By Amanda Becker and David Morgan
WASHINGTON (Reuters) - The U.S. Senate on Thursday delayed voting on a Republican tax overhaul as the bill was tripped up by problems with an amendment sought by fiscal hawks to address a large expansion of the federal budget deficit projected to result from the measure.
The Senate was debating the legislation late into Thursday, but put off any votes until Friday. It was not clear if a decisive vote on the bill would happen then.
The delay underscored nagging concerns among Republican fiscal conservatives with the deficit impact of a bill seen by the party as crucial to its political prospects in the November 2018 elections, when it will fight to keep control of the Senate and the House of Representatives.
Since taking office in January, President Donald Trump and Republicans now in control of Congress have yet to pass major legislation, a fact they hope to change with their proposed tax- code overhaul, which would be the biggest since the 1980s.
Democrats, expected to unanimously oppose the tax bill, have dismissed it as a giveaway to the wealthy and corporations.
Republican Senator Bob Corker and others tried to add a provision to the bill to trigger automatic future tax increases if the tax cuts in the bill did not boost the economy and generate revenues sufficient to offset the deficit expansion.
But the Senate parliamentarian barred Corker's "trigger" proposal on procedural grounds.
The trigger amendment was needed to win Corker's vote and those of others worried about the deficit - worries that intensified when congressional analysts said the bill would not boost the economy enough to offset the estimated deficit expansion, as the Trump administration had said it would.
Senate Finance Committee Chairman Orrin Hatch told reporters in the Capitol that it had not been easy to accommodate Corker, Senator Jeff Flake and other fiscal hawks. "It's been pretty hard to make them happy so far. We're going to keep working on it ... and we're going to do it," Hatch said.
In an approach that could pose political problems for other lawmakers, Republicans were considering building future tax increases into their bill, effectively reversing some of the bill's tax cuts, to lock in the votes they need.
"It's not a threshold anymore. It's just a tax increase," Republican Senator David Perdue said, describing possible alternatives. "The only thing that's come off the table is the trigger concept."
CORPORATE TAX MAY CHANGE
For instance, Senate Republicans were considering making a proposed corporate income tax rate cut temporary, instead of permanent, so the rate would rise back to an unknown level after six or seven years, said one Republican senator and an aide.
By that time, Trump might no longer be in office and a future Congress might change the law.
When asked if the tax bill was in trouble, Republican Senator Mike Rounds told reporters: "No, I don't think so. It's just a matter of once again trying to make the bill work."
Asked if there were 50 votes for an automatic tax increase, he said: "Good question!"
Optimism had reigned earlier in the day, when the bill won the backing of Republican Senator John McCain. Stocks surged on hopes that Senate Republicans were on the brink of passing their tax bill.
The S&P 500 hit a record closing high and the Dow Jones industrial average topped the 24,000 mark for the first time.
But the Joint Committee on Taxation, or JCT, a nonpartisan fiscal analysis unit of Congress, said the bill as passed earlier by the Senate Finance Committee, would generate only $407 billion in new tax revenue from increased economic growth.
JCT had earlier estimated the tax bill would balloon the $20 trillion national debt by $1.4 trillion over 10 years. The new estimate, counting "dynamic" economic effects, put the deficit expansion at $1 trillion, far short of assertions by some Republicans that the tax cuts would pay for themselves.
House of Representatives Democratic leader Nancy Pelosi said the new JCT estimate showed "no amount of dynamic scoring fairy dust will fix the catastrophic deficits of the GOP tax scam."
McCain, a key player in July's collapse of a Republican effort to gut Obamacare, backed the tax bill. While "far from perfect," the party's 2008 presidential nominee said it would boost the economy and give tax relief to all Americans.
Republican Senator Susan Collins, who also played a role in the failure of the Obamacare rollback, told reporters she was still not committed to the bill.
Several Republicans were withholding support while pushing for including a federal deduction for up to $10,000 in state and local property taxes and bigger tax breaks for "pass-through" companies, including small businesses.
As drafted, the Senate bill would cut the U.S. corporate tax rate to 20 percent from 35 percent after a one-year delay and reduce the tax burden on businesses and individuals, while ending many tax breaks, but would still expand the deficit,
Trump wants to enact tax cuts before January. The House approved its own tax bill on Nov. 16. It would have to be merged with the Senate bill, if it is approved, before any final measure could go to Trump for his signature.
Republicans have 52 votes in the 100-member Senate, giving them enough to win if they hold together. With Democrats opposed, Republicans could lose no more than two of their own votes, with Vice President Mike Pence able to break a 50-50 tie.
(Additional reporting by Susan Cornwell, Makini Brice and Richard Cowan in Washington, and Lewis Krauskopf in New York; Writing by John Whitesides; Editing by Kevin Drawbaugh and Peter Cooney)