Posts Tagged ‘House Ways and Means Committee’

Analysis: How Consensus for Corporate Rate Cut Turned Into Partisan Tax Brawl

December 22, 2017

If there are problems with tax law, Republicans are unlikely to have willing partners in Democrats to fix it

President Donald Trump congratulates House Speaker Paul Ryan during an event at the White House to celebrate Congress passing the tax bill earlier this week.
President Donald Trump congratulates House Speaker Paul Ryan during an event at the White House to celebrate Congress passing the tax bill earlier this week. PHOTO: CHIP SOMODEVILLA/GETTY IMAGES

WASHINGTON—Both candidates in the 2012 presidential election ran on a corporate tax cut.

Five years later, a unified Republican government made that a reality, and a bipartisan idea has turned into a deeply partisan brawl.

President Donald Trump signed the 21% corporate tax rate into law Friday and Democrats are talking about which pieces of the bill they will keep and which they will toss aside should they assume power.

If there are problems with the law, Republicans are unlikely to have willing partners in Democrats to fix it, in the same way Republicans have stood against making many repairs to the Affordable Care Act.

The political backdrop to the tax overhaul is a warning sign. The new tax system encoded by Republicans is fragile. There are many challenges on the horizon that are likely to warrant changing the law—expiring provisions, tax competition from other countries, the risk of revenue shortfalls, the potential for flaws in the law itself that might be gamed by households or businesses.

As has been the case with the ACA, addressing them won’t be easy.

“It’s like training for a marathon. And you finally run a marathon,” said Jon Traub, a former Republican staff director at the House Ways and Means Committee who is now a managing principal at Deloitte LLP. “You can’t go back the next day and run another marathon.”

Image result for Kevin Brady, photos

Kevin Brady

The new law was designed, at least partly, with that idea in mind. Rep. Kevin Brady (R., Texas), one of its chief authors, talked frequently about the rate cut to 21% from 35% as a “leapfrog,” a way to get ahead of moves by other countries, in recognition that the U.S. system can move slowly.

But less than two hours after the bill was formally enrolled by congressional leaders on Thursday, Mr. Brady said the U.S. isn’t necessarily done jumping.

“For our foreign competitors, I want to make it really clear, we are not going to fall behind like we have as a country. We’re not waiting another 31 years,” he said, referring to other countries’ rate cuts since the previous U.S. reduction in 1986. “So we’ll do what it takes to compete and give our workers and businesses a fighting chance around the world.”

Mr. Brady has also talked about technical corrections, especially in international tax rules, as companies get familiar with the new system. He mentioned changes to retirement savings and education tax policies as possible areas for bipartisanship.

His Senate counterpart, Orrin Hatch (R., Utah), on Wednesday proposed extending a long list of tax provisions that expired at the end of 2016, an issue that lawmakers had hoped to address in the broader bill they just finished.

Republicans could try again to use the legislative process that let them pass this year’s tax law with a simple majority, but that is far from certain at this point. Anything else will require 60 votes in the Senate, and that means Democrats. The minority, sensing electoral opportunity in the bill’s low poll numbers, isn’t ready to engage.

“This bill is so bad that it’s very hard to fix in small little tweaks,” said Senate Minority Leader Chuck Schumer (D., N.Y.). “We’ll see what they propose.”

Democrats seem unlikely to roll back the increased child tax credit, larger standard deduction or lower tax rates in low- and middle-income brackets. But other provisions are in play. Rep. Richard Neal (D., Mass.) would become Ways and Means chairman if Democrats retake the House in 2018. The first two items on his list were pushing the top individual tax rate back from 37% to 39.6% and reversing the doubled exemption for the estate tax.

Asked whether Democrats would help plug revenue holes if the new GOP law spurs more tax avoidance than expected, Mr. Neal demurred.

“We have to wait and see after there is an acknowledgment on their side that it didn’t work,” he said.

The path to the corporate tax cut is instructive in just how hard it might be to replicate anything like it.

For a long time, Republicans and Democrats agreed that U.S. corporate tax rates were too high, encouraged tax avoidance and made the U.S. uncompetitive globally.

In 2005, President George W. Bush’s tax overhaul commission proposed setting the rate as low as 30%. Then Rep. Charles Rangel (D., N.Y.) offered a 30.5% rate in his 2007 “mother of all tax reforms.” Sen. John McCain (R., Ariz.) included a rate cut in his presidential campaign in 2008.

When Republicans took the House in 2010, then-Rep. Dave Camp (R., Mich.) took up the charge for a 25% rate, joined by a coalition of companies that sensed an opportunity.

“There was some point in the late 2000s where everybody started to realize that the United States was just behind the rest of the world. We were sticking out like a sore thumb,” said Rachelle Bernstein, tax counsel at the National Retail Federation. “It’s a dozen years that we’ve sort of been in the wilderness of getting to this point.”

President Barack Obama joined in 2012, seeking a 28% rate. His rival that year, Mitt Romney, pushed for 25%. At times, a deal looked possible, whether between Mr. Obama and then-House Speaker John Boehner or between Mr. Camp and then- Sen. Max Baucus (D., Mont.).

By the time Mr. Camp released his plan in February 2014, GOP leadership showed little inclination to work with Mr. Obama on a compromise and gave Mr. Camp little support.

In the end, the only way to move forward was to look inside the Republican Party itself.

Beyond the worsened Washington gridlock, the corporate rate cut took a long time because Republicans had trouble deciding what to package with it. Removing business tax breaks would erode support. Leaving out pass-through businesses—partnerships, S corporations, sole proprietorships—would fracture the GOP. Ignoring individual taxes would make the idea politically treacherous.

Something had to give and that was the stated Republican commitment to reducing budget deficits. When they agreed to allow adding $1.5 trillion to deficits over the next decade, the door opened to drive the corporate rate all the way down to 21% without some of the other painful trade-offs they had considered.

There were still last-minute efforts this month to get a bipartisan deal, after Mr. Trump signaled that the 20% corporate tax rate he had insisted on might go to 22% in the final version.

Sen. Bob Corker (R., Tenn.) said he told Mr. Trump and his advisers that an agreement with Democrats was possible to create a more durable bill, a legacy for the president that wouldn’t be ripe for immediate reversal. Mr. Corker said he pushed for the president to meet with 10 to 12 Senate Democrats to see what was possible. It didn’t happen because a process was in train that Republican leaders didn’t want to derail.

