Republican tax reform plan may stall over John McCain illness

Timing of vote on Trump’s historic tax cut scheme remains ‘flexible’

House Speaker Paul Ryan: House is willing to accommodate health concerns of some Senate members for vote’s timing. Photograph: Mark Wilson/Getty Images

House Speaker Paul Ryan: House is willing to accommodate health concerns of some Senate members for vote’s timing. Photograph: Mark Wilson/Getty Images


The timeline of the Republican tax reform plan remains uncertain amid signs that a much-anticipated vote in the Senate next week may be postponed due to the absence of Senator John McCain.

Mr McCain, who has been struggling with brain cancer, has been absent this week from the Senate. In a statement his office said he was receiving treatment at a hospital in Maryland, just outside Washington, for “normal side-effects of his ongoing cancer therapy”. “Senator McCain looks forward to returning to work as soon as possible,” the statement added.

But Mr McCain’s increasing frailty is reportedly concerning colleagues in Congress. It is not the only health worry for Republicans.

Thad Cochran, a Republican senator from Mississippi, was hospitalised this week for treatment for a non-malignant melanoma, but is expected to return to Washington next week.

Republicans are poised to vote on a historic tax reform package as early as Monday, following a breakthrough this week on the Bill.

While the House of Representatives and the Senate both passed their own version of the tax reform package last month, negotiations between the two sides of the House have been ongoing in recent weeks to hammer out a compromise proposal. Under the changes agreed, the corporate tax rate will be cut to 21 per cent (not 20 per cent, as had been expected), the higher rate of income tax will fall from 39.6 per cent to 37 per cent, and the Bill will scale back previously mooted mortgage interest deductibility rules.

Health concerns

Speaking in the US Capitol on Thursday, House speaker Paul Ryan said the House remains “flexible” about the timing of the vote, and is willing to accommodate the health concerns of some of the Senate’s members.

But despite expectations that the Bill will pass next week, there were still some late holdouts in the Senate on Thursday who threatened to scupper it.

Florida senator Marco Rubio threatened to vote against the Bill if the expansion of a childcare tax credit that was in earlier versions of the Senate proposal, but was ultimately dropped, is not included. The White House insisted the child tax credit had already been doubled in the plan.

The Republican tax reform plan represents the most sweeping rewrite of the tax system in decades and will be a welcome achievement for Republicans following their unexpected electoral loss in Alabama this week.

Addressing journalists on Thursday, press secretary Sarah Huckabee Sanders said the White House was “very hopeful” that the vote will take place early next week. Asked about the tax Bill’s impact on those who will see tax increases under the plan, Ms Huckabee Sanders replied:

“Overwhelmingly the middle class will get a huge tax break . . . more Americans will see more of their hard-earned money.”

Macroeconomic effects

Speaking during one of her final press engagements as Federal Reserve chair before her replacement next February, Janet Yellen played down the impact of the Republican plan for tax reform on the economy.

“While changes in tax policy will likely provide some lift to economic activity in coming years, the magnitude and timing of the macroeconomic effects of any tax package remain uncertain,” she said.

Republicans have argued that the huge tax cuts envisaged in the proposal – particularly in the corporate tax rate – will be compensated for by a growth in the economy.

Speaking after a meeting of negotiators from both sides of the political divide earlier this week in the White House, Mr Trump said he wants to give the American people “a giant tax cut for Christmas”.

“Our current tax code is burdensome, complex and profoundly unfair – it has exported our jobs, closed our factories, and left millions of parents worried that their children might be the first generation to have less opportunity than the last. I am here today to tell you that we will never let that happen.”