Trump agenda takes a big hit
Health care defeat imperils next effort: ‘massive’ tax cuts
Putting on a brave face, the president and GOP are eager to move on.
The stunning collapse of the Republican health care bill now imperils the rest of President Donald Trump’s ambitious congressional agenda, with few prospects for quick victory on tax revisions, construction projects or a host of other issues in the months ahead despite complete GOP control of government.
While Republicans broadly share the goal of Trump’s promised “big tax cuts,” the president will have to bridge many of the same divides within his own party that sank the attempted overhaul of the Affordable Care Act. And without savings anticipated from the health care bill, paying for the “massive” cuts Trump has promised for corporations and middle-class families becomes considerably more complicated.
Meanwhile, other marquee agenda items, including a $1 trillion investment in roads and other infrastructure and proposed crackdowns on both legal and illegal immigration, will require the support of Democrats, many of whom have been alienated by the highly partisan start to Trump’s tenure.
The lone exception for near-term victory could come with the confirmation of Supreme Court nominee
Neil Gorsuch — but even that faces the prospect of a threatened filibuster by Democrats.
Trump and Republican leaders continued Saturday in their attempts to put a brave face on the health care debacle. “ObamaCare will explode and we will all get together and piece together a great healthcare plan for THE PEOPLE,” Trump wrote in a morning tweet. “Do not worry!”
But others in the party acknowledged the political damage sustained by pulling the House bill, particularly for a president who had touted his own dealmaking prowess.
“It’s a momentum issue,” said Rep. Mike Coffman, RColo. “The fact is that, you know, you came out of the gate and you stumbled.”
Doug Heye, a GOP consultant and former congressional staffer, said Republicans, having achieved control of both chambers of Congress and the White House, were left with a lot to prove.
“It sends a troubling sign to a lot of folks about the broader issue of whether Republicans will be able to govern,” he said.
Trump has said he would have preferred to start his term by cutting “the hell out of taxes.” Even before the health care bill was pulled Friday, the president was already starting to turn the page.
Determined to highlight other priorities, Trump staged two announcements in the White House meant to underscore his commitment to creating jobs: granting a construction permit for the Keystone XL pipeline and appearing with executives of a telecom giant as they pledged to hire thousands of new employees, although the company’s plans had already been announced in October.
Separately, Treasury Secretary Steven Mnuchin said at an event Friday that he will push Congress to enact comprehensive tax revisions by its August recess, though he acknowledged that the timetable might slip.
The White House signaled Saturday that it was eager to move on. Trump’s weekly address made no mention of the health care fight, instead focusing on his signing of legislation authorizing funding for NASA and his commitment to space exploration.
“We’re going to roll our sleeves up, and we’re going to cut taxes across the board for working families, small businesses and family farms,” Vice President Mike Pence said Saturday at an appearance in Scott Depot, W.Va. A simpler issue?
A senior White House official, however, said it was unlikely that Trump would ramp up a major sales effort on retooling taxes immediately, given that his team had been planning on using the coming days to push for Senate action on the healthcare bill.
Trump’s top advisers had envisioned a threestep legislative agenda this year, starting with scaling back President Barack Obama’s signature domestic initiative. After that was complete, they wanted to move to a comprehensive overhaul of the tax code, followed by the creation of a $1 trillion infrastructure package.
The implosion of the health care effort complicates the tax overhaul both logistically and politically.
House Republican leaders had been counting on changes to the tax code included in the health care bill to make the task of paying for future tax cuts easier.
Americans for Tax Reform President Grover Norquist said the bloc of hard-line Republicans who helped stymie the health care overhaul were guilty of “ripping the lungs out of tax reform.” If they don’t revisit the health care bill immediately, Norquist said, they will soon realize that “they didn’t shoot and wound health care reform, they shot and killed permanent tax reform.”
House Speaker Paul Ryan acknowledged Friday that the health care defeat “does make tax reform more difficult, but it does not make it impossible.”
“We are going to proceed with tax reform,” said Ryan, R-Wis.
Hours before the health bill was pulled, Mnuchin said a “comprehensive” overhaul of the tax code should prove less complex. “Health care is a very, very complicated issue,” he said at a Friday event hosted by Axios. “In a way, (tax reform is) a lot simpler. It really is.”
Trump has proposed cutting the corporate tax rate from 35 percent to 15 percent, though many Republicans on Capitol Hill have been aiming for a 20 percent rate. Trump has also proposed consolidating the existing seven individual income-tax brackets into three brackets of 10 percent, 20 percent and 25 percent.
Trump’s advisers have argued that these changes would trigger a big expansion of economic growth, but some budget analysts have said the changes would widen deficits by anywhere from $2.6 trillion to $7 trillion over 10 years, depending on how it is measured.
Many Republicans have long vowed that an overhaul of the tax code must be “revenue neutral,” which means they need to find new revenue to offset the reduction in rates. Trump’s advisers have not identified specific tax breaks they would eliminate to raise new revenue, and Trump himself often waved away debt concerns during the campaign.
Meanwhile, House and Senate Republicans are at odds over the wisdom of a key component of tax restructuring. Border tax dispute
Ryan has proposed a border-adjustment tax that would essentially create new taxes on items imported into the United States as a way to raise close to $1 trillion in new revenue while also providing incentives for companies to move operations to the U.S.
Many other Republicans oppose this idea, though, and the fight probably will only intensify now. Some Republicans, including Sen. Lindsey Graham of South Carolina, argue that the scheme would drive up prices on consumer goods, and many large retailers are strongly opposed.
Given such divides, as well as the mechanics of the budget process, it’s highly unlikely that lawmakers will produce a comprehensive tax bill by the August recess, if at all, said Jim Manley, a former longtime aide to former Senate majority leader Harry M. Reid.
“It’s clearly not realistic, and it’s not going to happen, on policy and political grounds,” Manley said, adding that the Republican agenda is also undercut by “a president who’s out of his league and doesn’t know how to legislate.”
Republicans had planned to use a budget procedure called “reconciliation” for both the health care overhaul and for the tax changes, as that would allow them to pass their plans with a simple majority in the Senate and make it impossible for Democrats to block the changes through a filibuster.
That’s still the plan with a tax overhaul.
Barry Bennett, an adviser to Trump during the general election, said he thought it was a “tactical mistake” for the president not to have started his term by pushing for tax changes.
“Now you’re going to have to carry these battle scars into the tax debate,” he said.
Former House speaker Newt Gingrich, who was a close adviser to Trump during the campaign, said the White House should postpone what is expected to be a messy battle over the tax code and instead pivot toward trying to build a large infrastructure package. Proceeding with infrastructure could attract bipartisan support, he said.
Some Democrats and labor unions have said they could support a big infrastructure package, though the White House has not specified how it plans to finance a package that includes roads, bridges, airports and broadband capability, among other things.
Mnuchin said Friday that the package would probably include several hundred billion dollars in public money but that the rest would be financed by the private sector, with public support as incentives. Democrats are wary of that approach and prefer more direct government spending.
Many Democrats and Republicans have tried — but failed — to pull off tax revisions in recent years. A principal reason changing the tax code is so difficult is because interest groups flood Washington looking for tax cuts but fight vigorously against any measure that would hike their bills.
“It’s very, very hard to get done,” said Doug HoltzEakin, a former director of the Congressional Budget Office.