“Their concern was: They had the votes,” Mr. Corker said in an interview this week. “If they brought in Democrats and began adjusting anything, it could cause the Republican side of this to fall apart.”

https://www.wsj.com/articles/analysis-how-consensus-for-corporate-rate-cut-turned-into-partisan-tax-brawl-1513959787

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Tax Overhaul Marked by Blinding Speed

December 4, 2017

Republicans are on track to overhaul the entire U.S. tax system—affecting millions of households and businesses—in less than eight weeks

WASHINGTON—One of the defining characteristics of the Republican tax overhaul making its way through Congress is speed.

A mere two weeks passed between the day the House Ways and Means Committee unveiled its tax plan and the day the full House passed the measure. On the Senate side, 23 days passed between unveiling details of a tax plan and passage.

Lawmakers aim to have a final bill on the president’s desk for signature before Christmas. If they achieve that goal, they will have overhauled the entire U.S. tax system—affecting millions of households and businesses and advancing $1.4 trillion in cuts over a decade—in less than eight weeks between unveiling a bill and presidential signature.

The last major tax overhaul 30 years ago, by contrast, was legislated over more than a year. The Ways and Means Committee, for example, held hearings on a tax plan in June 1985 and approved a bill in November 1985; the president didn’t sign legislation until October 1986.

In the case of the 2010 Affordable Care Act, six months elapsed from the time a bill was introduced in the House to the time it made it into law in March 2010. The 2001 Bush tax cuts passed in less than a month after the House unveiled its bill.

TIMELINE OF A REPUBLICAN TAX BILL

  • July 27: Republican leaders release ‘framework’ in a press release.
  • Nov. 2: House Ways and Means Committee unveils tax plan.
  • Nov. 9: House Ways and Means Committee passes slightly revised tax

    plan; Senate Finance Committee unveils tax plan.

  • Nov. 16: House passes tax plan; Senate Finance Committee passes

    alternate tax plan.

  • Dec. 2: Senate passes tax plan in predawn hours after changes made

    hours earlier.

The latest tax bill’s speed came into stark light Friday, when lawmakers added dozens of new provisions to the Senate bill so quickly that some were handwritten into the margins of printed text, which is rare though not unprecedented.

Speed is a two-edged sword. As a tactic, it enhances the prospects of passage by helping congressional leaders dart past foes more quickly than opponents can erect blockades. But haste can also create a public backlash and risk unintended consequences by setting in motion changes in the law whose effects are understood only in hindsight.

“The faster the legislative process, the less time for opponents to mobilize and for wavering lawmakers to lose their resolve to vote yes,” said Sarah Binder, who specializes in Congress and the legislative process at the Brookings Institution.

At the same time, she said, “the failure to scrutinize the effects of changing the tax code—intended and unintended—could undermine the expected benefits of the changes.”

Speed could also undermine the GOP’s ability to swing public sentiment.

“Politically, it’s incredibly perilous,” said former Rep. David Jolly (R., Fla.). He said he supports making corporate tax rates more competitive, but “the congressional GOP has never sold it to the American people.”

Among the unintended consequences could be a decision to preserve the corporate alternative minimum tax. The change, made hours before a Senate vote, raised $40.3 billion to help pay for other priorities, but it also appears to have undermined a research and development tax credit that many companies depend upon to spur innovation and Republicans had pledged to protect.

The legislative haste also heightens the risk of drafting errors in the law.

The 2010 Affordable Care Act, for example, was written in a way that was ambiguous on the question of whether federal health insurance subsidies could go to Americans in any state or only those in states that established their own insurance exchanges. A battle over four words in the text – “established by the state”—went all the way to the Supreme Court.

Marc Gerson, a former House Ways and Means Committee tax counsel in a GOP-controlled House, said that even bills passed after months of work end up with errors that have to be fixed later, in what is known as a technical corrections process.

One risk for Republicans in the months ahead: a technical corrections bill could require 60 votes in the Senate and is sure to meet resistance from Democrats.

Democrats are already expressing outrage about the speed of the process.

“This is 477 pages,” Sen. Angus King (I., Maine) told CBS on Sunday. “There’s a lot of stuff in here that I don’t think anyone knows about.”

Republicans made similar complaints about the process behind the Affordable Care Act, even though it was the subject of extensive public hearings, a sign the measures lacked consensus that could spark future challenges.

“You complain about process when you’re losing,” Senate Majority Leader Mitch McConnell (R., Ky.) said early Saturday at a 2 a.m. news conference.

Write to Siobhan Hughes at siobhan.hughes@wsj.com

https://www.wsj.com/articles/tax-overhaul-marked-by-blinding-speed-1512392400

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CNN

How Republicans found a way to pass tax reform

Story highlights

  • Despite the hurdles facing the Senate tax plan, only one Republican voted against it
  • Sens. Rob Portman, Orrin Hatch, Tim Scott and Pat Toomey lobbied hard for the bill

(CNN)Republicans are finally on the verge of enacting a signature legislative achievement.

It’s something that seemed up in the air less than 24 hours before the vote, unlikely just a few months ago and completely unfathomable despite bold claims to the contrary midway through President Donald Trump’s first year in office.

Yet the Republican-controlled US Senate, by a vote of 51-49, early Saturday morning passed a historic overhaul of the US tax code, clearing what has long been considered the largest and most byzantine hurdle in an effort that hasn’t been completed in more than 31 years.

“We have an opportunity now to make America more competitive, and to keep jobs from being shipped offshore and provide substantial relief to the middle class,” McConnell told reporters after the vote. “At the end, there was not a single Democrat who thought this was a good idea, and so we’re going to take this message to the American people a year from now.”

Trump sounded a jubilant note Saturday morning, thanking Republican lawmakers on Twitter for their work on the bill.

Biggest Tax Bill and Tax Cuts in history just passed in the Senate. Now these great Republicans will be going for final passage. Thank you to House and Senate Republicans for your hard work and commitment!

— Donald J. Trump (@realDonaldTrump) December 2, 2017

Read More

The White House, too, lauded passage of the legislation Saturday morning, saying in a statement that the senators who voted for the bill “did a great service to their constituents” and adding that the legislation would lead to “sustainable economic prosperity and job creation.”

“We have a once-in-a-lifetime opportunity to reclaim America’s great destiny,” the statement read, adding that the administration looked forward to enacting the legislation by year’s end.

The legislative product — something that will touch every facet of American life, every US business and every individual in the country — came from a year of closed-door, cloistered meetings. It was driven by GOP goals of significant cuts and benefits to corporate entities designed to turbocharge economic growth, with significantly less benefit to the individuals who have been at the heart of the Republican pitch for the plan itself. It was created without the inclusion of Democrats and it came on the heels of a devastating failure on what has been the Republican Party’s top legislative priority for more than seven years: the repeal of Obamacare. Just hours before the bill was voted on, aides were still writing the bill. When the final bill emerged, notes were still hand-written and scribbled in the margins.

