Senate Democrats issued a call Tuesday for bipartisan talks on a sweeping rewrite of the nation’s tax code amid growing pressure from the White House for Republicans to implement aggressive tax cuts before year’s end.
Democrats unveiled their request in a letter calling on the GOP to work with them to update the tax code without reducing federal revenue or cutting taxes on the wealthy. The entreaty comes as President Trump and his Cabinet demanded that Republicans in Congress deliver steep tax cuts for businesses and individuals, with or without the help of Democrats.
The letter follows a call from White House legislative director Marc Short for conservative activists to pressure vulnerable Democrats to support the tax overhaul plan or face political peril in the 2018 midterm elections.
“We’re confident right now that we will be able to earn their support with our tax reform agenda,” he said, sitting beside Treasury Secretary Steven Mnuchin at an event hosted by Americans for Prosperity and Freedom Partners, two conservative groups backed by billionaires Charles and David Koch.
Short pointed to several states where Democrats are facing tough reelection bids, including Montana, North Dakota, Ohio and Indiana. The White House hopes that Congress will be ready for a House vote in October, followed by votes on a similar Senate bill in November, according to accounts from several White House officials who were granted anonymity to discuss strategy.
But Senate Democrats hope that Republicans will be wary of an aggressive push on taxes following last week’s dramatic failure of the GOP effort to repeal and replace the Affordable Care Act. That measure imploded when three GOP senators rejected a scaled-down effort by Majority Leader Mitch McConnell (R-Ky.).
On Tuesday, Senate Minority Leader Charles E. Schumer (D-N.Y.) and Ron Wyden (D-Ore.), the top Democrat on the Senate Finance Committee, released a letter signed by 45 of the 48 Senate Democrats calling on McConnell and Trump to launch bipartisan talks. The letter identifies three basic demands: any tax legislation should be drafted under the regular bipartisan committee process; the legislation should deliver relief to middle-class families without tax cuts for the rich; and any tax changes should include at least as much revenue as is collected today.
Democrats plan to unify around policy demands that they say will be appealing enough to keep the entire party in line, according to interviews with Democratic aides and senators. Many Democrats say the badly fractured GOP won’t be able to pass a complex tax bill on its own and GOP leaders will be forced to accept Democrats’ conditions to start bipartisan talks.
But, two of the three Senate Democrats missing from the letter, Sens. Heidi Heitkamp (N.D.), and Joe Donnelly (Ind.) are also running for reelection next year in states referred to Monday by the White House. The other, Sen. Joe Manchin III (W.Va.), faces difficult reelection prospects of his own.
Wyden dismissed any concerns about lack of unity among Democrats ahead of the letter’s release.
“I think Democrats generally, and you see in what we’ve said in the last couple of weeks, are going to be very united about saying the centerpiece has got to be to focus on middle folks,” Wyden told reporters Monday, ahead of the letter’s release. “The middle class drives the economy.”
Several other Senate Democrats running for reelection in states where Trump won in 2016, warned that the combative White House plan on taxes resembled the tactics that led to last week’s dramatic failure on health care in the Senate.
Sen. Sherrod Brown (D-Ohio) said Monday that he hoped Senate Republicans would learn from their health-care failure and work with Democrats to craft a long-term solution to the problems in the nation’s tax code. Brown dismissed any threats from the White House with the sarcastic retort, “that’s a really good way to get bipartisan cooperation.”
The letter comes amid a concerted push by Republicans to mobilize support for their plan to pursue a large tax overhaul package this year, with Trump pressing Cabinet members about the goals in the morning and three top advisers mapping out the road ahead later in the day.
Short and Mnuchin, as well as White House National Economic Council Director Gary Cohn, each described an aggressive sprint forward in the coming weeks to try to snowball support for their tax plan, though they have been careful not to release too many details of what they will back.
The White House in April issued a one-page outline for how it wanted to rework the tax code. The plan included cutting the corporate tax rate from 35 percent to 15 percent, simplifying the taxes individuals and families pay, eliminating the estate tax and jettisoning the alternative-minimum tax. White House officials called for cutting many unspecified deductions, but there has been fierce resistance to this from many outside groups.
Democrats are skeptical of many elements of the White House plan, citing the lack of detail and fears that the proposals would lead to huge reductions in federal revenue. Outside budget groups have speculated that Trump’s ideas would reduce revenue by $5 trillion over 10 years, leading to a major expansion of the federal debt.
Many Republicans have also questioned whether it is possible to make good on Trump’s promises. Senate Finance Committee Chairman Orrin G. Hatch (R-Utah) in particular has all but dismissed the possibility of reaching Trump’s goal to slash the corporate tax rate.
“It would be kind of miraculous if we could get it down to 25 percent or less,” Hatch said in a recent interview with Reuters. “I think the odds are, we’re going to be lucky to get it down at all.”
Mnuchin said Monday that the White House would support eliminating or curbing numerous tax breaks to offset some of the lost revenue from cutting tax rates. But he also said the package would rely in part on assumptions about future economic growth that often prove controversial because critics of the White House plan have said it grossly overestimates how much new revenue tax cuts could bring in.
Mnuchin and Cohn have met for months with more than 200 members of Congress and numerous business groups, but neither top adviser has experience in helping muscle a giant piece of legislation through Congress.
The pair has set a self-imposed deadline of the end of the year for the tax overhaul to be completed.
“We will have success,” Mnuchin said. “This is a pass-fail exercise. And we will pass tax reform.”