Republican leaders get small taste of panic Monday night on tax bill

Members of the conservative Freedom Caucus threatened to sink the pro-forma vote to name conferees to the House-Senate tax conference over the length of the short-term government funding bill. They sorted it out, but as one top outside GOP adviser put it to me last night: "It's a good reminder that no matter how well things are going, we're always one troublesome subgroup away from this thing spinning out of control."

The risk: The tax bill is caught in an epic end-of-the year legislative thicket. Until last night, it had been separate and apart from what even optimistic aides describe as a total mess.

That changed Monday night.

We'll see if it's an isolated incident, but the Freedom Caucus, which was remarkably helpful getting the tax bill across the finish line in the House, grabs onto leverage like few other groups in the House. Don't be surprised if this isn't the last threat to the tax bill over an unrelated end-of-the-year issue.

What to watch today:

A handful of GOP senators head to the White House to meet with the President. Ostensibly, this is about the year-end legislative issues, but will keep an eye on any side tax comments. Senate GOP policy lunch with Vice President Mike Pence.

What's happening with conference:

The House has named its conferees. The Senate will likely follow suit Wednesday. The structure and timeline are still TBD, but several aides have made it clear: they want to hammer this out behind the scenes (in fact, staffs in both chambers have been working through reconciling issues for weeks), and do it very quickly. So, things are fairly quiet now, but when they kick into gear, expect it to move quickly.

The provision most in need of a fix

As previously reported, the intensity of the corporate America freakout over the late re-addition of the corporate alternative minimum tax into the Senate GOP proposal is really a thing to behold.

"Nightmare," one told CNN. "Existential threat to what we do," another said. And so on and so forth. Hyperbole? Most certainly. But a real problem? You better believe it.

Basically, here's the gist: the AMT exists as an alternative tax system designed to kick in if a corporation's regular tax bill, with tax breaks is too low. It sits at 20% now, so with a 35% corporate rate, it rarely is a problem for companies. But the House and Senate proposals take the corporate rate down to 20%, meaning with various deductions, many more companies could end up kicked into the AMT. And as such -- and this is the key issue -- would be unable to claim research and development tax credits.

Of note: House Majority Leader Kevin McCarthy, a key ally of Silicon Valley, which is positively freaking out over this, has identified this as a problem that must be resolved. So expect it to be resolved. The issue: this was added back into the bill because it raises $40 billion. So, conferees will need to find new cash somewhere.

An interesting side element here: The House and Senate are going to conference, that much is clear. But the option of the House just passing the Senate bill is always on the table as a "break the glass" type of emergency scenario should everything else fall apart. The major, major blowback to the above sure makes that seem like an even more untenable option than it already stands.

To underscore a point

Tax lawyers and lobbyists are still getting their heads around the Senate bill and what was done in the late hours of last week. There are a lot of smaller bore concerns that are starting to pop up -- from provisions that are problematic to basic drafting errors. The expectation is these things will be fixed in conference, but it's not like anyone is slowing the process down any time soon. These are the real risks to moving so quickly on a bill that means so much to absolutely everyone.