Yet, McConnell lost just one Republican vote, something even senior GOP members would deem almost inconceivable just a few weeks ago. After rushing the bill through a release and a markup, GOP leaders also survived a late, and completely unexpected, scare that nearly stalled a tax bill on the brink of passage. The bill is now expected to go to conference committee with House.

The story of how Senate Republicans closed the deal, which despite the roaring success of Republicans up to this point, still faces challenges in the days ahead as lawmakers in both chambers attempt to reconcile proposals that differ sharply in several key substantive ways, involves multiple Republican senators negotiating with other members right up until the final moments before the vote.

To tell that story, CNN spoke with dozens of lawmakers, administration officials, aides and lobbyists directly involved in the process, most of whom requested anonymity to candidly discuss the process.

The speed with which GOP leaders recovered from Thursday night’s scare on the bill was emblematic of the entire process. Expectations of potential doom from the lobbyists and outside advocates who watched the process like hawks quickly were overcome by the phoenix-like nature of a legislative priority that for decades has flummoxed both parties. As the proposal took another step forward, Republicans were candid about what appeared to be the accelerant behind the effort: political imperative. The idea that passing something — anything — was better than protecting a single provision or a single industry.

McConnell’s work for months, Corker unswayed

How the bill survived started at the top with McConnell.

After a tumultuous August in which Trump chastised the Senate leader frequently on Twitter for failing to deliver the votes on repealing Obamacare, McConnell kept his powder dry. In speeches across Kentucky, McConnell didn’t disparage Trump and returned to Washington ready to work with a partner whose style was the antithesis of McConnell’s say-less, focus-more approach.

Senate Majority Leader Mitch McConnell, a Kentucky Republican

A source familiar with their discussions told CNN that after a meeting shortly after Labor Day, Trump and McConnell began speaking at a clip more frequent then at any other point in Trump’s presidency.

“Daily,” the source told CNN.

The two men divided and conquered, with McConnell asking Trump explicitly for help trying to convince Sen. Ron Johnson of Wisconsin and Kentucky Sen. Rand Paul to vote for the tax bill.

Eventually it was just Sen. Bob Corker, a Republican from Tennessee who won’t seek re-election in 2018 and has often sparred with Trump, who voted against the proposal, citing concerns that the bill would add too much to the country’s deficit. Corker had made his support contingent on leaders including a trigger in the bill that would generate automatic tax cuts in the event the tax bill didn’t get the anticipated growth. But after reworking the proposal several times, the Senate parliamentarian ruled that the trigger wouldn’t pass Senate rules that allowed Republicans to pass their tax bill along a party-line vote. Corker then demanded $350 billion in additional cuts his colleagues weren’t ready to give him.

RELATED: Bob Corker’s $1 trillion tax reform problem

But even Corker, who had left aides and colleagues fuming Thursday night with a dramatic showing on the Senate floor that included him huddled around the Senate’s parliamentarian and GOP leaders for more than hour, offered conciliatory remarks Friday morning at a closed-door GOP conference meeting.

Sen. Bob Corker speaks to reporters on Capitol Hill May 10, 2017 in Washington, DC.

According to two GOP sources, Corker moved to de-escalate the situation that angered his colleagues Thursday night, saying he was happy the party was on the precipice of passing their tax bill even if he wasn’t going to be with them. Republican leaders as of Friday morning were still trying to win his support, but sources acknowledged the reality: the decision had been made to cut him loose. They had the votes without him.

“This is yet another tough vote,” Corker said in a statement Friday. “I am disappointed. I wanted to get to yes. But at the end of the day, I am not able to cast aside my fiscal concerns and vote for legislation that I believe, based on the information I currently have, could deepen the debt burden on future generations.”

Everyone besides Corker got in line

Earlier Friday morning, Sens. Steve Daines of Montana and Johnson had announced their support for the tax bill after leadership promised they’d include a provision in the tax bill that increased the tax break for pass-through entities from 17.4% to 23%.

Johnson’s conversion to a “yes” vote on the bill was perhaps the most hard-fought — and frustrating — for Republican leaders. For weeks he’d expressed discontent about being left out of the process. He didn’t just want to address the pass-through issue, he wanted to overhaul the Republican approach to it altogether. At one point, he appeared willing to stall the bill out in committee just to prove his point.

Sen. Ron Johnson, a Wisconsin Republican, is seen in July 2016.

It was the President himself — someone regularly maligned by Republican senators and staff alike — who helped bring Johnson along, multiple aides and administration officials said. It was in an exchange, shortly before the committee vote in a closed-door meeting of Republican senators and Trump, where Johnson vented his frustrations in front of everyone. Trump listened, engaged occasionally, dismissed once (“Oh c’mon, Ron,” Trump said at one point, according to two people in the room) and didn’t take personally an unusual slight: Johnson declined to stand when addressing Trump in the meeting, breaking bipartisan tradition. When Johnson finished, Trump said bluntly: “That’s not a reason to vote against the bill, Ron.”

But it was another part of the exchange that others said added clarity to what would eventually occur: Johnson complained nobody ever listened him. Trump countered that he did. And he was right. Trump administration officials, and the President himself, had been working with Johnson behind the scenes for days. And he had help from inside the Republican conference. Sen. David Perdue, a freshman senator from Georgia and former CEO, was also reaching out to Johnson — by phone over the Thanksgiving break, at another point on the Senate floor. He reported back to the President — with whom he’s formed a close relationship over the course of the year — giving him another source on where Johnson really stood on the proposal.

What Johnson wanted, however, hadn’t yet come the night before the final vote: a more generous expansion of the pass-through tax rate cut than Republican leaders were willing to offer to get he and Daines on board. He would get it by the next morning.

Leadership also won over Sen. Susan Collins of Maine — a senator who helped kill the GOP’s Obamacare repeal efforts and who many considered out of reach on the tax bill. But several aides say Collins, unlike health care, made clear to McConnell she wanted to get to “yes” on the tax legislation. The two had several private meetings. She made her concerns known — and the specific things she would need to come along, including the inclusion of the state and local tax deduction for property taxes, capped at $10,000, which had previously been repealed in the bill. Republican leaders, including the President at the closed-door conference meeting, solidified her support by giving her assurances that they’d push for an Obamacare market stabilization bill in upcoming weeks.

Sen. Susan Collins, a Maine Republican

“Having secured these key improvements in the bill, as well as the commitments to legislation to help lower health insurance premiums, I will cast my vote in support of the Senate tax reform bill,” Collins said in a lengthy statement before the final vote.

