President Trump on Tuesday made a personal appeal from across the globe to ask moderate Senate Democrats to support the emerging Republican tax plan, saying he has explored the impact of the plan on his personal finances and believes it won’t help the rich.
At a meeting of administration officials and moderate Democratic Senators, National Economic Council Director Gary Cohn pulled out his cellphone and took a call from Trump, who is traveling in Asia this week, according an account of the meeting from Sen. Sherrod Brown (D-Ohio) — one of the Democrats gathered for a meeting organized by Sen. Joe Manchin III (D-W.Va.) to hear about the GOP plan.
Trump pitched the plan as a benefit to the middle class that comes at the expense of the rich — an assessment at odds with independent tax experts who have analyzed the bill and concluded the bulk of its benefits go to corporations and the wealthy.
Trump told the senators that he has spoken to his own accountant about the tax plan and that he would be a “big loser” if the deal is approved as written, according to multiple people in the room who heard the president on the phone.
“The deal is so bad for rich people, I had to throw in the estate tax just to give them something,” Trump said, according to the people, who spoke on the condition of anonymity to share details of the meeting.
The nonpartisan Joint Committee on Taxation, Congress’ tax policy analyst, found the House GOP bill as written would broadly cut taxes, but that the bulk of the benefits would go to corporations and the very wealthy. The analysts also concluded that families earning between $20,000 and $40,000 a year and between $200,000 to $500,000 would, on average, pay more in individual income taxes in 2023 and beyond.
Several Democrats in attendance once again presented proposals to be included in the tax plan, as they have in previous meetings with Trump, senior administration officials and GOP congressional leaders. Senate GOP leaders are slated to release a bill Thursday that would need support from their party’s moderates to pass.
Along with Brown and Manchin, the meeting was attended by Democratic Sens. Sherrod Brown (Ohio), Ron Wyden (Ore.), Michael F. Bennet (Colo.), Gary Peters (Mich.), Maggie Hassan (N.H.), Christopher A. Coons (Del.), Joe Donnelly (Ind.), Thomas R. Carper (Del.) and Heidi Heitkamp (N.D.). Sen. Angus King, a Maine independent who caucuses with Democrats, also attended.
“It was very good, very constructive. It’s great to have conversations,” Cohn said as he left the meeting.
Manchin described it as a “first supper,” while Carper called it “only the beginning” of talks he expects to continue in the coming days.
“If Gary Cohn and Marc Short were left to their own devices and their own instincts, we could come pretty close to hammering something out,” Carper said.
“This effort to just jam it through, straight Republican votes on an accelerated scheduled will lead to failure. But in that failure, lies opportunity and then we’ll have a chance to do it right,” he added.
House Republicans, meanwhile, faced new pressure from conservatives to make changes to their sweeping tax plan, days before it is set to go to the House floor.
The president of the Club for Growth, an influential group promoting tax cuts, issued a statement Tuesday saying parts of the House bill “fails the pro-growth test,” while social conservative groups pushed lawmakers to restore a tax credit for families who adopt children.
“All in all, this bill must be changed if Republicans intend to keep their promise of real pro-growth, job-creating tax cuts,” Club for Growth’s president, David McIntosh, said, advocating for changes that would further reduce the tax bills owed by the wealthy.
The group is calling on lawmakers to the cut tax rate on income over $1 million, which the House bill as currently written would leave unchanged at 39.6 percent. The group also wants the bill’s authors to make it easier for businesses to claim a lower 25 percent income tax rate, as well as to speed up their planned repeal of the estate tax, in a bid to promote economic growth.
Meanwhile, groups including the National Right to Life Committee, Focus on the Family and the U.S. Conference of Catholic Bishops mobilized to restore an existing tax credit that’s worth up to $13,570 for families who adopt children.
A petition circulated Tuesday to members of March for Life, a leading antiabortion group, said that the loss of the adoption tax credit would “adversely affect families seeking to adopt.”
“Adoption is a critically important pro-life effort, and the adoption tax credit is a significant government policy to encourage and enable it,” the petition said.
The push from the right adds new complications for House Ways and Means Committee Chairman Kevin Brady (R-Tex.), the House’s top tax writer and the author of the GOP tax bill released last week, as he moves the legislation toward a planned floor vote next week.
The proposed changes would further decrease government revenue and add to the federal deficit. Brady’s bill is already close to proposing $1.5 trillion in new deficit spending, a limit GOP tax legislation can’t go past if Republicans are to use the special process they need to get the bill through the Senate over Democratic opposition.
The nonpartisan Joint Committee on Taxation estimated this year that the adoption tax credit would cost $2.2 billion between 2016 and 2020. The changes advocated by the Club for Growth could cost much more — tens, if not hundreds of billions of dollars.
