After triumphal rollout for tax reform, GOP faces the reality of delivering – Politico
The GOP’s tax-reform efforts got a jolt of momentum this week, but Republicans also are getting a fresh reminder of how hard it will be to write a bill that makes it to President Donald Trump’s desk this year.
They will have a number of hurdles to grapple with in the coming months, including selling their new plan to the public, fleshing out the policy, wrangling the rank and file and dealing with the myriad competing interests that will deluge the Hill.
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Then there’s the Senate, the graveyard of Republicans’ efforts to repeal and replace Obamacare. Senate Finance Chairman Orrin Hatch (R-Utah), asked about the biggest challenges in turning the plan GOP leaders released this week into legislation, deadpanned: “Fellow senators.
“It’s mostly all complicated,” Hatch added, later noting: “I want it to be the right kind of a bill. I don’t want it to be some piece of crap, which we’re so used to around here.”
The first challenge: passing a budget. Republicans in both chambers are trying to line up votes on a budget next week, a crucial and difficult step for tax reform that they’ll have to tackle as they start wading into member concerns about what tax breaks might be on the chopping block.
The Senate Budget Committee looks ready to consider a framework that makes room for $1.5 trillion in tax cuts, while the full House is expected to take up its budget after months of delay in searching for the votes. If and when both chambers pass a budget, the House and the Senate would then have to reconcile their differences over spending targets and other potential obstacles.
Even if the chambers clear the budget hurdle relatively fast, some GOP lawmakers are already voicing concerns about how to fill in the specifics of the plan, and interest groups are already mobilizing to protect or advocate for certain provisions.
Plus, Hatch and other members of the Big Six who helped draft the plan have had to defend their product, which Trump sells as focused on the middle class, against intense Democratic attacks that it’s merely a gift to the rich.
Gary Cohn, the director of the National Economic Council and a Big Six member, deflected questions Thursday about whether a plan that repealed the alternative minimum tax — meant to ensure that upper-income Americans can’t escape taxes altogether — and cut taxes on businesses that pay through the individual system would help Trump.
Americans are worried about “their own financial situation,” Cohn said at a White House briefing, hours after saying on ABC’s “Good Morning America” that “I can’t guarantee” that some middle-class people wouldn’t get a tax hike under the framework.
For his part, Trump has been promising a massive tax cut for everyone at various rallies around the country. But with Democrats accusing Republicans of not caring about deficits caused by tax cuts, Treasury Secretary Steven Mnuchin said several times Thursday that the GOP plan would eventually pay for itself — and maybe then some.
“We think there will be $2 trillion of growth,” Mnuchin, another Big Six member, said on Fox Business. ”So we think this tax plan will cut down the deficits by a trillion dollars.”
Liberal groups also have been saying for days that it’s laughable to think that the GOP plan, which also proposes cutting the corporate rate to 20 percent, cutting the top individual rate to 35 percent and repealing the estate tax, would be better for the middle class than for the wealthy.
Republicans are considering putting another income tax bracket on top of the 35 percent rate. But they’ve also drawn criticism from Democrats for proposing to raise the bottom tax rate for individuals from 10 percent to 12 percent, a charge that rank-and-file GOP lawmakers complained needed a better response during a half-day tax reform retreat on Wednesday.
House Ways and Means Chairman Kevin Brady (R-Texas) called the criticism “nonsense” this week, insisting that taxpayers who currently pay 10 percent would pay nothing under the GOP plan. “The tax elevator goes down at every level,” he said Wednesday.
He added in several speeches on Thursday that big-name Democrats like former Vice President Joe Biden, former Vice President Al Gore and former Secretary of State John Kerry all voted to take the lowest bracket to zero in the 1986 tax overhaul.
But perhaps the biggest challenge top Republicans will face on taxes is trying to get rid of tax breaks that have defenders on and off the Hill, and navigating all the various policy priorities pushed by groups around Washington.
“There’s a constituency for every single one of them,” Sen. Bob Corker (R-Tenn.) maintained, predicting that a GOP tax plan would need to kill around $4 trillion worth of tax incentives to break even.
The National Federation of Independent Business, a group that backs the “pass-through” businesses that pay through the individual tax system and has longstanding ties to the GOP, even had to be talked out of publicly criticizing the Republican framework, according to several people with knowledge of the discussions.
NFIB has long advocated for pass-through businesses to pay as close to the corporate rate as possible. The plan would set their rate at 25 percent, and the corporate rate at 20 percent.
“Our policy goals haven’t changed, and we’ll be working with Congress and the White House to secure them in the final bill,” said Jack Mozloom, a spokesman for NFIB, adding that the group’s statement on the GOP outline “made it clear that we wanted more details and that we will remain engaged.”
The White House has suggested in closed-door meetings that it’s open to taxing contributions to 401(k) savings plans up front and cutting the cap on the mortgage interest deduction in half. Some housing groups are already worried that the more robust standard deduction proposed by Republicans would amount to a backdoor repeal of the mortgage tax break.
The rush of lobbying on tax reform is to be expected, given how many potential losers there are when tax breaks go by the wayside. But outside groups face a risk if they’re too aggressive in their efforts, warned Grover Norquist, the president of Americans for Tax Reform.
“If you sit on the side and throw rocks, you are at the back of the line,” he said.
Still, Republican tax writers said those issues would all be worked through in time, even as senior administration officials and congressional leaders still say a tax overhaul can be signed into law this year.
“Look at the totality of the package,” said Rep. Vern Buchanan (R-Fla.). “More of the blanks are going to get filled in the next week or so.”