A final boost for GOP leaders: Sen. Jeff Flake, who like Corker had been pushing hard for the deficit “trigger” idea. He too would come on board, even without the trigger, when his concerns over the sunset of the expensing provision in the bill were addressed. He was also given assurances by Vice President Mike Pence that he would be involved in the negotiations over how to handle a solution for halting the Deferred Action for Childhood Arrivals program, which Trump pledged to end by March.

Victory after repeated defeats against Obamacare

The success of 11th-hour horse-trading represents a massive win for McConnell, who spent months haunted by the conference’s inability to repeal and replace Obamacare in July.

After 11 months, Senate Republicans finally delivered on a core election promise.

For their part, Senate Democrats were unified in their opposition — and their disdain for the proposal. They took to the floor, member after member, for three days — attacking the proposal for being too weighted toward corporate interests, fiscally irresponsible and produced through a process that was equal parts scattershot and secretive. Sen. Richard Durbin, an Illinois Democrat, waved a page of a draft version of the proposal with handwritten changes to in the margins at one point to demonstrate what he attacked as a haphazard process. Others seized on the bill’s $1.5 trillion price tag — and the lack fo any nonpartisan analysis that said the growth created by the proposal could cover that cost, as Republicans had pledged.

“My Republican friends will ultimately pay the consequences for this bill in 2018 and beyond. The Republican Party will never again be the party of tax cuts for the middle class,” Sen. Chuck Schumer, the Senate’ Minority Leader, said on the Senate floor Friday evening.

The victory on tax reform also represented a first step on dismantling Obamacare as well. On Friday, Senate Republicans managed to not only pass a tax reform bill, but also to deliver a first and crucial blow to the Affordable Care Act. The tax bill repealed the individual mandate, a provision that required individuals to purchase health care or face a fine, something that just four months proved too complicated for the conference.

In a way, including the provision — which was the ultimate gamble for a conference that failed repeatedly to repeal it just months before — represented a double win for the party. Finally, Republican senators have done what their House colleagues and even their donors feared they couldn’t: they’ve finally passed a cornerstone piece of legislation.

Four senators and a bill one year in the making

While Republicans had worked on various proposals to overhaul the tax code for decades, Republican senators began strategizing their latest attempt to reform the tax code not long after Trump stunned the country and won the White House. Republicans had a President ready and willing to sign a bill if they could manage to send him one.

According to a source familiar with the tax negotiations, as far back as December 2016, a small group of Republican senators — all on the Senate Finance Committee and guided by Chairman Orrin Hatch and his staff — began hashing out the Senate’s course.

Sen. Tim Scott, a South Carolina Republican

The group included Sens. Rob Portman, formally the director of the Office of Management and Budget, Sen. John Thune, a member of the GOP leadership, Pat Toomey, a fiscal conservative and a member of the Senate’s Budget Committee and Sen. Tim Scott, a rising conservative star in the party. Over the next several months, the senators held what the source said must have been hundreds of meetings as they sought to find a way forward not only among fellow senators but in cooperation with the House of Representatives and Trump — who lawmakers widely acknowledge was more engaged and interested in tax reform than he had been on health care.

“There’s been an enormous amount of work done. The reason you see everybody looking so tired is because we are,” said Sen. John Kennedy, a Louisiana Republican. “They did a great job of keeping us apprised so we wouldn’t be surprised.”

It was those four senators’ knowledge about the bill that made the effort successful, senators said.

“The health care was sort of a committee of the whole and staff did most of the explaining,” said Sen. Lamar Alexander. “In this case, you had the senators themselves more directly involved in writing and explaining and defending the bill and I think it’s the principal reason why it succeeded.”

“I think Sen. Toomey was born with a tax-reform bill in his bassinet, and Sen. Portman probably was too,” Alexander added as he walked onto a Senate elevator.

Sen. Pat Toomey, a Pennsylvania Republican (Photo by Mark Wilson/Getty Images)

Republican senators widely credit the four senators with bringing the bill to the finish line. Sen. James Lankford, a Oklahoma Republican who desperately wanted a trigger like Corker, said he met regularly with them and that unlike on health care, where no one had ownership over the process, colleagues knew exactly who they could go to with concerns.

“Those four were really the front people who each took a section whether it be international taxes, whether it be business, whether it be individual. Each had their lane and everybody as they were going through it could run it through them,” Lankford said. “I don’t mean this flippantly, they all did a good job.”

In the final days and hours of negotiations, sources familiar tell CNN, Portman played a critical role in helping his colleagues get comfortable with the bill. Just minutes before the Republican conference meeting Friday morning that would determine the fate of the bill, Portman could be seen standing outside the Strom Thurmond room in the Capitol for 10 minutes with Collins and the Senate’s Majority Whip John Cornyn. The source familiar with the negotiation said that in the final three days, Portman met with Daines and Corker and dined for breakfast with Collins Wednesday just two days before the crucial vote.

In the end, Republicans filled the chamber, anticipating the final vote. They slapped backs and shook hands. McConnell winked and pointed at the Vice President Mike Pence, who presided over the vote, a sign of relief after months of searching for that one legislative achievement.

Democrats one by one voted and left, a protest to the process they abhorred. In the end their side of the chamber was empty and the vote tally was called: “51 to 49,” the clerk read.

But in his news conference following the vote, McConnell dismissed Democrats’ concerns, saying “You complain about process when you’re losing.”

CNN’s Kristin Wilson, Ashley Killough and Ted Barrett contributed to this report.

Republican Tax Plan Quickly Hits First Hurdle

September 29, 2017

GOP lawmakers from high-tax states oppose repealing individual deduction for state and local taxes

A day after announcing their ambitious tax plan, Republicans debated scaling back one of their largest and most controversial proposals to pay for lower tax rates: repeal of the individual deduction for state and local taxes.

Faced with the potential for defections by House Republicans from high-tax states such as New York and New Jersey, Republicans are exploring ways to satisfy those lawmakers without backing off the lower tax rates they promised.

“The members with concerns from high-tax states have to be accommodated. This has to be dealt with,” said Rep. Peter Roskam (R., Ill.), a senior member of the House Ways and Means Committee whose district outside Chicago ranks 37th out of 435 in use of the deduction. “So, you can imagine a soft landing on this that creative people are putting much time and energy into.”

Image result for Peter Roskam, photos

Rep. Peter Roskam (R., Ill.)

The fight over the state and local deduction, with more than $1 trillion at stake over a decade, is an early signal of the bruising battle ahead for Republicans trying to pass a tax bill that hasn’t garnered Democratic support and that faces narrow GOP margins in the House and Senate. It is the most obvious case of a bloc of pivotal lawmakers holding a specific concern, but it won’t be the only one.

“The notion that you fix this and then it’s smooth sailing?” Mr. Roskam said. “How naive.”

