The White House and GOP leaders plan to reveal new details of their plan to cut corporate and individual taxes the week of Sept. 25, and they are imploring lawmakers to reach a budget agreement that could smooth its passage, a key lawmaker told his colleagues Wednesday morning.
House Ways and Means Committee Chairman Kevin Brady (R-Tex.) told other House Republicans during a closed-door meeting that they needed to unify or the effort to cut taxes could fail, according to two people in the room.
That was a nod to the GOP’s aborted fight to replace parts of the Affordable Care Act earlier this year, during which the House and Senate tried to pass competing health-care bills, splitting the party and culminating in the effort’s failure. They want a much different outcome in their tax overhaul effort.
Brady told his colleagues that “the stakes are higher than ever that we deliver this year.”
Later in the morning, House Speaker Paul D. Ryan (R-Wis.) left open the possibility that the tax plan would cut government revenue — adding to the government’s budget deficit but potentially averting the need to make tough choices that could leave the legislation tangled in a political thicket.
“We want pro-growth tax reform that will get the economy growing, that will get people back to work, that will give middle-income taxpayers a tax cut, and that will put American businesses in a better competitive playing field so that we keep American businesses in America,” Ryan said at an event hosted by the Associated Press. “That is more important than anything else.”
Ryan, who had spent years blasting Washington policymakers for not doing enough to tackle the deficit and the debt, had earlier pledged a “revenue-neutral” tax bill — one that did not change the amount of anticipated federal income. But the failure of the GOP health-care legislation, which included a nearly $1 trillion revenue cut, has scrambled party leaders’ plans.
The White House released a one-page blueprint in April of the tax law changes it wanted to see, which included slashing the corporate tax rate, simplifying the tax brackets that individuals and families face, and eliminating the estate tax and alternative minimum tax, among other things.
In recent weeks, President Trump has referred publicly to “tax cuts” rather than the “tax reform” Ryan and Brady have discussed. In Wednesday morning tweets, Trump promised “the biggest Tax Cut & Tax Reform package in the history of our country” and urged Congress to move fast.
After the morning House GOP meeting, Brady said that GOP leaders are working with Trump and the White House on the tax bill. Some details will be included in the template set to be released later this month, but the text of the legislation will ultimately be crafted by the House Ways and Means Committee.
“The House will begin with the bill and we will continue to have work to do after the framework is laid out,” Brady told reporters. “The president is all in on this, and not just tax cuts, because that gives us a temporary stimulus, but redesigning the code so we can compete and win anywhere in the world.”
So far, the White House and GOP negotiators have areas of overlap but also areas of disagreement in their tax cut approach.
They each want to cut tax rates and simplify the tax code, but they have not agreed on how much. Republican leaders have dismissed concerns about the lack of information, saying that tax discussion is still in the early stages and details will be worked out by the relevant committees.
“It’s the beginning of a very important process to achieve, for the first time in a generation, overhauling our tax system and giving middle-class families a much-deserved break,” Ryan told reporters after the GOP meeting Wednesday. “The House, the Senate and the White House are starting from the same page and the same outline, and then the tax writers are going to take it from there on the details.”
Trump has proposed lowering the corporate tax rate from 35 percent to 15 percent, while House GOP leaders believe a rate in the low- to mid-20s is more politically viable. They are also debating whether to make the tax cuts retroactive so that they impact all income earned in 2017, or whether to make the changes prospective, impacting income earned in 2018 and beyond. They also haven’t agreed on what proportion of the changes should be temporary or permanent. Trump has promised the biggest tax cut in U.S. history.
But legislators have not revealed what tax breaks they would eliminate to offset the revenue that would be lost from the dramatic tax rate reductions, which some economists have said could reduce government receipts by more than $5 trillion over 10 years.
The framework to be released later this month would be the first time the White House, House and Senate GOP leaders have issued a joint blueprint for their tax plan. It will have some details but still leave plenty of decisions unresolved, as lawmakers are planning to debate and decide on changes during House and Senate votes.
Brady also reminded members that House and Senate budget writers will need to reach an agreement in mid-October on budget levels for 2018 to ease the path to passing an eventual tax bill. They need to pass matching budget resolutions to trigger a process called “reconciliation,” which allows them to pass changes to the tax code through a simple majority in the Senate.
Republicans control just 52 of the 100 Senate seats, and if they don’t have matching budget resolutions, they would need 60 votes in the Senate to pass a new tax plan. The White House has begun reaching out to key Democrats in an effort to bring them into the process, but their support is far from certain.
Asked whether Democratic votes would be needed, Ryan said Wednesday, “I would love to have the Democrats supporting and working with us in a constructive way on tax reform, but we’re going to do it no matter what.”
Many conservatives, however, have been unwilling to sign off on a budget until they see the full details of the tax proposal. Opponents of the budget plan say they went along with GOP leaders’ pleas this year that they had to pass a bare-bones budget to pave the way for repealing and replacing the Affordable Care Act. Conservatives went along, only to see leaders struggle and fail to follow through on that promise.
Rep. Dave Brat (R-Va.) was among those who said he is not willing to vote for a budget that could lead to another failure, this time on tax reform.
“We opened the budget gate for that to happen,” Brat said. “You get burned once. Second time around: Nope, put it in writing.”
Trump is scheduled to meet Wednesday afternoon with 13 House lawmakers — eight Democrats and five Republicans. The group includes Reps. Martha McSally (R-Ariz.) and Stephanie Murphy (D-Fla.), who hail from competitive swing districts, and moderate Reps. Kyrsten Sinema (D-Ariz.) and Collin C. Peterson (D-Minn.). Sinema is likely to launch a bid for a Senate seat against incumbent Jeff Flake (R-Ariz.).
On Tuesday night, Trump hosted six senators for a dinner that also focused on tax reform. Over beef medallions, Trump vowed that any tax overhaul would not focus exclusively on cutting taxes for high-income Americans, according to one senator in attendance.
“The president was adamant from the get-go: This is not a tax cut for the rich. And I repeat that: This will not be a tax cut for me or any rich people,” Sen. Joe Manchin III (D-W.Va.) said on MSNBC’s “Morning Joe.”
The White House said in a statement that the dinner demonstrated Trump’s “commitment to fulfilling his promises, and that includes producing tangible results on important issues like tax reform. The meeting was highly productive, and will spur constructive discussion moving forward.”
Ed O’Keefe contributed to this report.