Divisions threaten Trump’s hopes for tax code overhaul
WASHINGTON — The Trump administration is planning a much more assertive role in undertaking a broad overhaul of the tax code than it did during the failed effort to repeal and replace the Affordable Care Act, with some advisers working to craft a concrete blueprint for specific changes instead of letting Congress dictate details.
But there are divisions with congressional Republicans and within the administration over who should be in charge of the effort — and how ambitious to go with it, say administration officials and congressional aides.
Some GOP allies say they have already produced tax legislation and it would not make sense for the White House to produce its own.
Key division points could be about whether to seek a broad overhaul of the tax code or whether to limit it to more specific provisions — such as those affecting corporations — and whether such an initiative could increase the deficit without offsetting spending cuts or changes to tax policy. Also highly controversial is a proposal to impose a new tax affecting imports.
Within the administration, meanwhile, there are open questions about who will lead the charge on tax policy. The Treasury Department has close to 100 people now working on the issue, and Treasury Secretary Steven Mnuchin has signaled to lawmakers that he will be a point person in any negotiations. At the same time, some legislators say National Economic Council Director Gary Cohn has also emerged as a powerful force within the White House for overseeing economic policy and he could attempt to take the reins of what is likely to be the administration’s most important policy issue going forward.
There will be several key tests of the White House’s new approach. Congress must vote by April 28 to authorize new funding for federal agencies, or there will be a partial government shutdown.
If the Trump administration allows Congress to negotiate spending levels on their own, there could be another split between GOP centrists and conservatives. Another legislative setback could weaken the White House’s hand even further and embolden Democrats during the tax discussions.
That’s one reason the White House is trying to jump-start the tax negotiations. To take more of a leadership role, the administration officials are planning to issue a document that lays out the specific changes to the tax code it wants in any legislation, people familiar with the deliberations said, speaking on condition of anonymity because they weren’t authorized to speak publicly.
This approach reflects how the White House is adjusting to lessons learned from the humiliating intraparty collapse that occurred when House Republicans drafted a bill to repeal the health care law and then splintered into different factions. The White House needs Congress to achieve key legislative victories, but some key White House officials fear the agency shouldn’t be too deferential to the legislating process.
Trump believes a major overhaul of the tax code — complete with huge tax cuts for the middle class — will lead to more economic growth and hiring. They have also said the tax code is too complicated and full of loopholes for special interest groups that have lobbied for pet provisions over numerous years.
Several GOP congressional aides said a key issue in the discussions will be which White House official emerges as their main interlocutor.
Mnuchin has known Trump for 15 years but is a newcomer to government and has never negotiated even a simple piece of legislation before.
Overhauling the tax code is considered to be one of the most daunting legislative tasks, and it hasn’t been completed since 1986 despite efforts by lawmakers from both parties.
“We’ve been working diligently since the first days of this administration to develop a tax reform plan that helps achieve our goal of sustained economic growth, provides relief for middle class families and creates a more competitive business environment that supports greater job creation and reinvestment in the American economy,” Treasury Department assistant secretary for public affairs Tony Sayegh said in a statement.