Democrats of­fer tax-re­vamp help

45 sen­a­tors reach out to GOP but lay down con­di­tions

Northwest Arkansas Democrat-Gazette - - FRONT PAGE - COM­PILED BY DEMO­CRAT-GAZETTE STAFF

WASH­ING­TON — After the fail­ure of Repub­li­cans to pass health care leg­is­la­tion on their own, Se­nate Democrats are seiz­ing the chance to in­flu­ence the po­ten­tial over­haul of the tax code by call­ing on Repub­li­can lead­ers to work with them on a plan.

On Tues­day, 45 Se­nate Democrats sent a letter to Pres­i­dent Don­ald Trump; to Mitch McCon­nell, the Se­nate ma­jor­ity leader; and to Sen. Or­rin Hatch, the Repub­li­can chair­man of the Se­nate Fi­nance Com­mit­tee, urg­ing them to em­brace a bi­par­ti­san ap­proach on the ef­fort.

The Democrats reached out days after Repub­li­cans failed to re­peal the Pa­tient Pro­tec­tion and Af­ford­able Care Act. Mem­bers of both par­ties have said they are think­ing about the Repub­li­cans’ abil­ity to press ahead with their agenda while act­ing along strict par­ti­san lines.

“We are con­fi­dent that, by work­ing to­gether, we could mod­ern­ize our tax sys­tem to in­crease work­ing fam­i­lies’ wages, im­prove mid­dle-class job growth, pro­mote do­mes­tic in­vest­ment, mod­ern­ize our out­dated busi­ness and in­ter­na­tional tax sys­tem and put in place sound fis­cal pol­icy,” the group wrote.

Sen. Charles Schumer of New York, the Se­nate mi­nor­ity leader, and Sen. Ron Wy­den of Ore­gon, the rank­ing Demo­crat on the Se­nate Fi­nance Com­mit­tee, or­ga­nized the draft­ing of the letter, which lays out their pri­or­i­ties. Three Demo­cratic sen­a­tors who are up for re-elec­tion next year — Joe Don­nelly of In­di­ana, Joe Manchin of West Vir­ginia and Heidi Heitkamp

of North Dakota — did not sign the letter.

De­spite the Democrats’ over­ture, the par­ties have starkly dif­fer­ent ideas on how to change the tax code.

The Democrats are in­sist­ing that changes to tax laws not in­crease the tax bur­den on the mid­dle class and that the wealth­i­est 1 per­cent of tax­pay­ers not see their tax bills shrink.

They also are in­sist­ing that Repub­li­cans re­turn to “reg­u­lar or­der” and not at­tempt to push a tax bill through Con­gress us­ing bud­get-rec­on­cil­i­a­tion rules that re­quire only a sim­ple ma­jor­ity in the Se­nate.

Fi­nally, they want a re­write of the tax code that does not add to the deficit and that is not paid for with cuts to pro­grams such as Medi­care, Med­i­caid and So­cial Se­cu­rity.

Analy­ses of Repub­li­can tax plans have found that the changes the party has pro­posed would dis­pro­por­tion­ately ben­e­fit high-earn­ers. Thus far, Repub­li­cans re­main com­mit­ted to us­ing rec­on­cil­i­a­tion in hopes of get­ting leg­is­la­tion to Trump’s desk be­fore the end of the year.

“We will need to use rec­on­cil­i­a­tion be­cause we have been in­formed by the ma­jor­ity of the Democrats in a letter I just re­ceived to­day that most of the prin­ci­ples that would get the coun­try grow­ing again, they’re not in­ter­ested in ad­dress­ing,” McCon­nell said, leav­ing the op­tion for Democrats to sup­port a Repub­li­can-led tax plan. “So I don’t think this is go­ing to be 1986 when you had a bi­par­ti­san ef­fort to scrub the code.”

After the Trump ad­min­is­tra­tion and the top Repub­li­can tax ne­go­tia­tors in Con­gress re­leased a set of com­mon tax prin­ci­ples last week, Democrats warned that they were go­ing down the wrong path.

“We need sus­tain­able, com­pre­hen­sive tax re­form, not a mas­sive tax cut for the wealthy,” Wy­den said.

The White House in April is­sued a one-page out­line for how it wanted to re­work the tax code. That plan in­cluded cut­ting the cor­po­rate tax rate from 35 per­cent to 15 per­cent, sim­pli­fy­ing the taxes in­di­vid­u­als and fam­i­lies pay, elim­i­nat­ing the es­tate tax and jet­ti­son­ing the al­ter­na­tive-min­i­mum tax. White House of­fi­cials called for cut­ting many un­spec­i­fied de­duc­tions, but there has been fierce re­sis­tance to this from many out­side groups.

Democrats are skep­ti­cal of the el­e­ments of the White House plan, cit­ing the lack of de­tail and fears that the pro­pos­als would lead to huge re­duc­tions in fed­eral rev­enue. Out­side bud­get groups have spec­u­lated that Trump’s ideas would re­duce rev­enue by $5 tril­lion over 10 years, lead­ing to a ma­jor ex­pan­sion of the fed­eral debt.

Many Repub­li­cans have also ques­tioned whether it is pos­si­ble to make good on Trump’s prom­ises. Hatch, R-Utah, the Se­nate Fi­nance Com­mit­tee chair­man, in par­tic­u­lar has all but dis­missed the pos­si­bil­ity of reach­ing Trump’s goal to slash the cor­po­rate tax rate.

“It would be kind of mirac­u­lous if we could get it down to 25 per­cent or less,” Hatch said in a re­cent in­ter­view with Reuters. “I think the odds are, we’re go­ing to be lucky to get it down at all.”

As Repub­li­cans stum­ble with their leg­isla­tive agenda, Democrats have been work­ing to re­vamp theirs ahead of the 2018 midterm elec­tions.