To accommodate the requests, Brady would have to find new tax revenue elsewhere, possibly by shrinking the size of provisions in the bill aimed at benefiting middle- and working-class households.
In a morning interview with conservative talk show host Hugh Hewitt, Brady said that changes to help adoptive families are under discussion but also argued that the GOP bill as written offers broad benefits to adoptive families.
“We know how important this is, but it doesn’t help a lot of families,” said Brady, the father of two adopted sons. “Do we want to stick with the old credit, which leaves fewer and fewer people behind, and helps one time in your life, or do we go with the tax cuts that provide about $2,000 a year, and the new family credit that helps you with your child every year of their life?”
Brady said he was still considering another conservative demand — repealing the Affordable Care Act’s individual mandate to purchase insurance. That move, supported by President Trump, would please the health care law’s opponents and could generate hundreds of billions of dollars to offset cuts elsewhere. But it would create a major new political hurdle for the bill, and Brady has thus far declined to include it in bill.
Brady said Tuesday that the mandate’s repeal is an “area that we are looking at carefully.”
Senate Republicans say they expect to introduce their tax bill on Thursday, as Republicans in both chambers push to pass legislation by Thanksgiving with the eventual goal of sending a unified bill to Trump’s desk by year’s end.
Undermining the Affordable Care Act — often referred to as “Obamacare” — through a tax overhaul would probably draw the same type of opposition that several earlier repeal efforts did earlier this year and kill any attempt at a bipartisan bill.
Senate Republican leaders face a challenge in getting legislation through their chamber, as, to pass, a bill would require support from nearly all 52 GOP senators. That means finding a measure that wins over moderates, does enough for hard-line conservatives and — barring any Democratic support — loses support from no more than three Republicans senators in the process.
Brown said he mentioned the proposals he first presented to Trump at a dinner last month: One would expand access to the Earned Income Tax Credit and the Child Tax Credit, while the other would give tax credits to companies that pay workers at least $15 an hour and offer health-care and retirement benefits.
“The president said he liked it,” Brown told reporters. “We said, ‘Put this kind of stuff in the bill, and you’ll get 70 or 80 votes.’ We want to participate. We don’t want to see a bill come out Friday and do a markup on Monday and don’t actually hear people and write in the back room. The president didn’t comment on that, but he said he wants to help people in the middle class and make it bipartisan.”
If such proposals aren’t included in the final legislation, “I just wonder what this is all about,” Brown said.
Brady on Monday unveiled fresh changes to the Tax Cuts and Jobs Act, the $1.5 trillion tax cut that represents the cornerstone of the Republican economic agenda. Those changes preserved a key tax break for child care and addressed various business concerns. But it left other controversial parts of the plan intact — such as a proposal to scale back the long-standing mortgage interest deduction.
Brady told Hewitt on Tuesday that he was not inclined to change the mortgage interest provision — which would cap the amount of interest a taxpayer could deduct for a primary residence and eliminate it entirely for a second home — and played down the potential economic impact of the change. Trade associations representing home builders and real estate agents are warning that the provision could cause home prices to fall and dampen a major driver of the American economy.
The GOP tax bill, Brady said, would stimulate the economy generally, including the real estate sector: “You get home values up, you get more sales, you get better prices when the economy is stronger,” he said. “This tax plan is all about getting growth going. That is good for home builders. It’s good for homeowners like you and me.”
Meanwhile, the Ways and Means Committee continued a marathon session to debate the bill Tuesday, considering a series of Democratic amendments meant to highlight what they see as shortcomings of the bill. The “markup” is expected to last till Thursday, setting up a planned floor vote in the House next week.
An amendment offered by Rep. Earl Blumenauer (D-Ore.) would roll back the Republican plan after two years if promised economic growth does not materialize and the federal budget deficit continues to expand. The GOP’s promises of a deficit-neutral tax plan, he said, are based on “unicorn dust and magic beans.”
“There’s no excuse for us going down that path of escalating debt,” Blumenauer said. “All I am suggesting is that we put in a fail-safe mechanism.”
But Republicans blasted the amendment as a poison pill that would keep middle-class American families from gaining tax relief under the bill.
“Most Americans are having a tough times making ends meet, and they are sick and tired of hearing people talk about a deficit, when most of the people sitting here talking about the deficit have been sitting here for 20 years and have allowed the deficit to occur and have done nothing about it,” Rep. James B. Renacci (R-Ohio) said.
According to the nonpartisan Joint Committee on Taxation, the GOP bill is expected to add nearly $1.5 trillion to the federal deficit over the course of a decade. An independent analysis from the conservative-leaning Tax Foundation released Friday found that the bill would create jobs and generate economic growth but would still add $989 billion to the deficit.
But Renacci insisted the fiscal effects of the tax cut should be set aside: “It’s not the revenue side, it’s the spending side,” he said. “The driver of our debt is our spending.”