PHILADELPHIA — Congressional Republican leaders said Thursday that they plan to move forward with legislation to provide $12 billion to $15 billion to pay for a wall along the U.S.-Mexico border.
But it is still unclear who will end up footing the bill for the gigantic construction along the 2,000-mile border — U.S. taxpayers or, in some form, Mexico.
Trump and his aides insisted throughout a confusing day that Mexico would ultimately pay for the wall through, they said, reforms to the U.S. tax code. But Republicans were confused about whether such a change would be considered a tariff or a tax; many do not support a tariff. Lawmakers are also concerned that without such changes, there is no way to offset or make up elsewhere the costs of the enormous structure.
“Border security yes, tariffs no. Mexico is 3rd largest trading partner. Any tariff we can levy they can levy. Huge barrier to econ growth,” Sen. Lindsey O. Graham (R-S.C.) wrote on Twitter late Thursday.
He added: “Simply put, any policy proposal which drives up costs of Corona, tequila, or margaritas is a big-time bad idea. Mucho Sad.”
In an address to Republican lawmakers here, Trump said that his administration was “working on a tax reform bill” that would “generate revenue from Mexico” with the aim of paying for the wall.
White House press secretary Sean Spicer later told reporters that the wall could be paid for with a 20 percent tax on imports from Mexico, a line that some Republicans initially read as a reference to a House GOP proposal to tax imports — a mechanism known as a “border adjustment.”
By the end of the day, Spicer clarified that he had, indeed, been talking about an idea that House GOP leaders have floated, but he said that no final decisions had been made.
“By doing it that way, we can do $10 billion a year and easily pay for the wall just through that mechanism alone. That’s really going to provide the funding,” Spicer said.
Later in the day, Spicer said: “One idea through comprehensive tax reform is that there could be this idea that Speaker [Paul D.] Ryan and others have floated that through tax reform you could actually look at imports with countries that we have a trade deficit for, that can generate revenue.”
“What he’s referring to is border adjustment,” said Rep. Devin Nunes (R-Calif.), a senior member of the House Ways and Means Committee, of Spicer’s initial remarks.
Nunes was referring to a proposal to tax all imports at a rate of 20 percent and exempt exports from tax entirely. Trump seemed to dismiss that plan this month when he told the Wall Street Journal that the idea was “too complicated.”
A system of taxing all imports is often confused with a tariff because both systems effectively drive up the prices of imports. The difference is in how the two ideas are executed. A tariff is a punitive fee on specific goods, and a border tax is a tax exclusion for exports. Republicans say their idea acts as an incentive for companies to buy U.S.-made goods.
Without some mechanism to pay for the wall — either through additional revenue generated in the United States or by Mexico, as the administration insists — Republican concerns about building it could grow.
Asked at a news conference here Thursday morning whether spending on the wall would be offset, Ryan punted.
“As far as the offset, we’re going to wait and see from the administration what their supplemental [spending plan] looks like,” he said. “I’m not going to get ahead of a policy and a bill that has not been written yet. But the point is, we are going to finance the Secure Fence Act, which is the construction of the physical barrier on the border.”
Pressed on whether he could guarantee that the broader Republican agenda would not add to the federal deficit, Ryan did not respond directly.
“We’re fiscal conservatives,” he said. “What that means is we believe government should not live beyond its means.”
Asked about Spicer’s comments, Rep. Mark Meadows (R-N.C.), who chairs the hard-line House Freedom Caucus, did not endorse the idea but also did not fully reject it.
“We have to explore a number of options on how to pay for that. You know, generally speaking, I’m against tariffs,” Meadows said. “You know, I look at it from an economic standpoint. At the same time, I don’t want to hamstring the administration in things they are willing to explore.”
Meadows said he was confident that lawmakers could find immediate offsets of some kind through the appropriations process to cover the costs of the border wall. But he also sounded open to doing that after the fact.
“I’ll stay true to my commitment that we’re going to give the president the tools necessary — whether it is a non-offset spending on this on a short-term basis, that we find the offsets at a later date.”
For other Republicans, paying for the wall upfront is paramount.
“I generally don’t vote for anything that’s not offset,” said Sen. James E. Risch (R-Idaho), adding for emphasis: “Everything needs to be offset.”
Aides to House Minority Leader Nancy Pelosi (D-Calif.) argued that congressional Republicans were being hypocritical.
“The same Republicans who howled ‘fiscal responsibility’ when it comes to investments to help working families are apparently willing to light billions of taxpayer dollars on fire and add to the federal deficit in order to build Trump’s useless border wall,” Pelosi spokesman Drew Hammill said in a statement.
Sen. John McCain (R-Ariz.) told reporters here Thursday that lawmakers and officials need to be more precise when they talk about building a wall and that a single physical barrier is unlikely to suffice.
“When you say, quote, build a wall, what does that exactly mean?” McCain said. “It means to me drones, technology, surveillance all that. If you’re talking about just building a wall, history shows that you can tunnel under them, you can breach them and you can climb over them.”
McCain predicted that there will be a “down payment to begin construction” of border security but that it will not be anywhere near $15 billion.
Kelsey Snell in Washington, and Paul Kane and Mike DeBonis in Philadelphia, contributed to this report.