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Senate weighs scaling back tax package to win deficit hawks

WASHINGTON (AP) — Senate Republicans weighed scaling back the tax cuts in their massive package to secure crucial support as congressional analysts said Thursday the legislation would add $1 trillion to the deficit over the next decade.

Republicans were making major changes to the bill — a top political priority of President Donald Trump — up to the last minute, including one that would roll back some of the tax cuts after six years to appease deficit hawks.

The scramble to alter the bill came after senators said the chamber's parliamentarian had ruled that automatic "triggers" designed to guard against big deficits would violate Senate rules. GOP leaders' main concern was winning over lawmakers, including Sens. Bob Corker of Tennessee and Jeff Flake of Arizona, concerned about adding more red ink to the deficit.

Senate Majority Leader Mitch McConnell, R-Ky., had expressed confidence early in the day, but he has little margin for error with a 52-48 majority. He can afford to lose two votes while counting on Vice President Mike Pence to break the tie.

Sen. John Cornyn, R-Texas, said the bill will have "alternative, frankly, tax increases we don't want to do" to deal with deficit concerns.

Forced to rewrite the bill behind closed doors, Republican hopes of passing the bill late Thursday slipped to Friday.

In a dramatic turn, Democrats forced a vote on whether to return the measure to the Senate Finance Committee so it could be rewritten to ensure smaller deficits. After holding out for nearly an hour during the vote, Corker, Flake and Ron Johnson of Wisconsin eventually joined fellow Republicans to scuttle the Democratic proposal.

Corker has been pushing to add automatic tax increases in future years if the package doesn't raise as much revenue as projected.

With the provision dead, Corker said senators would change the bill to roll back some of the tax cuts in future years, regardless of whether tax revenues meet expectations. Flake said the tax increases would take affect after six years, though he didn't specify which taxes would go up.

The overall legislation would slash the corporate tax rate, offer more modest cuts for families and individuals and eliminate several popular deductions.

Lawmakers will then try to reconcile the Senate bill with one passed by the House in the hope of delivering a major legislative accomplishment to Trump by Christmas. Republicans have cast passage of a tax overhaul as a political imperative to ensure they hold their House and Senate majorities in next year's midterm elections.

A new analysis by the nonpartisan Joint Committee on Taxation found that the bill would add $1 trillion to the deficit.

The tax bill would increase economic growth, generating an additional $458 billion in tax revenue, according to the analysis. That's far short of the $2 trillion promised by Treasury Secretary Steven Mnuchin.

Two Republican senators, John McCain of Arizona and Lisa Murkowski of Alaska, announced their support for the tax package Thursday, giving it a major boost. Both McCain and Murkowski had voted against the GOP bill to dismantle the Obama health care law this past summer.

"It's clear this bill's net effect on our economy would be positive," McCain said in a statement. "This is not a perfect bill, but it is one that would deliver much-needed reform to our tax code, grow the economy, and help Americans keep more of their hard-earned money."

Murkowski said she supports the tax bill now that it would allow oil drilling in Alaska's Arctic National Wildlife Refuge. Murkowski got the provision added earlier this week, but the initial version violated arcane Senate rules about which provisions can be added to the tax bill.

Murkowski said Thursday the provision was tweaked to comply. "We have done it and we're ready to go," she said.

Drilling in the refuge has long been a contentious issue, pitting environmentalists against those who want to increase domestic oil production.

Senators were still grappling with several issues Thursday, including a provision to add a deduction for local property taxes. The current Senate bill completely eliminates the federal deduction for state and local taxes, a popular deduction in the Democratic-leaning states of New York, New Jersey, California and Illinois as well as many wealthy suburbs nationwide.

Sen. Susan Collins, R-Maine, proposed an amendment to let homeowners deduct up to $10,000 in local property taxes on their federal returns. It is similar to a provision in the House-passed bill.

Without the deduction, Collins said, it would be "very problematic for me" to vote for the bill.

Collins would make up the estimated $146 billion in lost revenue by keeping the personal income tax rate for the wealthiest earners at 39.6 percent and making a smaller cut in the corporate tax rate. Trump and other Republicans insist that the corporate tax rate must be reduced from 35 percent to 20 percent.

Sen. Steve Daines, R-Mont., backed the package Wednesday after securing an increase in the deduction for business income from 17.4 percent to 20 percent. The deduction is for business owners who report their business income on their individual tax returns.

Johnson, the Wisconsin Republican, has also been pushing to increase the tax break for these business owners. He has been noncommittal about his support, even with the change secured by Daines.

The tax package would mark the first time in 31 years that Congress has overhauled the tax code.

The plan would nearly double the standard deduction to around $12,000 for individuals and about $24,000 for married couples. The tax cuts for individuals would expire in 2026 while the corporate tax cuts would be permanent.

Associated Press writers Alan Fram and Andrew Taylor contributed to this report.

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