Last week, con­gres­sional Democrats in­tro­duced an eco­nomic pro­gram called “A Bet­ter Deal” in hopes of steal­ing some of Trump’s pop­ulist lus­ter. The plan in­cludes rais­ing the min­i­mum wage and re­duc­ing drug prices.

GOP OUT­REACH

Repub­li­cans have said they are open to a bi­par­ti­san tax plan, but most of their dis­cus­sions on changes to the code have been among them­selves.

An­to­nia Fer­rier, a spokesman for McCon­nell, noted that in the state­ment Repub­li­can lead­ers re­leased last week, they invited Democrats to get in­volved.

“It bears re­peat­ing to our friends on the other side of the aisle that the Fi­nance Com­mit­tee is lead­ing the way on re­form­ing America’s out­dated tax code,” Fer­rier said.

The Trump ad­min­is­tra­tion has also been more vo­cal this week about the im­por­tance of at­tract­ing some Democrats to work on a tax plan.

At a gath­er­ing Mon­day of con­ser­va­tive ac­tivists spon­sored by Amer­i­cans for Pros­per­ity, the po­lit­i­cal net­work of the Koch brothers, Marc Short, the White House leg­isla­tive af­fairs di­rec­tor, made the case that Democrats need to be brought into the fold. The Repub­li­can ma­jor­ity in the Se­nate, he said, was too slim for party mem­bers to count only on one an­other.

“We ask your help, ac­tu­ally, reach­ing out to Democrats as well,” Short said, not­ing the ones who are com­ing up for re-elec­tion. “If they hear from their con­stituents that they need tax re­form, that’s go­ing to be a very strong sell­ing point.”

He noted that Democrats are fac­ing tough re-elec­tion bids in states such as Mon­tana, North Dakota, Ohio and In­di­ana. “We’re con­fi­dent right now that we will be able to earn their sup­port with our tax re­form agenda,” he said.

The White House hopes that Con­gress will be ready for a House vote in Oc­to­ber, fol­lowed by votes on a sim­i­lar Se­nate bill in Novem­ber.

“So that, I think, is an ag­gres­sive sched­ule, but that is our timetable,” Short said. He added that the pres­i­dent plans to do more trav­el­ing to pitch a tax over­haul than he did for the health care ef­fort.

Na­tional Eco­nomic Coun­cil Di­rec­tor Gary Cohn re­peated the timetable goals at the gath­er­ing of con­ser­va­tives, say­ing the ad­min­is­tra­tion and con­gres­sional law­mak­ers were in a “heavy drive to­ward tax re­form.”

Trea­sury Sec­re­tary Steve Mnuchin said at the event that the plan was to have a tax bill “start go­ing through the nor­mal process” be­gin­ning Sept. 1.

DEBT CEIL­ING LOOMS

Sep­a­rately Tues­day, talks be­tween the White House and the Se­nate’s top Repub­li­can and Demo­crat broke up Tues­day with no progress on rais­ing the coun­try’s debt ceil­ing, an im­passe that threat­ens a fi­nan­cial cri­sis if left un­re­solved.

The Se­nate and House have 12 joint work­ing days be­fore Sept. 29, when the Trea­sury Depart­ment says it would no longer be able to pay all of the gov­ern­ment’s bills un­less Con­gress acts. A de­fault would likely dis­rupt the world fi­nan­cial sys­tem, with a stock mar­ket crash and surg­ing in­ter­est rates that could send the econ­omy into a re­ces­sion.

Mnuchin has urged Con­gress for months to raise the debt limit, but the White House has lacked a uni­fied mes­sage and run into re­sis­tance on Capi­tol Hill.

Mnuchin met Tues­day morn­ing with McCon­nell and Schumer, search­ing for ways to raise the debt ceil­ing, but the gath­er­ing ended with­out any progress — or even a clear sense of what the law­mak­ers needed to de­liver votes to raise the limit.

The White House had im­plored Con­gress to raise the debt ceil­ing be­fore the Au­gust re­cess, but law­mak­ers showed lit­tle sign of en­gag­ing. The House of Rep­re­sen­ta­tives has al­ready left town and will not re­turn un­til after La­bor Day.

The U.S. gov­ern­ment spends more money than it brings in through rev­enue, cre­at­ing an an­nual deficit. The Trea­sury Depart­ment bor­rows money to cover that gap by is­su­ing debt, and it has al­ways paid back the bond­hold­ers on time. Ac­cord­ing to one mea­sure­ment, the gov­ern­ment now has close to $20 tril­lion in debt.

Con­gress has estab­lished a cap on the amount of money the gov­ern­ment can bor­row, and Mnuchin has told Con­gress that this cap must be raised by Sept. 29 to en­sure that the Trea­sury can con­tinue pay­ing all of the gov­ern­ment’s bills.

In­for­ma­tion for this ar­ti­cle was con­trib­uted by Alan Rappeport of

The New York Times; by Kelsey Snell and Damian Paletta of The

Wash­ing­ton Post; and by Saleha Mohsin, Justin Sink, Bill Allison and Ter­rence Dopp of Bloomberg News.

AP/J. SCOTT APPLEWHITE

The letter from Se­nate Mi­nor­ity Leader Charles Schumer and 44 other Se­nate Democrats calls for tax code changes far dif­fer­ent from GOP pro­pos­als.

AP/J. SCOTT APPLEWHITE

“We need sus­tain­able, com­pre­hen­sive tax re­form, not a mas­sive tax cut for the wealthy,” Sen. Ron Wy­den, the rank­ing Demo­crat on the Se­nate Fi­nance Com­mit­tee, said Tues­day in join­ing fel­low Democrats in a call for a bi­par­ti­san plan for over­haul­ing the fed­eral tax code.

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