Tax overhaul at mercy of negotiators
THREATS are amassing on all sides of a tax code overhaul, the keystone of the GOP economic agenda. They’re as grave as an administration sinking in the quicksand of the Russia scandal and as relatively picayune as an intramural standoff among House Republicans over the level of spending cuts in a budget resolution.
But in each of the three Republican power centres in Washington - the White House and both chambers of Congress - leaders are pre-occupied by matters other than the dicey work of forging a consensus approach to reworking the tax system from top to bottom.
In the Senate, before Republicans can focus on the matter, they first to need to work through an Obamacare replacement package that no one seems to want to support. Debate over that measure has spilled over the time that Senate Majority Leader Mitch McConnell, Republican , set aside for it, piling pressure on an already-crowded agenda for the rest of summer and fall. McConnell on Tuesday acknowledged that reality by cutting the chamber’s planned August recess in half to keep senators working in Washington. He also set a procedural vote on the health-care bill for next week.
The holdup in the Senate is more than a scheduling concern. Republicans have been counting on their Obamacare repeal to help pay for their tax plan. Their first proposal would have wiped out all of the roughly US$1 trillion in tax hikes that the original law imposed on the health industry and the rich to fund its coverage expansions. With those cuts out of the way, the GOP could slash rates even further in their overhaul of the code. But a public backlash to a measure Democrats have attacked as wealth transfer from the poor to the rich has forced Republicans to adjust course. Now, they appear poised to preserve a pair of Obamacare tax increases that fell on couples earning more than US$250,000 a year - saving US$231 billion while potentially adding that sum to the price tag for the tax rewrite.
The House is hung up on a budget. Republicans divided among defense hawks, deficit hard-liners and moderates are struggling to reach consensus on a package setting spending levels for fiscal year 2018. That resolution will also unlock the procedural rule known as reconciliation that allows Republicans to pass a tax bill with simple majorities in both chambers - the route that leaders have counted on taking as they’ve plotted their approach this year.
House Budget Committee Chair Diane Black, R-Tenn., is attempting to thread the needle among competing demands from the wings of the Republican conference. But she still hasn’t scheduled a markup that she’s said she intends to hold next week. “Obviously, we’ve gotten postponed, so there are still negotiations going on,” Republican Tom Cole, Republican, a senior member of the budget panel, told me Tuesday. “Sooner would be better, but it looks to me like we may all be here a little longer.”
Federal budget expert Stan Collender called the standoff over spending levels “intractable” and said it looks increasingly likely that Republicans will pass another so-called skinny budget, as they did in January, that holds current spending levels constant in order to get the tax rules in place.
That will rankle conservatives demanding cuts to mandatory spending who may be forced to swallow another vote for the status quo in the interest of advancing the tax debate. “It comes down to tax reform versus no tax reform,” Collender tells me.
Looming ever larger over the internal disputes knotting up progress in either chamber is the shadow the Russia scandal is casting down Pennsylvania Avenue. That’s not to say that congressional Republicans are suddenly sweating the progress of the Russia investigation. As my colleague Dave Weigel documents, they aren’t.
But congressional aides and business lobbyists close to the process have griped for weeks that the White House needs to assert some leadership to resolve fundamental impasses stymying Republican negotiators on the Hill. House Ways and Means Committee Chairman Kevin Brady, Rublican, told reporters last Tuesday after a White House meeting on the subject that principals are “still on target and making steady progress toward delivering this to the president’s desk in 2017.”
And House Speaker Paul D. Ryan, Republican, who also attended that meeting, tweeted this hopeful report:
Tax reform is coming along. Today’s meeting among House, Senate, and WhiteHouse leaders was very constructive
But as my colleague Damian Paletta points out, Republicans still haven’t come to agreement on the most basic aspects of their approach to the issue:
Things still unresolved in GOP tax push: • Permanent vs. short-term • Cuts vs. offsets • border adjustment replacement • A lot more Meanwhile, The Post’s Phil Rucker and Ashley Parker report, the White House has been “thrust into chaos after days of ever-worsening revelations about a meeting between Donald Trump Jr. and a lawyer characterized as representing the Russian government, as the president fumes against his enemies and senior aides circle each other with suspicion, according to top White House officials and outside advisers.”
People who have spoken with the president this week describe him as “enraged that the Russia cloud still hangs over his presidency” and “exasperated that his eldest son and namesake has become engulfed by it.”
For his part, President Trump tweeted last Wednesday morning to defend his son and lambast what he called the “greatest Witch Hunt in political history”:
My son Donald did a good job last night. He was open, transparent and innocent. This is the greatest Witch Hunt in political history. Sad!