But Republicans held back from celebrating too much Saturday both because it was 2 a.m. and because everyone acknowledged there are still plenty of obstacles ahead.
Welcome to a rare process in the US Congress: a real, live conference committee.
A conference is intended to help Republicans in the House and Senate sort out their differences. And there are plenty.
- The Senate bill sunsets tax breaks for individuals in 2025, something it did to save money so their bill would meet reconciliation rules. The House bill makes its individual tax cuts permanent. The corporate rate, meanwhile, would be permanent in both bills.
- Speaking of the corporate tax rate. The Senate bill enacts its 20% corporate rate in 2019. The House bill enacts its 20% corporate rate right away in 2018.
- The Senate bill repeals Obamacare's individual mandate. The House bill does not.
- The Senate bill doubles the exemption on the estate tax so that you could pass down up to $11 million tax free, but the House bill entirely repeals the estate tax in 2024 so you could pass down any amount of money tax free.
- The Senate bill maintains the current mortgage interest deduction of $1 million. The House bill cut it in half to $500,000
- The House bill repealed the alternative minimum tax. The Senate bill maintained it.
- The Senate bill has seven tax brackets and they lowered the top rate. The House has four and they maintained the top rate.
- There are major differences between how the Senate and House structure taxes for so-called pass-through businesses. It's a bit complicated, but just know that it could be a major sticking point. It already was in both chambers.
There are even more than that, but those are the biggies.
The Senate bill moved closer to the House version on several fronts by the end of the process, most notably on the state and local tax deduction compromise. And the Senate bill is already known to comply with the Senate's arcane and complex budget rules. It's fair to assume that version will take priority over the House in as many places as tenable in this effort to reconcile the two.
So what's next?
This is when Republican leaders appoint conferees, basically a group of people they trust to hash out those massive differences we laid out above. Nobody is wasting time on this. House Speaker Paul Ryan announced over the weekend that he'd announce folks to negotiate the tax bill today.
So will there be a lot of drama in conference?
Still TBD. The fact is House and Senate leaders worked for months -- long before either chamber of Congress unveiled their respective bills -- to make sure they were on the same page on the general outline of what they would offer. For some of the differences, there is just some fine tuning that has to be worked out.
But, it's hard to predict exactly where the pressure points are going to be. Republicans managed to find a way to include a deduction for state and local property taxes up to $10,000 in the Senate bill. That will help with upcoming negotiations with the House where there are many Northeast and California Republicans who hail from high-tax states. But, House Republicans from high-tax areas may still be looking for more to win their votes this time around.
The key factor in the Senate is to pass a bill that meets Senate rules. That means a bill that doesn't add to the deficit after a decade. Finding a way to include all the tax breaks they want while not busting through spending constraints is the real trick. They did it once, but it is something House Republicans have to keep in mind when negotiating with their Senate colleagues.
What about Trump
President Donald Trump proved to be a real closer with some key Senate Republicans including Sens. Ron Johnson of Wisconsin and Rand Paul of Kentucky. But, the President has largely stayed out of the tedious policy negotiations.
One of his biggest demands was the lower corporate rate. As you might remember, Trump wanted a 15% corporate rate, but settled for 20%. It became a kind of sacred number in the negotiations with Senate Republicans reluctant to tick the number up a few points to cut taxes elsewhere. But, over the weekend, Trump hinted he might be OK with a 22% tax rate in a tweet.
That is something to watch. Every percentage point you raise the corporate rate yields massive opportunities to cut taxes elsewhere. Republican Sens. Mike Lee of Utah and Marco Rubio of Florida had suggested last week of raising the corporate rate to 20.9% in order to expand the child tax credit, for example.
About those growth projections:
The Joint Committee on Taxation. Goldman Sachs. Moody's. Any number of serious economists. The list goes on of folks who can't seem to figure out how Republicans can say with a straight face that this $1.47 trillion plan won't add to the deficit. Even the letter to Treasury Secretary Steve Mnuchin from economists heartily supporting the bill and talking about its revenue effects (which just about every GOP office in America sent to reporters as an "ICYMI" or "FYI") notably does not make this claim.
And yet, Senate Majority Leader Mitch McConnell said just after the vote early Saturday morning: "I'm totally confident this is a revenue neutral bill."
And later Saturday, in Louisville: "I not only don't think it will increase the deficit, I think it will be beyond revenue neutral, in other words I think it will produce more than enough to fill that gap."
He's not alone -- the vast majority of his conference (save for Sen. Bob Corker), also agree all the analyses up to this point are wrong. That's pretty bold.
More bold? McConnell is just straight up saying put the future elections on the line for numbers they can't prove -- and don't have any analysis yet to back up will exist.
"A year or two from now you all can make an assessment: which one of us was right," McConnell told reporters in Kentucky on Saturday.
He's not shying away from it at all -- and neither are his colleagues. So bookmark those quotes.
The next few days will be important to watch. Republicans don't have much time to work out their differences if they expect to pass a tax bill before the holiday break. Republicans are going to be forced to juggle several key priorities in upcoming days as they seek to fund the government, find a way to pay for the Children's Health Insurance Program, negotiate on immigration, find a way to renew a key spying program and all as the Russia investigation and Alabama Senate election swirl around them.