If Republicans from high-tax states all oppose repeal and stick together, they have the clout to force a change. The top nine states for the deduction, measured as a percentage of income, are represented by 33 House Republicans. With one vacancy in the House, the party can lose no more than 22 GOP votes on legislation if all Democrats remain opposed.

The dispute over the state and local tax break echoes back to 1986, the last time Congress revamped the tax system. Then, too, House Republicans from New York fought against their own party’s plan to repeal the tax break. Aided by Democrats, who controlled the House, they prevailed, and taxpayers can now deduct their property taxes, along with either their income or sales taxes.

More than 90% of filers with incomes over $200,000 claim the deduction, according to the Tax Policy Center. Overall, 38% of the deduction’s value goes to California, New York and New Jersey, which have 21% of U.S. households, the center said.

Rep. Kevin Brady (R., Texas), the chairman of the House Ways and Means Committee, said he is listening to lawmakers from high-tax states and is open to further discussions.

Related image

Rep. Kevin Brady (R., Texas)

“It’s crucial that we deliver tax relief for every American regardless of where they live, including in those states that have high state and local taxes,” said Mr. Brady, whose suburban Houston district ranks 328th out of 435 in use of the deduction, according to the nonpartisan Tax Policy Center. “We will have a choice between keeping that deduction for a few, or lowering tax rates for every American.”

New York Republicans said Thursday that they were concerned that without that deduction, many of their voters might end up paying more in taxes under the GOP plans, and they were waiting for details about tax brackets and other breaks to determine how they would fare.

“I’m also worried that it would exacerbate New York’s status as a donor state to Washington, where we send many more dollars to Washington than we receive back,” said Rep. John Faso (R., N.Y.), whose district is largely in the Hudson River Valley.

Rep. Peter King (R., N.Y.) said that taking away the state and local tax deduction would squarely hit his middle-class constituents on Long Island, whose property taxes can average $15,000 a year and who wouldn’t tend to benefit from other tax breaks contained in the House GOP plan.

Image result for Peter King, photos

Rep. Peter King (R., N.Y.)

“It doesn’t add up,” Mr. King said. “Even under the best interpretation, maybe a majority of my constituents would break even. So, if the rest of the country is getting a tax cut, the most I can tell my constituents is: It could have been worse for us.”

Republicans don’t intend to produce a detailed plan for weeks. A high-level framework released Wednesday was the product of six top negotiators from the House, Senate and Trump administration, and top policy makers said the state and local tax provision was one of the main deductions they were targeting for elimination.

Possible options under discussion include allowing the break for property taxes but not income taxes, or else converting the deduction into a smaller credit. The plan could also adopt a more general cap on itemized deductions.

Repealing the break would free over the next decade more than $1 trillion that the party plans to use to lower tax rates. Politically, it would be good for most Republicans, shifting more of the federal tax burden from states they represent onto states they don’t and to Washington, D.C.

Repealing the state and local deduction while increasing the standard deduction would also limit the value of other deductions. Fewer people would get over the new, higher threshold to itemize deductions of $12,000 for individuals and $24,000 for married couples, meaning that fewer people would have an incentive to take deductions for home mortgage interest and charitable contributions.

Many higher-income households already have their state and local tax breaks curtailed under the alternative minimum tax. But about three-quarters of taxpayers who owe AMT and deduct state and local taxes would see a net increase if both provisions were repealed, as is the case under the GOP plan, according to economist Frank Sammartino of the Tax Policy Center.

Republicans argue that the deduction lets states raise taxes with fewer consequences, because the federal deduction subsidizes part of the cost. If New York wants higher taxes, they say, New Yorkers should pay.

Democrats and blue-state Republicans say the change would punish their states.

“Republicans used to say that the best decisions are made locally, and now they want to tax local decisions,” said Sen. Chris Van Hollen (D., Md.).

The deduction’s fate in the Senate isn’t clear, either, even though Republicans there don’t represent any of the top nine states for the deduction.

“Chairman [Orrin] Hatch recognizes that every major provision within the tax code has an important constituency and consequence,” said Julia Lawless, a spokeswoman for Mr. Hatch, who heads the Senate Finance Committee. “He will work with members to examine these provisions and make appropriate decisions.”

The fight over the state and local deduction highlights the backlash every decision in the tax debate will bring — a reality glossed over when Republicans described their tax plan Wednesday, said Sen. Bob Corker (R., Tenn.). He said he supports repealing the state and local deduction but was “almost aghast” at the lack of clarity about tax breaks that would have to go away.

Image result for Bob Corker, photos

Sen. Bob Corker (R., Tenn.)

“They’re throwing sugar out on the table,” he said. “You haven’t even begun to deal with the spinach part. Not even a little leaf of spinach was thrown out on the table.”

–Kristina Peterson and Laura Saunders contributed to this article.

Write to Richard Rubin at richard.rubin@wsj.com and Siobhan Hughes at siobhan.hughes@wsj.com

https://www.wsj.com/articles/republican-tax-plan-quickly-hits-first-hurdle-1506638523

The 30 Republicans Holding Up Tax Reform

September 14, 2017

The Freedom Caucus threatens to side with Democrats and block the GOP majority.

By Karl Rove
The Wall Street Journal
Sept. 13, 2017 6:53 p.m. ET

No matter how persuasive President Trump is, it’s unlikely he can round up enough Democrats to get 60 votes in the Senate for tax reform. That means Republicans will need to use the Senate’s reconciliation process, which avoids the filibuster, to pass their plan with 51 votes. But first the House and Senate must pass a budget resolution—and soon.

A budget resolution sets spending levels and authorizes congressional committees to prepare bills fulfilling the blueprint. With the reconciliation plan in mind, this year’s resolution would set the size of the tax reform and then instruct the House Ways and Means Committee and the Senate Finance Committee to flesh out the provisions.

Gaining agreement on a budget resolution is always tough. No more than a handful of lawmakers from the opposition party ever vote for the majority’s resolution. It helps that Republicans control both the House and Senate, but the GOP must still resolve its internal philosophical disagreements.

House Republicans tend to insist on resolutions that balance the budget within 10 years. This means resolutions that pledge to slow substantially the growth of entitlement spending. Such promises are rarely fulfilled. But putting them in the budget blueprint fuels Democratic ads claiming Republicans will throw grandma off the cliff and deprive poor children of free school lunches. Knowing this, Senate Republicans tend to want resolutions that reach balance after 10 years. Another GOP tension is between defense hawks, who want increased military spending, and deficit hawks, who want all spending restrained or cut.

