Finance

Red-state Dems need more from Trump before tax embrace

President Trump has his work cut out for him in winning over red-state and centrist Democrats for his tax plan.

Many of the Democratic senators who hail from states that Trump won in last year's election say they fear the bill will end up being a giveaway to the rich that explodes the debt.

While none of them are willing to blast the plan as "wealth fare" - the descriptor used by Sen. Charles Schumer (D-N.Y.) - they are skeptical of and want to see more details. The nine-page framework Republicans released Wednesday leaves many questions unanswered.

"Well, it was a framework, so there are a lot of I's to be dotted and T's to be crossed," Jon Tester (D-Mont.), who is up for reelection in 2018 in a red-leaning state, told The Hill.

"The first numbers that have come out are $1.5 trillion. That's crazy," he added, appearing to refer to Senate Budget Committee Republicans' plan to release a budget resolution that calls for up to $1.5 trillion in tax cuts.

Congressional Republicans intend to pass tax legislation through a process called "reconciliation" so that votes from Democrats are not needed for passage. But Trump has talked of his desire to win bipartisan support for the bill.

The president has been giving speeches in red states with vulnerable Democratic senators, where he has at times suggested that audience members vote against lawmakers if they oppose his tax plan. He has also invited Democratic lawmakers to the White House to talk taxes.

The president on Thursday dared criticize Democrats to oppose his plan.

"Democrats don't want massive tax cuts - how does that win elections?" he tweeted.

Ten Democratic senators are up for reelection next year in states that Trump won. All but three of them - Sens. Heidi Heitkamp (N.D.), Joe Donnelly (Ind.) and Joe Manchin (W.Va.) - signed a letter in August saying they would oppose any tax bill that cuts taxes for the wealthiest, increases the debt and doesn't move through regular order.

The three senators who didn't sign the letter expressed interest in working with the White House on tax reform and were among the most hesitant to criticize the framework.

"I believe the president when he says it's not going to be a tax cut for the rich. ... I don't think that was his intention," Manchin told The Hill.

Donnelly, who attended the president's tax-reform speech Wednesday in his home state, said in a statement following the speech that he plans to continue to discuss tax reform with the White House and his Senate colleagues.

"As it stands, the framework released today is missing many details that will be critical to determining whether working- and middle-class families truly stand to benefit," he said.

"There is an outline. There are no details. Until I see details it would be irresponsible to comment," said Heitkamp (D-N.D.), who attended Trump's tax speech in her home state earlier this month, said Thursday.

But other Trump-state Democrats expressed specific objections to aspects of the GOP's framework.

Sen. Claire McCaskill (D-Mo.), whose home state Trump also visited recently to promote his tax efforts, said that she's worried about the framework's proposal to lower the top rate for pass-through businesses to 25 percent.

Pass-through businesses, which include sole proprietorships and limited liability corporations (LLC), have their income taxed through the individual code on their owners' returns, and the bulk of pass-through income goes to high earners.

"I am really worried about the huge tax breaks it gives to pass-throughs, wealthy people that use LLCs," McCaskill said.

Other Senate Democrats up for reelection next year say the framework could end up benefiting the wealthy and causing issues for the middle class.

Sen. Sherrod Brown (D-Ohio) was positive about several aspects of the plan in a statement on Wednesday, including the recognition of the need to prevent companies from shifting profits overseas. But on Thursday, he told reporters Republicans aren't focusing on the middle class and taking the right approach.

"These guys continue to try to spin the myth" that tax cuts for the top 1 percent will trickle down, he said.

Sen. Debbie Stabenow (D-Mich.), another senator up for reelection in a state won by Trump, said in a statement Wednesday that she's worried the framework "would give most of the benefits to those at the top and would take away important tax incentives for Michigan manufacturers."

The framework calls for the elimination of the domestic production deduction and notes that other tax preferences for businesses will be curbed or repealed.

Besides Tester, Manchin and Sen. Bill Nelson (D-Fla.) also warned of the potential for the GOP's tax framework to increase the debt.

"If you want $5 trillion to the national debt, that's a good one," he said. "Do I like increasing the lowest rate for the lowest income earners?"

There could be challenges for getting votes from Democrats for a tax bill on the House side as well.

Speaker Paul Ryan (R-Wis.) predicted on CNBC Thursday that legislation would receive a few Democratic votes in the chamber, saying that "there are still some moderates left."

But it could be hard for centrist House Democrats to support a bill if the costs of the tax cuts are not fully offset.

The leaders of the House Blue Dog Coalition of centrist Democrats - Reps. Jim Costa (D-Calif.), Henry Cuellar (D-Texas), and Daniel Lipinski (D-Ill.) - said in a statement Wednesday that the tax plan "contains goals that are laudable on paper, but the devil is in the details when it comes to attaining those goals."

But they also said that it's important for tax reform to be fiscally responsible.

"If Congress does not find a way to pay for tax reform, it will increase the risk of another economic crisis - and our children and grandchildren can't afford to bear the brunt of that burden," they said.

Rep. Jim Himes (D-Conn.), chair of the centrist New Democrat Coalition, said his group is glad that the tax-reform discussions have started but that the proposal violates two principles important to the group's members: revenue neutrality and a focus on those in the middle class and below.

"Tax reform needs to be about simplification and tax relief for the people who need it most," he told The Hill.

Democrats have also complained that Republicans did not include them in the process of creating the framework.

Himes said it's likely that at some point in the tax-reform process Democratic support will be needed, so it would be beneficial for Democrats to be included early on in the process.

'We want to be included at the beginning of the conversation," he said.

Asked if he had been included thus far, Nelson said: "No, of course not."

He added: "Here we go again. It's the health care deal all over again."

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