By David Morgan and Amanda Becker
WASHINGTON (Reuters) – U.S. Senate Republicans agreed to talks with the House of Representatives on sweeping tax legislation on Wednesday, amid early signs that lawmakers could bridge their differences and agree on a final bill ahead of a self-imposed Dec. 22 deadline.
The Republican-led Senate voted 51-47, along party lines with Democrats opposed, to begin formal conference negotiations to reconcile rival House and Senate tax bills passed last week.
The move, which follows similar House action this week, brings Congress a step closer to sending President Donald Trump a tax overhaul that he can sign into law.
House and Senate negotiators will need to work out differences on issues ranging from business taxes to the repeal of the Obamacare mandate that Americans obtain health insurance or face a penalty before lawmakers can pass a final version.
But John Cornyn, the No. 2 Senate Republican, said he was optimistic House and Senate tax negotiators would be able to work out an agreement within the next two weeks.
“Given the similarities between the House and the Senate bills, I think there are some obvious targets where they need to focus their attention but obviously they won’t be rewriting the bills,” Cornyn said.
Republican negotiators must be careful not to agree to changes that could diminish support in the Senate, where they can afford to lose support from no more than two party members.
There has been no major tax overhaul since 1986, when Republican Ronald Reagan was president.
While there are significant differences between the House and Senate bills, both would cut the U.S. corporate tax rate to 20 percent from 35 percent, provide tax relief for “pass-through” enterprises including small businesses where earnings are taxed at individual rates, and both benefit the wealthiest Americans and reduce the tax burden for most middle-class taxpayers.
Republicans claim the legislation will spur enough economic growth to pay for the tax cuts with new revenue, but the nonpartisan Joint Committee on Taxation estimates that Senate bill would still add $1 trillion to the federal budget deficit over a decade, even with an economic upswing.
U.S. stock prices have rallied on growing optimism that tax legislation will become law.
But on Wednesday, the head of sovereign credit ratings at S&P Global told Reuters that the rising deficit and looser fiscal policy could prompt negative action on U.S. credit ratings unless Washington…