Then there are nerdy but important technical arguments, starting with how the resolution’s spending baseline is calculated. Beginning with a baseline of “current law” means assuming that a tax break currently authorized for only a year or two will actually expire instead of being reauthorized. But Congress renews some tax breaks annually and probably will keep doing so through the next decade. To account for this, many in the GOP want to calculate the baseline under “current policy.”

It sounds technical, but it quickly becomes political. Democrats demand “current law” because a higher baseline would make tax reform appear to raise the deficit more than it actually would. On the other hand a lower baseline would give tax reform more wiggle room: One GOP budget expert tells me that “current policy” would provide, on paper, $450 billion that could be used to lower rates and make the tax code simpler and fairer.

Dynamic scoring is another geeky fight. A tax reform that generates economic growth will offset some of the government revenue lost from cutting rates. Republicans want their bill evaluated with dynamic scoring because it takes this effect into account and makes reform more attractive. Democrats oppose it for the same reason.

Still, given time and leadership—both on Capitol Hill and from the White House—Republicans could cobble together a budget resolution setting up a strong tax reform, which in turn would juice the economy and redeem the GOP in the midterms.

The biggest obstacle is the House Freedom Caucus. This group of just over 30 Republican congressmen has already slowed up the process by threatening to vote with Democrats against the GOP budget resolution unless they can see and approve, in advance, every major provision of the tax-reform bill. The Freedom Caucus tried in late July to block the House Budget Committee’s passage of a resolution unless the border-adjustment tax was taken off the table—which it then was. Now the Freedom Caucus’s members say they’ll flake on the budget resolution if tax reform includes full, immediate expensing of business investment. But if that’s agreed to, they’ll have more demands.

These lawmakers say they want Congress to operate in “regular order,” with committees grinding away to write legislation instead of leadership handing it down. This is hypocritical bunk. What they want is for their caucus to dictate the details of tax bills to the House Ways and Means Committee, the Senate Finance Committee and the Republican majorities on both sides of Capitol Hill. Their approach is to make demands while threatening to join Nancy Pelosi in opposing the budget resolution unless they get their way.

If the Freedom Caucus acts on its threat, the budget resolution could be voted down, making tax reform impossible. No doubt, following their M.O., the group’s members would then blame the GOP leadership. Even if the resolution passes, the Freedom Caucus’s shenanigans may delay tax reform until 2018. These lawmakers are demonstrating once again that the freedom they most prize is freedom from the responsibility of governing.

Mr. Rove helped organize the political-action committee American Crossroads and is the author of “The Triumph of William McKinley ” (Simon & Schuster, 2015).

Appeared in the September 14, 2017, print edition.

https://www.wsj.com/articles/the-30-republicans-holding-up-tax-reform-1505343197

Trump Will Get His Tax Cuts, Vast Majority of Economists Say

August 14, 2017

Bloomberg News

By Rich Miller and Catarina Saraiva

August 14, 2017, 4:00 AM EDT
  • Yet survey suggests the impact on economy will be limited
  • Fed seen raising interest rates, which may blunt stimulus

Rep. Brady Says on Track to Deliver Tax Bill This Year

The pros who make their living forecasting the economy overwhelmingly expect President Donald Trump and his fellow Republicans to push through tax cuts in time for next year’s congressional elections. They just don’t think that the reductions will do all that much to help the economy in 2018.

That’s the message from the latest Bloomberg monthly poll of economists, taken Aug. 4 to Aug. 9. Of 38 respondents, 29 expect Congress to pass tax-cut legislation by November 2018. The policy changes though are only expected to add 0.2 percentage point to the pace of gross domestic product expansion in 2018, according to the median figure from analysts penciling in an impact.

The Bloomberg survey forecasts growth in 2018 to be only slightly higher than this year — 2.3 percent versus 2.1 percent, according to median projections from a broader pool of 71 economists. What’s more, analysts see the economy losing momentum in 2019, with expansion falling back to 2 percent, contrasting with the Trump administration’s forecast of a further pickup.

“I think they’ll do something and it will probably be somewhat stimulative in the short run,” said High Frequency Economics Chief U.S. Economist Jim O’Sullivan, referring to Trump and Congress. “I don’t expect a huge impact from it.”

Cuts to individual and corporate rates would fall short of what GOP leaders and the Trump administration have promised — a once-in-a-generation permanent overhaul of the U.S. tax code, similar to what happened in 1986 under former President Ronald Reagan. If Republicans use a budget procedure for a tax bill to bypass Democratic opposition in the Senate, cuts would have to expire if they add to the long-term federal deficit.

First Half

The administration is betting that a mixture of corporate and individual tax cuts, along with other tax code changes, will eventually help lift annual economic growth to 3 percent, from the 2.1 percent average rate of the last eight years. In the first half of 2017, coinciding with Trump’s first six months in office, output rose at a 1.9 percent annual pace.

In order to win passage of a sweeping tax plan, the administration is holding a weekly, all-hands-on-deck meeting to coordinate strategy between the president and his allies, according to White House officials. The intensive discussions contrast with the at times haphazard approach the administration took in its failed attempt to repeal former President Barack Obama’s health-care law.

White House officials have said they’re still committed to a permanent tax revamp, and the plan is to start hearings and a markup of a tax bill after Labor Day so a version can get through the House in October and the Senate in November. Trump and Senate Majority Leader Mitch McConnell have sparred in recent days over the amount of time needed to pass complicated legislation, such as repealing and replacing Obamacare.

Trump officials see their policies accelerating GDP growth to 2.7 percent in 2019, on its way to 3 percent within the following two years. Economists beg to differ.

“The type of stimulus being talked about is temporary,” said Nariman Behravesh, chief economist at consultants IHS Inc. “It won’t deliver a sustained increase in growth.”

Texas Representative Kevin Brady, the Republican chairman of the House Ways and Means Committee, said Friday that Congress is on track to deliver a tax bill to Trump in 2017. Brady, in a Bloomberg Television interview, acknowledged the goal is “aggressive” but said there’s “urgency” in terms of the economy and U.S. competitiveness.

Fed Action

As the administration aims to add fuel to the economy, the Federal Reserve is expected to be withdrawing it, according to the poll. Economists forecast that the central bank will raise interest rates once more this year and three times in 2018, each time by a quarter percentage point.

That’s in line with Fed policy makers’ own projections but significantly below levels implied in financial markets.

“To keep the economy on a sustainable path of growth, we need to gradually reduce the monetary stimulus put in place during the recession and recovery,” San Francisco Fed President John Williams said in an Aug. 2 speech in Las Vegas. “If we delay too long, the economy will eventually overheat, causing inflation or other imbalances to emerge.”

