President Donald Trump's drive to overhaul the U.S. tax code headed toward a new drama on Tuesday in the Senate, where a pair of Republican lawmakers demanded changes to the party's tax bill in exchange for their help in moving the measure forward.
Trump was due to lobby Republicans at their weekly policy luncheon in the U.S. Capitol, with the Senate poised for a possible vote on tax legislation as early as Thursday.
The president has called on Republicans to deliver a tax bill to his desk before Christmas. But a Senate Budget Committee hearing on Tuesday, which Republican leaders hoped would send legislation to a full Senate vote, has become a potential hurdle with Republicans Ron Johnson and Bob Corker saying they may vote against the measure.
Their opposition could be the first major obstacle for the Republican tax overhaul in the Senate, where political infighting killed the party's effort to overturn the Obamacare healthcare law earlier this year.
Both lawmakers contend that they are ready to back the tax cut package for businesses and individuals if their separate concerns are satisfied. Corker, a prominent fiscal hawk, wants a measure that would prevent the tax bill from ballooning the federal deficit. Johnson wants a better deal for so-called pass-through enterprises that include small businesses.
"This is all very constructive," Corker told reporters on Monday even as he acknowledged that he could vote against the legislation. "We are all working in a very constructive way. It's nonstop."
Two Republican "no" votes at the committee hearing would come as a blow to the fast-tracked drive by Republicans to seize their first major legislative victory since Trump took office in January. Republicans, who control both chambers of Congress and the White House, need a win to save face with voters in next year's congressional midterm election after their failed push on Obamacare.
The budget committee's approval is vital to the Republican strategy of passing tax legislation by a simple majority in the 100-seat Senate, which they control by a margin of 52-48. But they control the 23-member budget committee by only one vote, making a single Republican "no" votedevastating.
The Senate bill would slash the corporate tax rate to 20 percent from 35 percent after a one-year delay. It would impose a one-time, cut-rate tax on corporations' foreign profits, while exempting future foreign profits from U.S. taxation.
But it would also add more than $1.4 trillion to the federal deficit over the first decade, according to congressional analysis. Republicans have said that economic growth spurred by tax cuts would generate enough new tax revenue to eliminate any new deficit.
But the nonpartisan Joint Committee on Taxation is not expected to release a full macroeconomic analysis of the tax bill head of a Senate vote.
As a result, Corker and other Republican deficit hawks, including Senator James Lankford, have been holding talks with Senate tax writers and the administration about adding a provision that would raise tax rates if revenues fall short of expectations.
Other lawmakers have expressed concern that the Senate bill could raise taxes on some individuals by eliminating a popular federal deduction for state and local tax payments and increase health insurance costs for people with medical conditions.
The Congressional Budget Office (CBO), another nonpartisan research unit of Congress, said the number of Americans with health insurance would fall by 13 million by 2027 under the Republicantax bill, which would repeal an Obamacare federal fine meant to encourage people to buy health insurance.
The CBO said this would make people with incomes below $30,000 net losers under the bill, and most of those earning more would be net winners, especially those with incomes between $100,000 and $500,000.
(Reporting by David Morgan; Editing by Cynthia Osterman)