Trump scrambles tax reform debate

President Trump is scrambling the politics of tax reform.


Republicans in Congress have been driving the process with little input from Democrats, but Trump’s surprise debt-and-spending pact this week has both parties wondering if things are about to change.

The president’s comments and those by White House Press Secretary Sarah Huckabee Sanders on Friday give an opening for Democrats.

“The president is committed to moving legislation through,” Sanders said. “He wants Congress to act. He’s happy to have Democrats be part of that.”

A tax code revamp anchored by deep tax cuts has taken on more political importance after the GOP failure to repeal ObamaCare, with the president craving a big legislative win before the end of the year.

Trump repeated his desire for the GOP to get moving on Friday.

“Republicans must start the Tax Reform/Tax Cut legislation ASAP. Don’t wait until the end of September,” Trump tweeted. “Needed now more than ever. Hurry!” 

At a Cabinet meeting at Camp David on Saturday, Trump said that he wants a “speed up” of tax reform because of Hurricane Irma.

“I wanted a speed up anyway, but now we need it even more so,” he said.

Administration officials said that Trump struck the surprise three-month debt-limit deal with Senate Minority Leader Charles SchumerCharles (Chuck) Ellis SchumerRSC Chairman: Harvey aid could be jeopardized if linked with debt ceiling Dems prep for major fight over Trump USDA science pick Ex-Medicare chief promotes ObamaCare enrollment on Twitter after Trump cuts outreach funding MORE (D-N.Y.) and House Minority Leader Nancy Pelosi (D-Calif.), “to clear the decks” for tax reform.

The president has been pitching a tax revamp in states with vulnerable Democratic senators up in 2018, pressuring them to back his efforts. Most recently, he spoke in North Dakota, where he brought Sen. Heidi HeitkampMary (Heidi) Kathryn HeitkampTrump playing active role in push to reform tax code Trump to give tax speech in North Dakota next week OPINION | On immigration, Mr. President, pick a fight — and win it MORE (D-N.D.) on stage and called her a “good woman.”

Democrats are encouraged by Trump’s newfound interest in bipartisanship, but they are unsure that will translate into a tax bill that’s widely supported by lawmakers in their party.

“We’re going to have to wait and see,” said Rep. Richard Neal (D-Mass.), the top Democrat on the House Ways and Means Committee.

Neal said that Trump has held out the idea of an agreement with Democrats on taxes.

But when he was asked about Trump’s recent outreach to Democrats, Neal said lawmakers shouldn’t “read too much into it” because “there’s a certain volatility at the White House where minds and moods change very swiftly.”

Many Democrats acknowledge the current tax code is too complicated and needs an overhaul and would like to work with Republicans on the issue. 

Lawmakers of both parties would like to streamline the code and provide tax relief for the middle class. Many Democrats also back lowering the corporate tax rate, a major goal for the GOP, so long as it’s done in a way that doesn’t increase the deficit.

But some of Trump’s tax goals directly contrast with Democrats, pressured from the left to oppose anything seen as helping the wealthy and corporations.

“Right now, [Trump’s] priorities seem to indicate that he’s for big business and the wealthiest in the country,” said House Democratic Caucus Chairman Joe Crowley (D-N.Y.), who also serves on the Ways and Means Committee. “Our priority is for the working men and women in the United States.”

Schumer and 44 others in the Senate Democratic caucus signed a letter in August that laid out “three key principles that we believe are prerequisites to any bipartisan tax reform effort.”

These are that any tax-reform plan should provide no tax cut for wealthy people, be fiscally responsible and move through so-called regular order.

GOP leaders and the White House intend for tax legislation to include several elements that Democrats will likely oppose, including a lower tax rate for the wealthiest individuals, repeal of the estate tax and elimination of the state and local tax deduction.

And despite the high priority, no concrete details have emerged from either the administration or Congress, after multiple failed promises to release a proposal for several months. 

Rohit Kumar, a former aide to Senate Majority Leader Mitch McConnellAddison (Mitch) Mitchell McConnellThis week: Harvey aid at top of long to-do list as Congress returns The Memo: Trump faces critical fall Week ahead in finance: Lawmakers brace for high-stakes September MORE (R-Ky.) who now leads the tax policy practice at PwC, said that if Trump made concessions to Democrats on these issues, it could be hard for a bill to get enough support from congressional Republicans.

Kumar also said that the debt limit differs from tax reform because increasing the nation’s borrowing authority is something that Congress has to do.

“I’m skeptical still that tax reform kind-of becomes this big, bipartisan kumbaya moment,” he said. 

Leading Republicans on tax reform say they are interested in Democrats’ ideas, even if they aren’t sure how many lawmakers from the party will ultimately support a package.

“The Ways and Means Republicans have been actively seeking the input of Democrats, both on the committee and off the committee, and it’s our preference to have a bipartisan process,” said Rep. Peter Roskam (R-Ill.), who heads the panel’s tax-policy subcommittee. “The Rubicon that the Democrats need to cross is will they pursue [economic] growth in the same way that we’re proposing, and if they are, then I’m sure that we can work together.”

And major challenges remain even if Trump ends up pursuing a Republican-only approach. 

Notably, Republicans are divided over how deeply to cut the corporate tax rate. Trump has said he ideally wants to lower the rate from 35 percent to 15 percent, while Speaker Paul RyanPaul RyanThis week: Harvey aid at top of long to-do list as Congress returns The Memo: Trump faces critical fall Week ahead in finance: Lawmakers brace for high-stakes September MORE (R-Wis.) said Thursday that Trump’s goal would be hard to achieve and that he’s aiming for a rate in the low-to-mid 20s.

Another major challenge is how to fund tax cuts without bloating the debt, especially after the GOP took a proposal to tax imports, which would have raised considerable revenue, off the table.

Despite the challenges, GOP leaders insist the prospects of passing major tax legislation are still good. And even after Trump made the debt-limit deal with Democrats, Ryan said at an event hosted by The New York Times that the president is a good partner on taxes.

“On tax reform, he’s very, very, engaged,” Ryan said.


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