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Dems warn GOP against retirement cuts in tax plan

Dems warn GOP against retirement cuts in tax plan
© Greg Nash

The top Democrat on the Ways and Means Committee warned Republicans Wednesday that they’ll be on their own if they target retirement programs as part of their tax overhaul.

Rep. Richard Neal (Mass.) said Democrats are concerned that one of the goals of the Republicans’ tax plan is to use the cuts as a justification to scale back retirement programs like Social Security.

Neal, who was among the lawmakers who huddled with President Trump Tuesday to talk taxes at the White House, said Democrats will oppose any overhaul plan that points to tax cuts “as offering a substitute for retirement savings.”

“One of the priorities of tax reform has got to be retirement savings,” Neal said during a tax-reform forum hosted by the Financial Services Roundtable in Washington. “You can outlive an annuity, you can’t outlive Social Security. 

“That check is coming.”

Neal said Democrats will fight to preserve what he called the “three-legged stool” of retirement security, combining the efforts of government (Social Security), employers (pension plans) and individuals (personal savings).

Neal also laid out three red lines governing the Democrats’ approach to tax reform. First, they will insist that any tax package be revenue neutral. Second, it must help the middle class. And third, it must not shower any benefits on the wealthiest tax payers.

“Those are the three principles we bring,” he said.

Neal said he’s urged Ways and Means Chairman Kevin BradyKevin Patrick BradyOvernight Finance: Senators near two-year budget deal | Trump would 'love to see a shutdown' over immigration | Dow closes nearly 600 points higher after volatile day | Trade deficit at highest level since 2008 | Pawlenty leaving Wall Street group Lawmakers discuss extending expired tax breaks in spending bill Dow falls more than 1,000 in biggest daily point-drop ever MORE (R-Texas) for full transparency as the Republicans pursue their tax overhaul, including an open hearing and mark-up process that allows for full scrutiny.

“This needs to be done in daytime,” Neal said. 

Released Wednesday, the Republicans’ tax-reform plan features provisions to reduce rates on corporations and some individuals; double the standard deduction for taxable income; and eliminate certain special interest deductions. It also aims to simplify the filing process, reducing the number of tax brackets from seven to three and promising a shorter “postcard”-style tax form. 

Republicans say the plan will boost jobs and the economy by discouraging corporate outsourcing and putting more money in the pockets of middle-class consumers. 

“The Obama era brought higher taxes, more regulations, and a stagnant economy,” said Sen. John ThuneJohn Randolph ThuneOvernight Tech: Uber exec says 'no justification' for covering up hack | Apple considers battery rebates | Regulators talk bitcoin | SpaceX launches world's most powerful rocket Apple tells senator it may give rebates to consumers who bought iPhone batteries Republican agenda clouded by division MORE (R-S.D.), chairman of the Senate Republican Conference. “Congress now has the opportunity to implement pro-growth tax-reform policies and provide relief to working families.”

Democrats have a decidedly different view, accusing Republicans of pushing a tax plan that would explode the national debt and steal revenues for popular programs like Medicare and Social Security, all while lavishing most of the financial benefits on the wealthiest people.

“This plan is not only fiscally irresponsible; it represents everything the American people don't want,” said Rep. John YarmuthJohn Allen YarmuthHouse Dems see shutdown as inevitable Red state Dem: Trump has 'committed impeachable offenses' Congress reeling from sexual harassment deluge MORE (D-Ky.), ranking member of the House Budget Committee.

Neal pushed back hard against the notion of eliminating the federal estate tax, another key provision of the GOP plan. The tax, which Republicans label the “death tax,” only affects estates worth roughly $5.5 million and up. Neal called repealing it “a step backwards.”

It’s unclear whether the Republicans will be able to pass their tax overhaul without Democratic votes. Tax reform is a top priority for President Trump and GOP leaders on Capitol Hill, and Republicans have long advocated for tax cuts benefiting individuals and corporations alike. 

Yet the Republicans were also unified behind the concept of repealing ObamaCare, only to see the effort crash and burn on the Senate floor. Given the complexity of the tax code — and the number of special interests sure to rise up in defense of individual benefits — the tax fight is sure to prove every bit as difficult as that over health-care reform.

With that in mind, Sen. Orrin HatchOrrin Grant HatchOvernight Tech: Uber exec says 'no justification' for covering up hack | Apple considers battery rebates | Regulators talk bitcoin | SpaceX launches world's most powerful rocket Overnight Cybersecurity: Tillerson proposes new cyber bureau at State | Senate bill would clarify cross-border data rules | Uber exec says 'no justification' for covering up breach Hatch introduces bipartisan bill to clarify cross-border data policies MORE (R-Utah), chairman of the Finance Committee, predicted Wednesday that Republicans won’t be able to pass tax reform without Democratic buy-in.

“I think we can [enact reforms] but we will need to have some Democrat help,” he said in an interview on Fox Business Network’s “Mornings with Maria” program. “I think we've got to put aside the differences and start working together.“

Neal echoed that message, saying the only way “to do something meaningful in this city” is “to do it in a bipartisan manner.” 

In the current environment of hyper-partisanship, though, Neal said he’s not terribly optimistic about reaching such a bipartisan agreement. He said the odds of passing tax reform are 50-50 — “at best.”