By Damian Paletta and John Wagner,
SPRINGFIELD, Mo. — President Trump on Wednesday called on Congress to pass sweeping tax cuts he said would unleash the economy and lead to higher wages for all Americans, leaning hard into conservative economic theories as he tries to revive his domestic agenda.
Trump, speaking at a manufacturing company here, provided few details of what the tax plan should look like, saying simply that he wants to cut taxes for companies and families and to encourage firms to move operations to the United States from places such as China.
Unlike his boisterous rallies, Trump rarely strayed from carefully worded remarks. White House officials hope the speech will energize GOP lawmakers to push a tax cut plan into law. Within minutes of its conclusion, numerous Cabinet agencies, including the departments of State and Interior, issued statements claiming Trump’s tax outline would benefit virtually every corner of the economy. Trump plans to meet with GOP leaders on Tuesday to press them to move quickly.
While Trump’s event was short on specifics and largely overshadowed by continuing coverage of Hurricane Harvey, it signaled a shift in his strategy for advancing his priorities on Capitol Hill.
During the failed push to repeal and replace the Affordable Care Act, Trump seemed disinterested in fully utilizing the bully pulpit provided by his office. He frequently spoke about what he saw as the “disaster” of Obamacare but did little to make an affirmative case for why it should be replaced with unpopular Republican-drafted legislation.
On tax reform, the White House is planning a series of pitches by Trump, building on his remarks Wednesday.
One senior Republican congressional aide said Trump’s speech was exactly the kind of message lawmakers want to see the president deliver and wished he had started sooner.
“I think we need presidential leadership on this issue,” said the aide, who requested anonymity to speak more candidly. “He needs to engage his base of support and create some urgency.”
But while the White House seems to be working more closely with congressional GOP leaders on tax legislation than during the health-care debate, signs of potential tensions were evident Wednesday with Trump leaving little doubt where he would place blame if this effort also fails.
“I am fully committed to working with Congress to get this job done. And I don’t want to be disappointed by Congress, do you understand me?” he said. “Do you understand? Understand? Congress. I think Congress is going to make a comeback. I hope so.”
The White House is also looking to win the support of moderate Democratic senators facing tough reelection fights next year, believing it will be more difficult for them to vote against tax legislation than it was for them to reject Republican attempts to scrap the ACA.
To further that effort, Trump brought a hammer rather than an olive branch to Wednesday’s event, saying there could be political consequences for Democratic Sen. Claire McCaskill (Mo.), who is up for reelection next November, if she doesn’t support the bill.
“She must do this for you, and if she doesn’t do it for you, you have to vote her out of office,” Trump said.
The speech Wednesday outlined broad principles but did little to advance the debate over the specifics of what the tax plan should look like. Trump even seemed to waver on one of the few specific tax ideas he has advanced, saying that “ideally” the corporate tax rate would be lowered from 35 percent to 15 percent as he has previously proposed. Many GOP aides on Capitol Hill believe it will be difficult to get the rate below 20 percent.
The speech had Trump’s trademark lofty promises — he said numerous times the tax-cut plan he envisioned would reshape the U.S. economy and the morale of workers who “will love getting up in the morning. They will love going to work.”
Trump closely followed the economic vision many Republicans have tried to advance for years — namely that cutting corporate taxes will grow the economy, lead companies to pay workers higher wages, spur those workers to spend more money and help grow the economy.
But budget analysts have found a large portion of the benefits from what Trump has outlined would be enjoyed by the wealthiest Americans. The Tax Policy Center estimates that 40 percent of the tax cuts would go toward the top 1 percent of U.S. earners, or those who make more than $732,000 a year.
On the corporate tax cuts, Trump echoed an argument that members of both political parties have made for years, saying that the 35 percent rate must be brought down. President Barack Obama proposed lowering it to 28 percent, and House Republicans have proposed bringing it down to 20 percent.
Lawmakers have often split when debating lowering the tax rate because they can’t agree on what tax breaks to jettison to make up for the lost revenue that would come from lowering rates.
The Obama administration found that the “effective” tax rate paid by corporations, when factoring in all the deductions and credits they claim, averaged 20 percent in 2011 and 2012.
The big tax-rate disparity between the United States and other countries has lured American firms to relocate overseas, to places like Ireland, so they could benefit from a lower rate on their earnings. Trump has said he wants to stop this, in part, by lowering the U.S. corporate rate and removing the financial benefit from such a relocation.
Alan Auerbach, director of the Center for Tax Policy and Public Finance at the University of California at Berkeley, said some of the ideas Trump floated during the speech could boost economic growth and potentially grow wages, but it would depend on how the tax changes were designed and structured. He also said it would depend greatly on whether the tax plan would add to the government debt. Trump didn’t mention his plan’s impact on the debt or the deficit during the speech.
“It’s hard to have a consensus about a policy about which you know very little,” Auerbach said.
Trump on Wednesday also said that lowering the corporate tax rate would help lure trillions of dollars in overseas earnings back to the United States, further helping the economy grow. Many Democrats have expressed skepticism about this proposal, saying companies would use the money to pay senior executives and shareholders and not hire workers or make new investments.
Senate Minority Leader Charles E. Schumer (D-N.Y.) said Wednesday that Democrats were open to discussing changes to the tax code but they would oppose any plan that is not squarely focused on the middle class and that would add to government debt, saying it would lead to Republicans later targeting programs such as Social Security or Medicare for savings.
“This is going to be one of the biggest fights of the next three, four months, and Democrats are ready for it,” Schumer said.
Republicans are hoping to pass a bill through the House Ways and Means Committee in October and then possibly through the full House of Representatives in November. The focus would then move to the Senate, where Republicans are divided on how to proceed.
Trump and his top advisers have refrained from outlining many details of any tax plan in part to give themselves maximum flexibility as they try to negotiate. Trump on Wednesday called for jettisoning tax breaks that he says benefit the “special interests,” but he declined to identify any of the tax deductions that could be targeted.
“It all comes down to one thing — and that’s the same thing health care came down to,” said Steve Moore, who was one of Trump’s top economic advisers during the campaign. “How do you get to 50 votes in the Senate?”
Paletta reported from Washington.
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