Policy makers last increased borrowing costs in June, when they boosted the target range for the inter-bank federal funds rate to a range of 1 percent to 1.25 percent.

https://www.bloomberg.com/news/articles/2017-08-14/trump-will-get-his-tax-cuts-vast-majority-of-economists-believe

Taxes, Budget Are Focus for Trump Despite Probes

May 22, 2017

White House, congressional GOP leaders aim to show they can deliver on policy promises

The White House on Tuesday will roll out a budget proposal crystallizing the president’s priorities.

The White House on Tuesday will roll out a budget proposal crystallizing the president’s priorities. PHOTO: ALEX WONG/GETTY IMAGES

WASHINGTON—President Donald Trump is thousands of miles away, but his policy agenda faces tests back home this week as he looks to shift the focus from Russia investigations to his plans for boosting American military power and revamping the tax code.

The White House on Tuesday will roll out a budget proposal crystallizing the president’s priorities in a blueprint that calls for large cuts to social safety-net programs such as Medicaid and food assistance while increasing Pentagon and border-security spending.

While Mr. Trump visits Pope Francis in Rome on Wednesday, Treasury Secretary Steven Mnuchin in Washington will testify about Mr. Trump’s 2018 budget plan before the House Ways and Means Committee. The same congressional panel will hold a separate hearing devoted to a tax overhaul aimed at reducing rates and speeding job growth—a centerpiece of Mr. Trump’s campaign message.

Following a drumbeat of revelations about Mr. Trump and Russia over the past two weeks, the White House and congressional Republican leaders are eager to show that they can deliver on policy promises.

“People in the country need to know that we are busy at work trying to solve their problems,” House Speaker Paul Ryan said. “So I realize that there’s a lot in the media these days. That doesn’t seize up Congress. That doesn’t stop us from doing our jobs, to work on people’s problems.”

A potential land mine for the Trump administration is a report coming out this week from the Congressional Budget Office. The nonpartisan CBO will release its evaluation of the health-care bill that narrowly passed the House on May 4 following an intensive lobbying push by the White House.

The analysis could influence the bill’s fate in the Senate by giving lawmakers a fuller picture of how much the measure will cost and how many people might lose insurance coverage.

Meantime, the congressional machinery devoted to the Russia probe continues.

A high-profile witness will appear before the House Intelligence Committee this week as part of the panel’s investigation into alleged Russian interference in the 2016 election, including questions about whether anyone from Mr. Trump’s campaign colluded with the Kremlin.

John Brennan, the former Central Intelligence Agency director under President Barack Obama, will testify publicly on Tuesday—a hearing that is expected to shed new light on how the Obama administration’s intelligence agencies came to the determination that Russia interfered in the 2016 election.

John Brennan, the former Central Intelligence Agency director under President Barack Obama, will appear Tuesday before the House Intelligence Committee as part of its investigation into alleged Russian interference in the 2016 election.

John Brennan, the former Central Intelligence Agency director under President Barack Obama, will appear Tuesday before the House Intelligence Committee as part of its investigation into alleged Russian interference in the 2016 election. PHOTO: DAVID PAUL MORRIS/BLOOMBERG NEWS

The Senate Intelligence Committee is also preparing for a hearing with former Federal Bureau of Investigation Director James Comey after Memorial Day. A final date hasn’t been set. But the hearing is expected to be a moment of high-drama, with Mr. Comey facing questions about a memo he wrote saying that Mr. Trump asked him to back off an investigation into former national security adviser Michael Flynn.

Asked whether he had said any such thing to Mr. Comey, Mr. Trump told reporters at a news conference last week: “No. No.”

Many presidents in modern times have endured distracting investigations that threatened to derail their agendas. Former Republican President Ronald Reagan faced the Iran-Contra scandal, while Democrat Bill Clinton dealt with long-running inquiries into the real-estate deal known as Whitewater and the probe into his affair with Monica Lewinsky.

Last week, the Justice Department named former FBI Director Robert Mueller as a special counsel to head the investigation arising from allegations that Russia interfered in the presidential race. Some allies of Mr. Trump believe this is a welcome development that will enable the White House to concentrate on its priorities and defer to Mr. Mueller while the investigation plays out.

Anthony Scaramucci, who served on Mr. Trump’s transition team, said in an interview Sunday that a stock answer from the White House when it faces questions about the Russia probe should be: “We have a special counsel. Why don’t we just allow them to do their work.”

Inside the White House, Trump aides say they have been discussing ways to compartmentalize tasks so that the probe doesn’t consume the building and doom various policy goals. Some veterans of past administrations believe such concerns are justified.

“There’s reason to be concerned that all of the turbulence surrounding stuff like the Comey firing will distract from and delay what should otherwise be a very robust and positive economic policy agenda,” said Joshua Bolten, a former White House chief of staff under George W. Bush and chairman of the Business Roundtable, a trade group representing some of the biggest U.S. firms. “We don’t have a lot of weeks to spare if serious [tax] reform is going to get through.”

Staying disciplined amid the Russia probe depends to some extent on Mr. Trump and the restraint he is able to show. In the past, the president has seen fit to tweet about various matters in the news that upset him, giving the issues new life.

Since leaving for his trip last week to the Middle East and Europe, Mr. Trump hasn’t addressed the Russia controversy in his twitter feed. Nor has he gone off script in any of his public remarks.

Ken Duberstein, a former chief of staff to Mr. Reagan who dealt with the fallout from Iran-Contra, said that the Reagan White House set up a system in which the counsel’s office focused on the scandal, leaving others to focus on their jobs. He said the Trump White House should consider a similar arrangement.

“A lot of these lessons apply to any president, because every president invariably goes into the ditch on something,” Mr. Duberstein said.

Write to Peter Nicholas at peter.nicholas@wsj.com and Byron Tau at byron.tau@wsj.com

Appeared in the May. 22, 2017, print edition as ‘Taxes, Budget Focus for Trump Despite Probes.’

https://www.wsj.com/articles/taxes-budget-are-focus-for-trump-despite-probes-1495414525

Democratic Lawmakers Deny Their President: After rejecting part of trade legislation, House supports fast-track authority

June 12, 2015

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The President That Never Worked The Halls of Congress, May be Paying The Price

President Barack Obama, with House Minority Leader Nancy Pelosi, made a rare, unannounced visit to Capitol Hill to urge Democrats to support the trade bill.
President Barack Obama, with House Minority Leader Nancy Pelosi, made a rare, unannounced visit to Capitol Hill to urge Democrats to support the trade bill. PHOTO: REUTERS

House rejects Obama on trade authority — humiliating defeat for President Barack Obama

June 12, 2015

By ERICA WERNER and CHARLES BABINGTON

The Associated Press

WASHINGTON (AP) — The House derailed a high-profile White House-backed trade bill on Friday, a humiliating defeat for President Barack Obama inflicted by Democratic Leader Nancy Pelosi and dozens of union-backed lawmakers from his own party.

