Trump’s tax lieutenants face a critical stretch

Trump’s tax lieutenants face a critical stretch
© Greg Nash

President Trump’s economic team is heading into a critical stretch on tax reform in a weakened position that could make the task even more difficult.

National Economic Council Director Gary Cohn and Treasury Secretary Steven MnuchinSteven Terner MnuchinOvernight Finance: CBO to release limited analysis of ObamaCare repeal bill | DOJ investigates Equifax stock sales | House weighs tougher rules for banks dealing with North Korea Week ahead in finance: Clock ticking for GOP on tax reform More former classmates of Mnuchin call on him to resign MORE are two of the administration’s key negotiators and pitchmen on a tax-code overhaul.

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But Cohn’s relationship with Trump was badly damaged by his criticism of the president’s response to white supremacist marches in Charlottesville, Va., raising doubts about his clout with the president.

Mnuchin has had trials of his own, having received a tongue-lashing from House Republicans for an off-key presentation last week where he pressed them to raise the debt ceiling as a favor to him. One Republican fuming over the speech told The Hill it was an “arrogant lecture.”

GOP strategist Ford O’Connell said Mnuchin and Cohn have key roles to play in the tax-reform push.

“The better their standing on Capitol Hill, the better off the administration will be,” he said.

O’Connell said that members of Trump’s economic team have had “a little bit of a rough time” because the White House has needed wins and there were many people who disliked the debt-limit deal that the president struck with Democrats.

Amid the challenges, both Cohn and Mnuchin are pressing ahead with work on tax legislation, which has become crucial for salvaging the GOP’s legislative agenda.

The pair spent Tuesday afternoon on Capitol Hill, first meeting with Republicans on the Senate Budget Committee and then meeting with the “Big Six” policymakers working on tax reform.

Leaving the meetings, Mnuchin and Cohn were tight-lipped. They were also slated to attend dinner at the White House on Tuesday with Trump and several senators from both sides of the aisle.

House Ways and Means Committee Chairman Kevin BradyKevin BradyOvernight Finance: CBO to release limited analysis of ObamaCare repeal bill | DOJ investigates Equifax stock sales | House weighs tougher rules for banks dealing with North Korea Week ahead in finance: Clock ticking for GOP on tax reform Liberal groups want Mnuchin off GOP tax group following airplane controversies MORE (R-Texas), who is part of the Big Six, told reporters that Mnuchin and Cohn’s knowledge of economic issues has helped lawmakers navigate the complex tax-reform discussions.

“They bring policy expertise to the table within their agencies. They bring real-life expertise to the table. And they are determined like we are to deliver pro-growth tax reform this year,” Brady said. “So I’ve got nothing but good things to say.”

Even GOP lawmakers who were critical of Mnuchin’s pitch on the debt limit praised his work on tax reform.

“Everything I’ve heard from Cohn and Mnuchin on taxes is very good,” Rep. Dave Brat (R-Va.), a member of the House Freedom Caucus, told The Hill on Monday.

Neither Mnuchin nor Cohn has deep ties to Washington or major conservative credentials. Both have backgrounds on Wall Street, while Mnuchin also worked extensively in the movie industry.

Their political chops are being put to the test as they pursue a goal that has eluded lawmakers for decades: a rewrite of the tax code, centered on rate cuts and tax-code simplification.

Adding to the challenge they face, the administration has at times struggled to put forward a united message in the tax debate.

Mnuchin on Tuesday cast doubt on Trump’s goal of cutting the corporate tax rate to 15 percent, saying it might not be realistic.

Meanwhile, Marc Short, the White House’s legislative affairs director, on Tuesday suggested Democratic support would be crucial for tax reform, raising questions about how much the White House will reach across the aisle.

Administration officials and congressional Republicans all share a deep desire to pass major tax legislation, but they face many obstacles.

Policymakers are not on the same page on tax rates and still have yet to say for certain which tax breaks will be scaled back to pay for an overhaul. It also remains to be seen whether the bill will add to the deficit.

There are also debates over the extent to which votes from Democrats are needed, and GOP lawmakers don’t have consensus yet on a budget resolution that would allow them to pass a tax bill without Democratic support.

Given the challenge ahead, Mnuchin and Cohn’s political standing could prove important.

Cohn’s status in the White House has been the topic of much discussion since he told the Financial Times in August that the administration “must do better” in condemning white nationalist groups.

At a tax-reform kickoff event in Missouri, Trump gave shout-outs to other administration officials but not to Cohn. The White House later said that Cohn wasn’t mentioned because he’s staff.

There have also been reports that Trump has been refusing to look Cohn in the eye during meetings and that Cohn is now unlikely to be named as the next chairman of the Federal Reserve.

Mnuchin has also had a rough several weeks.

Last month, the Treasury secretary’s wife, Louise Linton, drew criticism for touting the designer brands she wore on a trip to Kentucky and bragging about how much she and her husband pay in taxes. She later apologized for her response to a commenter who had criticized her Instagram post.

During Monday’s press briefing, White House press secretary Sarah Huckabee Sanders was careful to direct praise at both Mnuchin and Cohn.

“The president has confidence in Secretary Mnuchin and is glad that he is part of the effort working with Gary Cohn to get tax reform done this year,” she replied.

Tax-reform proponents said that any issues lawmakers may have with Mnuchin and Cohn are unlikely to matter because Republicans all believe that tax reform is critical to growing the economy and succeeding in the midterm elections.

“Every Republican needs this,” Americans for Tax Reform President Grover Norquist said. “They need it for economic reasons, they need it for political reasons.”