EXCLUSIVE: Blue Dog Democrats meet with top Trump aides on tax reform

EXCLUSIVE: Blue Dog Democrats meet with top Trump aides on tax reform
© Greg Nash

Blue Dog Democrats huddled with the leading members of President Trump’s economic team on Tuesday in the Capitol, where the lawmakers pressed the administration to seek bipartisan reforms to the nation’s tax code.

Just 18 members strong, the centrist Blue Dogs compose a tiny voice in the House, vastly outnumbered by even the liberals in their own caucus. But with GOP leaders struggling to rally their divided conference around big-ticket legislation, the Blue Dogs see themselves potentially stepping into the mix to broker a bipartisan deal for the sake of getting tax reform to Trump’s desk this year.

“If it’s constructive, if they’re genuinely interested in ideas and making it a bipartisan effort, then the Blue Dogs are certainly willing to participate,” said Rep. Sanford Bishop (D-Ga.), a member of the group.

“You’ve got the far left, you’ve got the far right, and the Blue Dogs are in the center. And basically, we want a tax code that’s efficient, that works for everybody.” 

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The Blue Dogs met Tuesday evening with Treasury Secretary Steven Mnuchin, White House chief economic adviser Gary Cohn and Marc Short, the president's director of legislative affairs, to press a simple, two-pronged message: First, for tax reform to be sustainable, it must be bipartisan; second, the Blue Dogs are willing to help.

“The message is that we’re willing to participate and give input if, in fact, it’s going to be a bipartisan process that ultimately is going to work for the good of the republic,” Bishop said. 

“They’re interested in input because they recognize that it needs to be a bipartisan effort if it’s going to succeed. And they want it to succeed.”

How the Republicans go about the process, however, remains an open question. 

GOP leaders in both chambers are hoping to rally their Republican troops behind a tax package that won’t require any Democratic votes — a message amplified by Speaker Paul RyanPaul RyanGingrich, small biz to launch major tax cut campaign GOP divided over care for transgender troops Want bipartisan health reform? Make the debate honest again MORE (R-Wis.) on Tuesday. 

“Once in a generation or so, there is an opportunity to do something transformational — something that will have a truly lasting impact long after we are gone,” Ryan, a former chairman of the House Ways and Means Committee who’s fought for years to rewrite the tax code, said during a speech this week before the National Association of Manufacturers in Washington. 

“That moment is here and we are going to meet it.” 

Thus far, however, Ryan and the Republicans are divided over the policy specifics of their various tax plans, particularly when it comes to an import tax that Ryan backs but Trump and many other Republicans reject.

Furthermore, going the partisan route will require the Republicans to adopt a 2018 budget bill that includes procedural language, known as reconciliation, that would allow them to move a tax package through the Senate with just a simple majority. That budget bill is on hold while the Republicans attempt to pass their ObamaCare repeal bill, which is slated for a Senate vote next week

The Blue Dogs are eying the healthcare vote with particular interest because they think it will likely dictate both the tenor of the subsequent tax debate and the extent of their influence over it.

If healthcare reform passes on a party-line vote via reconciliation, they say, there will likely be less appetite for Republicans to reach across the aisle for Democratic votes on tax reform. 

“If anything, it’s going to create an incentive for them to continue doing things in the way that they have done,” said a senior aide close to the Blue Dogs. 

If, on the other hand, the Republicans' healthcare bill fails to reach Trump’s desk, GOP leaders may feel increasing pressure to score a legislative victory on a major issue, and they’ll face a heightened urgency to get tax reform across the finish line, even if that means compromising with moderate Democrats to get it done.

“If healthcare goes down … there aren’t a lot of places that I can see that the Trump administration doesn’t turn on congressional Republicans for not having healthcare passed, and they’re going to want a big win,” said a second senior aide aligned with the Blue Dogs.

It’s the second scenario where the Blue Dogs think they could step in and work with the Republicans to secure the sweeping tax reforms that have eluded Congress since the Reagan administration. 

The Democratic aides said Trump officials favor a bipartisan approach to tax reform that would eliminate the need for reconciliation, but they expressed concerns that they’d lack the votes in the Senate, where eight Democrats would have to cross the aisle to defeat a likely filibuster from more liberal senators.

“In reality, according to them, they said the political landscape is very toxic and that they’re having a tough time identifying eight Democratic senators who would be on board for something like this,” said the first Democratic aide. 

The first aide singled out four points on which the Democrats and the White House appear to agree: Any tax reform package must spur economic growth, reduce rates for middle-income workers, broaden the revenue base and lower corporate rates. The Blue Dogs also stressed to Mnuchin and Cohn that they want the package to be deficit neutral — a goal Ryan shares, since adding to the deficit under reconciliation rules would cause new tax cuts to expire after a decade.

"Businesses need to have confidence that we won’t pull the rug out from under them," Ryan said.

The Blue Dogs, meanwhile, are vowing to press ahead. Last week, they wrote to tax-reform stakeholders on K Street, urging the groups to oppose a strictly partisan approach to this year’s debate. 

“Reforming our tax system must be done in the most responsible and sustainable way — and that means it must be bipartisan,” Rep. Dan Lipinski (D-Ill.), one of three Blue Dog co-chairmen, wrote in the June 15 letter. 

The Blue Dogs are also busy drafting a set of tax-reform principles, which they intend to release before the Republicans move to the issue in full. 

In a separate meeting on Tuesday, Cohn said the White House expects Congress to launch the tax debate in September, after Congress returns from its August recess

Ryan was less ambitious about that timeline, saying his “personal goal is to get it done by opening day at gun deer season” — meaning late November. But his goals for the policy itself remain sky-high.

“We are going to fix this nation's tax code once and for all,” he said.

The Blue Dog Democrats are hoping to be a part of that process.