Tennessee Sen. Bob Corker said earlier this fall that he would not vote for the Republican tax bill if it added “one penny” to the deficit.
In September, Corker engaged in a brief standoff over the size of the tax cuts, before agreeing to a $1.5 trillion deal, on the idea that he could make that number deficit-neutral. Corker’s theory was that shifting to a different budget baseline would cover for $500 billion of that cost, while dynamic scoring—which takes into account the macroeconomic feedback from legislation—would produce the other $1 trillion. On both counts, these rosy assumptions were destined to put Corker in a jam when the numbers came out. The Joint Committee on Taxation, one day before the Senate voted on the bill, released its dynamic score showing the bill would only produce $458 billion in new revenue. Corker voted against the proposal on the floor— the only Senate Republican to do so.
The conference report released last week does nothing to address Corker’s deficit concerns. And yet, he announced on Friday that he plans to vote for the bill.
“While many project that it is very possible over the next ten years we could be at least $500 billion short on a $43 trillion policy baseline,” Corker said in a statement, “I believe this bill accompanied with the significant regulatory changes that are underway, and hopefully, future pro-growth oriented policies relative to trade and immigration, could have significant positive impact on the well-being of Americans and help drive additional foreign direct investment in Tennessee.”
This reasoning mirrored the much-mocked, one-page “analysis” released by the Treasury Department last week, which claimed the tax bill would not add to the deficit because of other policies the administration is interested in pursuing later. This same flimsy argument was available to Corker on the original Senate bill. He didn’t avail himself of it then. Why is he doing so now?
David Sirota, a reporter for the International Business Times, wrote in a Friday piece that the just-released conference report would be more generous than the Senate bill to owners of pass-through businesses with few employees but significant depreciable assets—such as, for example, (partial) owners of real estate LLCs. Corker, a wealthy guy, invests in real estate holdings, but was mystified by this accusation. Corker told IBT that “he had no knowledge of this and would have no knowledge of it except for you guys are calling me about it.” He conceded that he hadn’t read and digested the whole bill before announcing his support.
Later in the weekend, Corker wrote a letter to Senate Finance Committee chairman Orrin Hatch asking for a public explanation of how this provision made it into the final bill. Hatch responded. It’s a long story, but the bill’s treatment of pass-through income is a hybrid of the House and Senate’s different ideas for giving these owners a tax break. The House bill offered a lower tax rate for pass-throughs that certain capital-intensive businesses could qualify for. The Senate bill offered a 23 percent tax deduction for pass-throughs tied to the size of their payrolls, to keep firms with few employees from claiming it. The conference report splits the baby: Business owners above a certain income level can qualify for up to a 20 percent deduction depending on the size of their payrolls or depreciable capital assets. The original Senate bill was not as generous to real estate investors as the conference report. It is not offensive to point out—and question—why Corker didn’t vote for the original, less generous Senate bill, but is voting for the conference report.
And yet no one has been able to prove that this new treatment played any determinative factor in his vote. “I had nothing to do with that whatsoever,” Corker told reporters Monday. Conferees told me that Corker was nowhere on their minds as they went through the mechanical process of blending two different ideas. “There wasn’t any communication from Corker, at any point, on that,” South Dakota Sen. John Thune, a conferee, told me Monday.
Even if Corker didn’t ask for such a change, they still included it, and it could have played a role in determining his vote. He claims that he hadn’t delved into the intricacies of the new pass-through formula before he made up his mind, and that this was never a part of the bill that animated him.
But as someone who has asked Corker questions about tax reform nearly every working day for the last several months, I did not once hear him mention that treatment of pass-through income was a concern of his. I didn’t hear from any staffers, or fellow reporters, that this was on his radar. (Corker had, on the other hand, expressed interest in throwing the entire title dealing with individual tax reform “in the trash can and [taking] it directly to the incinerator.”) If people want to shame Corker for voting for a provision that could enrich him further, they should of course oblige themselves—and not stop there. Pass-through treatment is but one of many, many provisions in this tax bill that will swell the portfolios of most of the Republicans voting for it.
It could also be the case that Corker got newfound pressure from his colleagues.
An alternate theory suggests that with Arizona Sen. John McCain and Mississippi Sen. Thad Cochran in poor health, leaders had called on the retiring senator to switch his vote to ensure passage. Corker told reporters Monday that, “from the standpoint of just McCain and his health, [leaders] wanted me to give them an answer as soon as I could as to what my decision would be.” It did not, though, “weigh in on what my decision was, in any way.” He’s not serving as anyone’s proxy—as with Maine Sen. Susan Collins announcing her support Monday night, he likely won’t be the deciding vote anyway.
Corker, instead, referred to his comments after the first vote when he said that he “would look at it again” before voting on the conference report.
“I spent a week on the phone talking to chambers of commerce across our state, people around our country, on both sides of the aisle that I respect on issues like this,” he said. “I took a long walk on Friday morning and just decided that, from the standpoint of if I were the deciding vote on this… is our country better with this or not better with it? And I feel that we are.”