SO NOW WHAT HAPPENS? In short, this deal has no shortage of obstacles — some of them very procedural, like figuring out whether the agreement would need to ride on a broader vehicle or if it can be enacted as a standalone bill. House and Senate leaders just announced a plan for a short-term funding punt into March, which would certainly complicate plans to attach the tax bill to something larger — certainly by the end of the month. Meanwhile, the chatter for days now has been that the House might try to pass the tax bill under the suspension of rules, requiring a two-thirds majority, perhaps as soon as this week. But there are still some questions about the substance of this bill as well, perhaps none bigger than the question of whether enough Democratic lawmakers will believe that the expanded child credit in the agreement is generous enough. To be clear: Lots of Democrats believe it is, while others, who might not, very well might end up accepting half a loaf. And there was no chance that Republicans would allow a return of the 2021 monthly child payment program that was popular on the left. But there were definitely some prominent, progressive Democrats who thought the CTC expansion in this deal falls way short of what’s needed, even as liberal groups like the Center on Budget and Policy Priorities projected that the larger credit would lift as many as 400,000 children out of poverty in its first year. The proposal would help larger families and adjust the refundable credit portion for inflation, but the worry for some Democrats is that this plan wouldn’t do enough for the families of the poorest workers. So keep an eye out for those reactions. Rep. Rosa DeLauro of Connecticut, the top Democrat on the House Appropriations Committee and a vocal champion for the monthly child allowance initiative, told Weekly Tax last week that she was concerned the long-term costs of the business breaks would swamp the CTC expansion. Again, that’s not a particularly controversial view — check these estimates from the Committee for a Responsible Federal Budget, for instance. The question is how many Democrats will fall in line with this being the best they can get. Something else worth monitoring: Rank-and-file GOP lawmakers really have been more vocal in pushing in recent months for the business tax relief, which would roll back provisions in the Republicans’ own 2017 tax law that created stricter preferences for writing off research costs, deducting interest and expensing capital investments. In fact, a number of House members took to the floor just last week to keep trying to nudge their leadership to embrace this tax plan. For his part, Smith hasn’t been shy in pushing for those business breaks, either — but as Brian and Benjamin noted, the Ways and Means chair also appears to be more interested in further expanding the child credit than the average Republican member, given that he comes from one of the poorest congressional districts in the country. That also might help explain why Smith has been so optimistic about the tax deal in general, to the surprise of some tax watchers. "If Jason Smith is going to go home and campaign on or talk about this tax bill, he's probably going to talk about the Child Tax Credit," Rohit Kumar, PwC’s National Tax Services Co-Leader, told Weekly Tax last week, before the full contours of the potential deal became clearer. NOT ON THE RIGHT SIDE: Whether this tax deal actually makes it across the finish line in the weeks to come is still up in the air — and it certainly wouldn’t be unheard of for further changes to be made to this initial deal between Wyden and Smith. But chances are that it’s back to the drawing board for lawmakers and groups that saw their pet policy left out of the current tax agreement. The most prominent example there is probably the current cap on state and local tax deductions, which GOP lawmakers from New York have been pushing to address in recent days and weeks.
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