President Donald J. Trump hosts a lunch with Senate Majority Leader Mitch McConnell, R-Kty., (left) and Speaker of the House Paul Ryan, R-Wis., (right) at the White House in Washington, U.S. March 1, 2017. (Photo: Reuters)
President Donald Trump is hosting congressional leaders at the White House Tuesday to discuss his legislative agenda for the remainder of the year. The President will put an emphasis on his desire to sign tax reform before the end of the year, and repealing ObamaCare and Dodd-Frank will also be discussed.
While the White House has taken unprecedented action to move President Trump’s agenda forward, the Republican-controlled Congress has struggled to find its governing footing. Under the leadership of House Speaker Paul Ryan, R-Wis., and Majority Leader Mitch McConnell, R-Kty., the upper and lower chambers have not only found themselves on different pages with the White House but also with each other.
The House passed the American Health Care Act (AHCA) on May 4 after weeks of negotiations and direct presidential involvement. Then, Leader McConnell established working committees to basically start all over. Meanwhile, individual insurance markets in Virginia, West Virginia, Iowa, Nebraska and other states have either collapsed or on the verge of collapsing under the weight of insolvency created by ObamaCare, the Affordable Care Act (ACA).
President Trump will make it very clear that he wants to sign tax reform by the fall, which is widely expected to significantly boost economic growth. While the jobs and labor market have gained steam, the U.S. economy, poised to explode, is being hindered by uncertainty caused by congressional inaction.
White House legislative affairs director Marc Short told reporters the administration is working together with House and Senate leaders to put together a single tax reform package that lawmakers would take up after Labor Day.
“We believe that the economy needs to get spurred quickly, and we want to make sure there are sufficient tax cuts,” Mr. Short said. “In order to jump-start the economy, we need to cut taxes for both businesses and individuals.”
Mr. Short added that the White House is pushing Speaker Ryan and Leader McConnell to repeal and replace ObamaCare by the end of July, which would provide a big buffer on deficit spending to offset static scoring methods used by the Congressional Budget Office (CBO) to derive cost. He also said the Trump Administration wants Congress to raise the nation’s debt ceiling before lawmakers leave for August recess.
But differences remain on tax reform, even though they aren’t as frequently cited as those surrounding healthcare reform.
President Trump wants cuts for both individuals and business, proposing to take the corporate tax rate down from about 35% to 15%. However, the House plan is looking at cutting the corporate rate to 20%, doesn’t put as much emphasis on individuals, and wants to offset cost through a Budget-Adjustable Tax (BAT).
Leader McConnell has said a BAT likely could not pass the Senate, and Mr. Trump will not accept a tax reform that ignores individuals. The Senate leader also put a “budget neutral” standard on tax reform, which the White House places secondary to achieving economic growth. The CBO has a terrible track-record on scoring the budgetary impact on tax cuts, including the Reagan tax cuts that resulted in more revenue to the U.S. Treasury.
When asked about budget neutrality, Mr. Short said “our greater priority is to provide growth.”
“Right now, we want it to be revenue neutral,” he said. “We are still supportive of tax reform, but I am also saying to you that what we believe is most important to get the economy going is a tax cut.”
