This post is excerpted from the INDY’s morning newsletter, Primer. To read this morning’s edition in full, click here. To get all the day’s local and national headlines and insights delivered straight to your inbox, sign up here.
On Friday, the Republican effort to pass a tax overhaul gained a jolt of momentum and a sense of inevitability when both Senators Bob Corker and Marco Rubio signed on. Rubio had made noise about voting against the bill if it didn’t include a child tax credit expansion; the conference committee threw him a bone, which will work out to something like $25 a month for low-income parents. But Rubio was never going to vote against the bill, and everyone knew it. Corker, however, was more of a mystery: he had voted against the bill on the first go-round, voicing concerns about the $1.5 trillion hole the thing was going to blow in the budget. The conference bill bleeds the same trail of red ink. So what changed his mind? On Friday night, a report from the International Business Times offered a clue:
- “Republican congressional leaders and real estate moguls could be personally enriched by a real-estate-related provision GOP lawmakers slipped into the final tax bill released Friday evening, according to experts interviewed by International Business Times. The legislative language was not part of previous versions of the bill and was added despite ongoing conflict-of-interest questions about the intertwining real estate interests and governmental responsibilities of President Donald Trump—the bill’s chief proponent. … Sen. Bob Corker, who was considered a potential ‘no’ vote on the bill, abruptly switched his position upon the release of the final legislation. Federal records reviewed by IBT show that Corker has millions of dollars of ownership stakes in real-estate related LLCs that could also benefit.”
- For Corker, who is retiring next year, the savings could amount to more than $1 million a year.
- On Sunday, Senator John Cornyn of Texas, the majority whip, told ABC that this provision was part of an effort to “cobble together the votes we needed to get this thing passed.” [IBT]
- Corker told IBT that he had no idea that provision was in there when he announced his support for the bill because—wait for it—he hadn’t read the thing.
- Bloomberg: “Corker said in an interview on Saturday that his change of heart had nothing to do with the added benefit for real estate investors. On Sunday he wrote to Senate Finance Committee Chairman Orrin Hatch seeking an explanation for how the provision came to be included in the final bill after being asked about it by a reporter.”
- Corker’s conversion is all the more important given that Senator John McCain won’t be there for the vote [NYT]. He went back to Arizona to recover from his brain cancer treatment. Without him, there are fifty-one Republicans; they can only afford to lose one more. With Corker a yes, that leaves some margin for error, especially if Susan Collins of Maine decides to bail.
WHAT IT MEANS: Remember the infamous Cornhusker Kickback [The Hill], the effort to appease Senator Ben Nelson of Nebraska during the Affordable Care Act debate? There, Nelson was looking out for his constituents. Here, it seems, some senators were looking out for themselves. Corker would have you believe that his hands are clean—he has no idea how this provision that enormously benefits him (and the president, for that matter) was snuck into the bill at the last moment, right about the time he changed his vote. Color me dubious.
- This is already among the least popular pieces of legislation in modern history. Even the hint that a senator sold his vote for a pecuniary benefit would further taint whatever legislative victory the Trump administration expects to get out of this.
- Part of the reason the bill is so unpopular is that it’s designed to benefit wealthy Americans like Bob Corker—those who have already amassed a giant chunk of the country’s wealth—at the expense of everyone else. Since 1964, the top 0.1 percent of households have seen their pretax incomes rise by 300 percent; the top 10 percent have seen their incomes go up by 150 percent. The bottom 50 percent of taxpayers, however, have seen less than 50 percent increases. [NYT]
- This tax bill is only going to make that disparity worse. By 2027, the rich will see their after-tax incomes rise, while the bottom 50 percent will see their after-tax incomes fall. Politically, that’s going to be hard to sell next year.