Trump’s meeting with tax negotiators kicks off fall reform push
While there are no indications that anyone is expecting a breakthrough Tuesday, some have raised expectations that more details could emerge soon.
By AARON LORENZO
When President Donald Trump sits down Tuesday with tax reform negotiators from his administration and Congress, they’re hoping it will mark the start of a final push to get legislation to Trump’s desk before the year is through.
Agreement on a plan to cut taxes for individuals and businesses, along with more fundamental changes to the tax code, would allow the House Ways and Means and Senate Finance committees to start putting meat on the bone with legislative language. The major issues to settle remain how low to push tax rates, particularly for corporations; whether and how to pay for most of the package; and if parts of it will have to be temporary to comply with budget rules.
While there are no indications that anyone is expecting a breakthrough at the 4 p.m. White House gathering, some administration officials and congressional leaders have raised expectations that more details on a reform framework could emerge fairly soon. The plan will have to get a green light from Ways and Means members first.
Senior members of Trump’s administration have been pushing an ambitious timetable for tax reform for months, suggesting a detailed plan would get through the House in October and clear the Senate by November.
But now Congress is returning from recess to face far more pressing matters, including emergency funds for Hurricane Harvey victims, an increase in the debt ceiling and a budget plan for fiscal 2018 that must be approved by Sept. 30.
Despite those obstacles, and despite having no detailed plan, Trump and his aides say they are pressing forward on a tax overhaul.
Tuesday’s gathering will be the first time Trump has joined the “Big Six” negotiators, who began meeting in late April. The group comprises House Speaker Paul Ryan, Senate Majority Leader Mitch McConnell, Ways and Means Chairman Kevin Brady, Finance Chairman Orrin Hatch, Treasury Secretary Steven Mnuchin and National Economic Council Director Gary Cohn.
White House press secretary Sarah Huckabee Sanders told reporters Sept. 1 that the meeting shouldn’t be taken as a sign that a plan is nearing completion.
It “means that we’re pushing forward,” she said. “We’re going to continue … and sit down with a lot of members of Congress to make sure we get this deal done.”
Trump has stepped up his personal engagement on the issue, planning a second trip to the Midwest this week to drum up public support and penning a Labor Day op-ed for the Milwaukee Journal Sentinel.
“I want to work with Congress on a plan that is pro-growth, pro-jobs, pro-worker and pro-American,” he wrote, sticking to a broad brush and avoiding details.
On Wednesday, Trump plans to visit North Dakota to speak on tax reform. The state — like the site of his first major speech on the issue last week, Missouri — is home to a vulnerable Senate Democrat, Heidi Heitkamp. Trump carried North Dakota with 63 percent of the vote.
“Now that Congress is back from recess, [Trump] looks forward to their stepped-up support to deliver the real tax relief that hardworking Americans deserve and our economy needs to grow and create jobs,” a White House spokesperson said.
Trump, Republican leaders and conservative advocacy groups are expected to continue to put pressure on Heitkamp and other Democrats in tough reelection fights in 2018, in hopes of winning their votes for tax reform. However, McConnell is laying the groundwork for pushing a plan through the Senate with only Republican votes.
In a statement, Heitkamp said she is “glad to welcome President Trump to North Dakota where North Dakotans are eager to hear more about his tax reform plan.”
Heitkamp added that she has “been pushing for both sides of the aisle to work together in Congress toward permanent, comprehensive solutions that will do away with loopholes and handouts for special interests and instead promote our small businesses, farm economy and energy industries with the fiscally responsible reforms they need to grow and expand.”
Business has been the major focus of the tax reform effort from the start. Tuesday’s meeting will focus on getting the 35 percent corporate tax rate as low as possible, a goal shared by all the parties in the talks.
“The president talked about 15, the president wants us to work to do everything we can to get it down to 15,” Cohn told Fox Business Network at the end of last week. “We’re going to do everything we can to get as low as we can. … The president has told us what he would like.”
But 15 percent is widely viewed as unrealistic, given the cost of such a drastic cut and the difficulty the negotiators have had agreeing on ways to keep the entire plan from exploding the deficit. The range most commonly mentioned by lawmakers, lobbyists and others following the process is 20 to 25 percent.
Beyond lowering the corporate rate, the administration and Hill GOP leaders agree that a major change is needed in how corporations’ foreign income is taxed. Their plan is to start taxing profits only where the money is earned, in hopes of ending the widespread corporate practice of keeping money locked up abroad rather than bringing it home, where it would face U.S. taxes.
Such developments notwithstanding, the negotiators have yet to resolve a number of issues. They include whether to combine a corporate tax cut with a plan to let businesses immediately write off new investment costs.
Ryan and Brady are champions of the idea, which would come with a costly price tag, but White House officials haven’t been as keen on the plan. Trump prefers some form of accelerated depreciation instead, but he’d rather use the money for rate reduction.
The plan to make certain tax changes permanent and let others expire remains in flux, with decisions still to be made on which provisions go in which pile. The blend is necessary to comply with budget rules that restrict permanent tax changes from increasing the deficit. But GOP lawmakers not on the two tax-writing committees say they still need to learn more about the strategy before they sign off.
Legislators can also expect to start hearing from businesses and other interest groups that oppose ideas like altering tax-favored retirement plans, tax benefits tied to business debt and mortgage interest.
To counter some of the negative messaging, the White House has cleared Cabinet-level officials to attend outside groups’ events in the coming weeks, and the administration is unveiling a tax reform website this week.
As if tax reform weren’t hard enough on its own, the negotiators will be working against a backdrop of cliffhangers like raising the debt limit, funding the government, passing a budget and, potentially, attempting one more drive to repeal and replace Obamacare.
The tax issue is clearly consuming the administration, even in the face of the destruction in Texas and Louisiana from Hurricane Harvey.
“Obviously we’re spending a lot of our time on Harvey and other things, but on the economic side we are spending all of our time on taxes, tax reform, tax simplification,” Cohn said on Fox. “We believe this is the most important thing we can do to drive the U.S. economy, drive economic growth, drive prosperity and drive wages.”