As with ObamaCare, Trump gives Congress no plan for tax reform
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President Trump says major tax reform is the lynchpin of his ambitious economic growth agenda. So why is he making it so hard for Congress to pass it?

The president’s speech in Springfield, Mo., this week was a textbook case of how not to promote tax reform. In contrast to the approach taken by President Reagan in the mid-1980s, he provided no specific framework for change. He made no serious case for why one version of reform is better than any other.

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He said nothing about the hard work of paying for a tax bill, nor did he distinguish between tax reform and tax cuts. He made promises he is unlikely to keep, such as long-term economic growth in excess of 3 percent. He threatened congressional Republicans. And he went out of his way to antagonize the very kind of Senate Democrat who might otherwise be persuaded to back a reform initiative.

 

Where Republican lawmakers need political cover, Trump left them exposed. Where they need direction, he left them without GPS, or even an old-fashioned map. Where they need a grand vision, he gave them partisan political rhetoric. Republican leaders have been pushing the president for months to use his bully pulpit to promote tax reform. But after Springfield, they may want to revise that strategy.

Think about what the president said, and did not say, in Springfield. Most important, the president proposed no specific tax plan and suggested he never will. Even though Treasury Secretary Steven MnuchinSteven Terner MnuchinAnalysis: House GOP tax bill adds .3T to the deficit Mnuchin: Comparisons to James Bond villain a compliment Sunday shows preview: GOP gears up for Senate tax reform push MORE now says the White House has a “very detailed” plan, we’ve seen no evidence of one. Instead, Trump apparently will leave all the heavy lifting to Congress. Especially the part about closing “special interest loopholes.”

The president said nothing about how he’d pay for the tax cuts he’s been talking about since the campaign. And Congress cannot come close to paying for them by closing “special interest loopholes.” Not close. Not within trillions of dollars. To cut tax rates significantly for business and individuals without adding to the debt, lawmakers would have to slash popular, widely used tax breaks that benefit businesses and middle- and upper-income taxpayers.

They include deductions for mortgage interest, charitable giving, and state and local taxes, exclusions for retirement savings and employer-sponsored health insurance and business deductions for interest costs. Without those revenue raisers (or offsetting spending cuts), a tax bill would either add trillions of dollars to the national debt or end up cutting rates far more modestly than the president seems to want.

But Republicans can’t roll back those popular tax breaks on their own. Without Democrats, whose support most GOP leaders have so far rejected out-of-hand, they desperately need political cover from the president. And, so far at least, he has not provided it. Indeed, he has not even said whether he wants revenue-neutral tax reform or a simple budget-busting tax cut.

Until Congress decides how much a new tax code should raise, debating other details is a waste of time. If Trump’s passive-aggressive legislative strategy seems familiar, it is because it mimics the way he handled the GOP’s misbegotten effort to replace the Affordable Care Act.

While he frequently promised his own plan, he never produced one. Instead, he first backed the House-passed bill, then called it mean, then left it to the Senate to pass a new bill, the blasted the upper chamber for failing to do so. The tax debate seems to be setting up the same way. The president will not offer a detailed plan but rather leave it to Congress to work something out. If it does, he will claim victory and take credit. If it does not, he will lay the blame at the foot of Capitol Hill.

Trump set the stage for this gambit in Springfield, where he punctuated his speech with a not-so-veiled threat against lawmakers: “I don’t want to be disappointed by Congress,” he said. “Do you understand me?” This Godfather-like warning may play to Trump’s most fervent anti-establishment supporters, but it won’t help him get a tax bill passed.

Howard Gleckman is a senior fellow at the Tax Policy Center, a joint venture between the Urban Institute and the Brookings Institution, where he edits the center’s TaxVox fiscal policy blog and Daily Deduction newsletter.


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