Echoing Reagan, Trump pushes Congress to act swiftly on tax reform

Pushing the House to take another step this week on the road to major tax reforms, President Donald Trump used an op-ed in USA Today to argue that GOP tax plans will “ignite America’s middle class miracle once again,” as he channeled former President Ronald Reagan, saying with “tax reform, we can make it morning in America again.”

“Revising our tax code is not just a policy discussion — it is a moral one, because we are not talking about the government’s money – we are talking about your money, your hard work,” the President wrote.

Mr. Trump meanwhile used a conference call with House Republicans on Sunday to make much the same argument – that now is the time for action on tax reform.

Here is where things stand on Capitol Hill when it comes to GOP plans to move legislation on tax reform.

1. The budget comes first for the GOP. Before they can focus solely on tax reform, Republicans must approve a non-binding budget outline for 2018, which would authorize expedited action on a tax bill – without the threat of a Senate filibuster. The Senate approved their plan last Thursday, and now the House seems ready to accept that this week, though the budget details are sure to give some GOP fiscal hawks some heartburn, as the plan would not ensure a balanced budget within ten years. But GOP leaders are basically telling rank and file Republicans that now is the time for tax reform, and that there is no use in getting caught up in a battle over budget cuts. Look for the House to vote later this week.

2. But ‘what if’ the House refuses to go along? If enough Republicans refuse to vote for the Senate-passed budget, then there would have to be formal House-Senate negotiations, which could take some time to hash out a deal on the budget resolution for 2018. That would obviously delay work on tax reform, and make it that much more difficult to swiftly get a tax bill moving on Capitol Hill. It seems unlikely that will happen, as more conservative lawmakers have been assured they will get votes on measures dealing with budget savings. But it is safe to say that the ‘normal’ Republican focus on budget deficits has melted away now that the GOP is in charge of the White House and Congress. Here is the sales pitch being made by the Republican Study Group, which says Speaker Paul Ryan has promised votes on some budget-related bills.

3. Let’s assume the House approves the budget – then what? If the House heeds the advice of President Trump, and votes for the Senate-passed budget outline this week, then the focus will shift to the tax-writing committees of the House and Senate – the House Ways and Means Committee, and the Senate Finance Committee, as they produce an actual tax reform bill. Remember – we don’t have a bill as yet from the White House – just some bullet points. In 1985, President Reagan sent Congress an actual 489 page bill as a starting point. President Trump’s bullet points are just a small piece of a much larger bill that is expected to be released by Republicans, as the scrums of reporters grow each day for key lawmakers, like Sen. Orrin Hatch (R-UT), the Chairman of the Senate Finance Committee.

4. What’s the possible timing on tax reform? Ask veterans of Capitol Hill what they think about a GOP tax plan, and they cannot imagine it getting done this year (or even at all). But the White House and GOP leaders in Congress keep talking about doing it fast, maybe having a vote in the House before a Thanksgiving break, and a Senate vote in December. If we go back and look at the tax reform timeline in the Reagan Administration, it took a lot longer. The House Ways and Means Committee started work on a draft bill in late September 1985 – it took two months to finish. The deal almost fell apart in December, as the House voted to approve that plan just before Christmas. In the Senate, it took six months to get the bill out of committee and to a vote, in June 1986. In other words, Republicans think they can move at legislative warp speed compared to thirty one years ago in the Congress.

5. Remember, there are a lot of details involved. If you are going to do just tax cuts, that’s pretty straightforward. But if you are going to try to do sweeping tax reform – for both the individual and corporate sides – that is very complicated. Just look back at 1986, and you can see that bill is filled with rifle-shot provisions intended to help just one company or group. Back then, there was no way to get this out to the voters. But with the internet and social media, these types of provisions will get a lot of attention and scrutiny.

6. Trump inserts himself on the details. Evidently, the President was watching television on Monday morning, and saw a story about possible changes to 401(k) savings plans. Mr. Trump immediately declared that nothing would change. We don’t know what the bill looks like, but that may not be what Congressional tax-writers were planning. This is a perfect example of how the President can pull the rug out from under tax-writers at any minute in the Congress – since he has not sent lawmakers a detailed bill, just some bullet points. Remember during the health care debate, when the President said a House-passed health bill was ‘mean,’ and that it needed changes.

7. One more thought on timing – from 1986. As I write this on October 22, it is 31 years to the day that President Reagan signed the Tax Reform Act into law. But I clearly remembered the final agreement being struck in August – and the vote taking place soon after Labor Day. My memory was correct. So, why did it take another month for the President to sign the bill into law? For one, there were a number of errors in the final agreement, which needed to be fixed. So, on September 25, 1986, the House passed H. Con. Res. 395, to make “technical and clerical” corrections in the final bill. The Senate took that up a few weeks later, and made some changes, which were sent back to the House. The House made a few more changes. But no final resolution was agreed to, as the Congress adjourned for the year on October 18, 1986. So, four days later, the President signed the bill into law anyway. Want to do some more reading about what happened in 1986? Here you go:

And by the way, that explanation of the 1986 Tax Reform Act runs almost 1,400 pages. Happy reading!

Reader Comments 0

0 comments