Deficit a stick­ing point in Repub­li­cans’ bud­get plan

GOP has promised re­write will be “rev­enue neu­tral.”

Star Tribune - - WASHINGTON - By MARCY GOR­DON and AN­DREW TAY­LOR As­so­ci­ated Press

WASH­ING­TON – Se­nate Repub­li­cans are strug­gling with how many bil­lions of dol­lars Pres­i­dent Don­ald Trump’s tax code over­haul will add to the deficit as they work on a GOP bud­get plan that’s a pre­req­ui­site to any far-reach­ing change in the na­tion’s tax sys­tem.

Se­nate Ma­jor­ity Leader Mitch McCon­nell and Repub­li­can mem­bers of the Bud­get Com­mit­tee met Tues­day with two top Trump ad­min­is­tra­tion of­fi­cials to make progress on forg­ing the bud­get plan, which is re­quired to stave off po­ten­tial Demo­cratic block­ing tac­tics and pass the sub­se­quent tax bill only with GOP votes.

The as-yet-un­drafted bill to over­haul the tax code is the top pri­or­ity for Trump and Repub­li­cans af­ter the col­lapse of their ef­fort to dis­man­tle for­mer Pres­i­dent Barack Obama’s health care law. Trump’s top eco­nomic ad­viser, Gary Cohn, and Trea­sury Sec­re­tary Steven Mnuchin met with McCon­nell, R-Ky., and bud­get panel mem­bers.

“From my stand­point, let’s set our­selves up for suc­cess on tax re­form,” Sen. Ron John­son, R-Wis., a mem­ber of the com­mit­tee, said be­fore the meet­ing.

Mnuchin sig­naled ahead of the meet­ing that the ad­min­is­tra­tion would be open to changes sought by law­mak­ers to im­prove the chances for pas­sage of a tax over­haul this year. In an in­ter­view with CNBC, Mnuchin said the ad­min­is­tra­tion would “ab­so­lutely” con­sider mak­ing tax cuts retroac­tive to the start of this year if over­haul leg­is­la­tion didn’t pass un­til 2018.

In ad­di­tion, the ad­min­is­tra­tion would con­sider in­clud­ing an in­fra­struc­ture spend­ing bill as part of the tax leg­is­la­tion,

As law­mak­ers worked on a bud­get plan on Capi­tol Hill, Pres­i­dent Don­ald Trump wel­comed Malaysian Prime Min­is­ter Na­jib Razak to the White House. Trump praised Razak for his coun­try’s in­vest­ments in U.S. com­pa­nies and thanked him for help­ing to fight the Is­lamic State of Iraq and Syria.

Mnuchin said.

“This is a pass-fail ex­er­cise,” Mnuchin said, in­di­cat­ing that the crit­i­cal goal was to en­act leg­is­la­tion. “Pass­ing tax re­form, which hasn’t been done in 31 years, that is a win,” he said.

Capi­tol Hill Repub­li­cans

have promised that the tax re­write will be “rev­enue neu­tral” and not add to the na­tion’s $20 tril­lion-plus debt, but they are in fact count­ing on bud­get ma­neu­vers to find hun­dreds of bil­lions of dol­lars to help max­i­mize cuts to cor­po­rate and in­di­vid­ual tax rates. For starters, they are go­ing to as­sume the tax leg­is­la­tion will mean higher eco­nomic growth and greater fu­ture tax rev­enue.

Un­der­scor­ing the pres­i­dent’s de­sire for tax leg­is­la­tion, Trump hosted a bi­par­ti­san group of se­na­tors for din­ner at the White House on Tues­day, in­clud­ing a trio of mod­er­ate Democrats from states Trump won last Novem­ber and whose votes he’d like to have on a tax bill.

Demo­cratic Sens. Joe Manchin of West Vir­ginia, Heidi Heitkamp of North Dakota and Joe Don­nelly of In­di­ana were joined by Repub­li­can Sens. John Thune of South Dakota, Pat Toomey of Penn­syl­va­nia and Or­rin Hatch of Utah, the White House said.

Manchin, Heitkamp and Don­nelly are the only Demo­cratic se­na­tors who did not sign a let­ter ad­dressed to Repub­li­can lead­ers and Trump that said the Demo­cratic cau­cus would not sup­port a tax over­haul that cuts taxes for the “top 1 per­cent” or adds to the govern­ment’s $20 tril­lion debt.

Trump pitched Heitkamp on the over­haul at an event in her home state last week, call­ing her a “good woman.” Heitkamp said she needs to see the de­tails first.

House ac­tion has been held up by a bat­tle be­tween mod­er­ates and con­ser­va­tives over whether to pair spend­ing cuts with the fil­i­buster-proof tax mea­sure. Se­nate ac­tion has been on hold while the House strug­gles.

On the bud­get panel, Sen. Bob Corker, R-Tenn., is hop­ing to limit the deficit cost of the tax ef­fort, while Toomey is on the other end of the spec­trum fa­vor­ing more ro­bust deficit­fi­nanced tax cuts. GOP lead­ers have asked them to try to craft an agree­ment among the 12 bud­get panel Repub­li­cans. Any Repub­li­can de­fec­tion on the bud­get plan would dead­lock the nar­rowly di­vided com­mit­tee.

EVAN VUCCI • As­so­ci­ated Press

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