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President Trump urges quick action on a tax plan still under construction

  • Author: Alan Rappeport, The New York Times
  • Updated: September 13
  • Published September 13

President Donald Trump speaks during a bipartisan meeting with lawmakers regarding tax policy, at the White House in Washington, Sept. 13, 2017. From left: Rep. Susan Brooks, (R-Ind.), Rep. Josh Gottheimer (D-N.Y.), Trump, Rep. Tom Reed (R-N.Y.) and Rep. Stephanie Murphy (D-Fla.). In the foreground at center is John Kelly, the White House chief of staff. (Doug Mills/The New York Times)

WASHINGTON — President Donald Trump is doubling down this week on his bid to remake the tax code, meeting with Democrats, tying tax legislation to hurricane recovery, and dispatching his economic team to Capitol Hill almost daily to prod lawmakers into action.

But he is bringing to the game a relatively weak team — a chief economic adviser whom he has openly disparaged and a Treasury secretary whose counsel he has dismissed — and is promoting quick passage of a new tax code that has yet to be written as members of his party bicker over the details.

The urgency was evident on Wednesday, as Trump urged Congress to "move fast," and Republican leaders seemed ready. Rep. Kevin Brady of Texas, chairman of the House Ways and Means Committee, told House Republicans that the administration and congressional Republicans would release a detailed framework of their plan during the week of Sept. 25, with the goal of taking up legislation in late October.

But Republicans remain divided on key details: whether they can meet Trump's demand for a 15 percent corporate tax rate; which small businesses and partnerships would qualify for a new low business tax rate; whether tax cuts in the package should be paid for by closing loopholes; and whether hedge fund and private equity managers would continue to see their huge fees taxed at the low rate of capital gains instead of at income tax rates.

Democrats have said they will reject any package that they see as skewed toward the rich, especially if it repeals the estate tax, as the president wants.

Then there is a tough interim step: Republicans must pass a budget resolution to unlock the procedural tool that would let them move a bill through the Senate with a simple majority. Congressional leaders are bracing for a fight over that budget blueprint.

But Trump made clear on Wednesday that he was ready to deal. At a bipartisan gathering of House members at the White House, the president said that he wanted a tax bill that benefited the middle class. He tried to ease concerns that he was preparing to give a windfall to the rich.

"The rich will not be gaining at all with this plan," Trump said. "I think the wealthy will be pretty much where they are."

He added about their tax rates, "If they have to go higher, they'll go higher."

Rep. Kurt Schrader, D-Ore., emerged from the meeting encouraged.

"I took that as a signal that he's not concerned about the upper 1 percent or 5 percent, he's concerned about hopefully middle-class Americans," he said. "Proof's in the pudding. We'll see how it comes out."

That gathering was one of a series of bipartisan efforts to push the tax overhaul. He held a dinner Tuesday night with senators from both parties where tax matters dominated the conversation. On Wednesday night, the president dined with Congress' top Democrats, Sen. Chuck Schumer of New York and Rep. Nancy Pelosi of California.

To old hands of America's biggest tax policy battles, the Republicans' accelerated timeline appears virtually impossible. One big reason: the diminished standing of Gary D. Cohn, director of the president's National Economic Council, and Steven Mnuchin, his Treasury secretary. That diminution is largely of the team's own making; Trump has let it be known that Cohn is in disfavor for publicly disparaging the president's response to violent racists in Charlottesville, Virginia, and Mnuchin suffered public scorn after jetting to Kentucky on a government plane with his wife to witness the solar eclipse.

Their stature stands in contrast to the experienced players who shepherded the last major tax overhaul in 1986.

Treasury Secretary Steven Mnuchin, center, with Gary Cohn, chief White House economic adviser, right, after meeting with Senate Majority Mitch McConnell (R-Ky.) on Capitol Hill in Washington, Sept. 12, 2017. (Al Drago/The New York Times file)

"Things are quite anarchic across the board right now, and that's not helping at all," said C. Eugene Steuerle, who served as the coordinator of the Treasury Department's tax reform effort from 1984 to 1986.

Last week, Trump blindsided Mnuchin during negotiations over lifting the government's statutory borrowing limit — an issue that is central to the job of Treasury secretary. Mnuchin was pushing for an 18-month extension of the debt limit before Trump interrupted him and sided with Schumer and Pelosi, who wanted a three-month extension.

The White House press secretary, Sarah Huckabee Sanders, insisted this week that Trump had "confidence" in Mnuchin, but the rift over the debt limit left many observers wondering if his public stances on taxes could still be trusted.

"Mnuchin might be the smartest man in the world, but he doesn't have any substantive tax credentials other than being a businessman," said Ronald A. Pearlman, the Treasury Department's assistant secretary for tax policy in the mid-1980s. "In terms of conceptualizing a new corporate tax system, I can't imagine he brings a lot to the table."

In public, those who have been working closest with Cohn and Mnuchin have been quick to defend them after slights from the president.

"They've been terrific on tax reform," Brady, the Texas congressman, said. "They bring policy expertise to the table within their agencies, they bring real-life expertise to the table."

Lawmakers from both parties have invoked President Ronald Reagan's 1986 tax act as a model of comprehensiveness and bipartisanship that they should be striving for, but those who lived through that experience say that bold promises of rewriting the tax code in the next few months sound naive.

Reagan's tax act was two years in the making and in many ways was a response to the ill effects of the tax cuts that he had passed in 1981. His Treasury Department released hundreds of pages of policy details before Congress began bipartisan brokering.

Former Sen. Robert Packwood, R-Ore., who was the chairman of the Senate Finance Committee in 1986, recalled the close relationship between Reagan; James A. Baker III, his Treasury secretary; and Richard G. Darman, who was Baker's deputy.

"He had a lot of government experience, and he was sensational at being able to speak for the administration," Packwood said of Darman. "I don't know if there's an insider in Treasury like a Darman that everybody would have faith in on the congressional side."

To be sure, there were clashes and second-guessing within Reagan's team and with Congress in the early 1980s. The fact that those issues were overcome suggests it is not too late for the Trump economic team to find its footing.

Pearlman noted that it remains early in the process, and that Mnuchin and Cohn remain major players. Moreover, the daily distractions are not likely to faze those who are crunching the numbers.

"My guess is that the staff will work as if nothing is going on," Pearlman said.

Some Democrats said they had been impressed by the intelligence and business perspective of Trump's economic advisers, despite their occasional bursts of New York bravado. And Democrats who attended Wednesday's White House meeting credited Trump for his professed openness to working with them.

Still, Rep. Peter Welch, D-Vt., who went to the meeting, worried that their input was coming too late in the process.

"The first bipartisan meeting where tax reform was a serious topic was the one convened by President Trump. That was a good thing," Welch said. "But I don't think it is going to cure the partisan nature of the secret process that has been long underway."

Rep. Richard E. Neal of Massachusetts, the ranking Democrat on the Ways and Means Committee, recalled Cohn's coming to his office this year and vowing to rip the tax code up by its roots and revolutionize the system.

"I said to him: 'I want you to know something. Six secretaries of the Treasury have sat there and told me exactly what you've told me,'" Neal said.

Thomas Kaplan and Nicholas Fandos contributed reporting.

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