The 302-126 vote left the legislation in perilous limbo, and came a few hours after Obama journeyed to the Capitol to deliver a last-minute personal plea to fellow Democrats to give him power to negotiate global trade deals that Congress could approve or reject but not change.

“I don’t think you ever nail anything down around here. It’s always moving,” the president said as he departed — a prescient remark given Pelosi’s dramatic announcement later on the House floor.

“Slow down the fast track to get a better deal for the American people,” the California lawmaker said in a speech that drew handshakes and hugs from Democrats have labored for months to reject Obama’s request for “fast track” authority in trade talks.

Republicans command a majority in the House, and Speaker John Boehner and the GOP leadership worked in harness with Obama to pass the legislation. But there were many defections among Republicans unwilling to expand the president’s authority and not nearly enough Democrats supporting him for the bill to prevail.

The outcome was also a triumph for organized labor, which had lobbied lawmakers furiously to oppose the measure that union officials warned would lead to the loss of thousands of American jobs.

“The president needs to realize we all represent our districts,” said Rep. Gene Green, D-Texas. He said labor opposition to the effort was “overwhelming.”

Technically, the pivotal vote was on a portion of the legislation to renew federal aid for workers who lose their jobs through imports.

A second roll call followed on the trade negotiating powers themselves, and the House approved that measure, 219-211. But under the rules in effect, the overall legislation, previously approved by the Senate, could not advance to the White House unless both halves were agreed to.

That made the day’s events something less than a permanent rejection of the legislation.

Pelosi said the bill was “stuck in the station,” suggesting that changes could get it moving again.

Even so, it was unclear how majority Republicans and the White House would be able to gain the momentum.

President Barack Obama, House Minority Leader Nancy Pelosi of Calif. and House Minority Assistant Leader James Clyburn of S.C., leave meeting with House Democrats on Capitol Hill in Washington, Friday, June 12, 2015. The president made an 11th-hour appeal to dubious Democrats on Friday in a tense run-up to a House showdown on legislation to strengthen his hand in global trade talks (AP Photo/Carolyn Kaster)

Obama drew applause when he walked into the meeting with Democrats, but sharp words after he left and few if any conversions for his efforts.

“Basically the president tried to both guilt people and then impugn their integrity,” said Rep. Peter DeFazio, D-Ore., one of the most outspoken opponents of the legislation.

Another Democrat, Rep. Steve Cohen of Tennessee, said Obama had told Democrats that “his whole philosophy, life, everything he’s done has been to help people. And he thinks he’s doing that with this trade agreement.”

Cohen added he remains on the fence after hearing Obama make his pitch. He noted that FedEx, a major employer in his district, supports the bill, while longtime political allies in organized labor oppose it.

Business groups generally favor the measure. But strong opposition by organized labor carries at least an implicit threat to the re-election of any Democrat who votes in the bill’s favor.

The debate and vote are certain to reverberate in next year’s presidential election as well. Most Republican contenders favor the trade bill. Among Democrats, Hillary Clinton is uncommitted, despite calls from presidential rival Vermont Sen. Bernard Sanders, an opponent of the measure, to take a position.

The president’s hastily arranged visit to Capitol Hill marked a bid to stave off a humiliating defeat at the hands of his own party.

His visit relegated much of the debate on the House floor to the status of a sideshow.

“Is America going to shape the global economy, or is it going to shape us?” said Rep. Paul Ryan, the Wisconsin Republican who is head of the House Ways and Means Committee and a GOP pointman on an issue that scrambled the normal party alignment in divided government.

But Rep. Sander Levin, D-Mich., countered that the legislation heading toward a showdown vote included “no meaningful protections whatever against currency manipulation” by some of America’s trading partners, whose actions he said have “ruined millions of middle class jobs.”

Democratic Rep. Barbara Lee of California, an opponent of the legislation, said Obama’s appeal “didn’t convince me. It may have convinced other members.”

Other presidents have had the authority Obama seeks. The White House wants the legislation as it works to wrap up a round of talks with 11 Pacific Area countries.

The same measure included a renewal of assistance for workers who lose their jobs as a result of global trade. Normally, that is a Democratic priority, but in this case, Levin and other opponents of the measure mounted an effort to kill the aid package, as a way of toppling the entire bill.

The move caught the GOP off-guard. House Republicans, already in the awkward position of allying themselves with Obama, found themselves being asked by their leaders to vote for a worker retraining program that most have long opposed as wasteful. Many were reluctant to do so, leaving the fate of the entire package up in the air, and Obama facing the prospect of a brutal loss — unless he can eke out what all predict would be the narrowest of wins.

___

Associated Press writers David Espo, Darlene Superville, Jim Kuhnhenn, Alan Fram, Laurie Kellman and Andrew Taylor contributed to this report.

Related:

Nancy Pelosi bucks President Obama on trade

June 12, 2015

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By LAUREN FRENCH 6/12/15 1:26 PM EDT Updated 6/12/15 1:38 PM EDT
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After weeks of silence, House Minority Leader Nancy Pelosi spoke on the House floor Friday against legislation to give President Barack Obama fast-track trade authority and a related bill to provide aid to workers displaced by trade.

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“We have an opportunity to slow down,” the California Democrat said. “Whatever the deal is with other countries, we want a better deal for America’s workers.”
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The floor speech by the Democratic leader spelled trouble for President Barack Obama’s bid to complete the 12-nation Trans-Pacific Partnership agreement. Democrats overwhelmingly oppose giving the president fast-track authority to clinch the deal, but there was some hope among trade proponents that Pelosi might help sway enough Democrats to vote for it to get it over the hump.

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Instead, she sided with opponents ahead of a pair of critical votes, an ominous sign for trade proponents. Pelosi said she would vote against a jobs aid bill that is critical to winning needed Democratic votes for fast track.

“Its defeat is the only way we will be able to slow down fast track,” Pelosi said.

Read more: http://www.politico.com/story/2015/06/nancy-pelosi-president-obama-trade-118941.html#ixzz3cs4uQvBu

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Related:

Obama makes personal appeal on trade with key vote in House

June 12, 2015

Associated Press

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WASHINGTON (AP) — President Barack Obama made an 11th-hour appeal to dubious Democrats on Friday in a tense run-up to a House showdown on legislation to strengthen his hand in global trade talks.

The president’s hastily scheduled trip to the Capitol coincided with the beginning of debate on the House floor on the legislation, which stands near the top of his second-term agenda.

“Is America going to shape the global economy, or is it going to shape us?” said Rep. Paul Ryan, the Wisconsin Republican who is head of the House Ways and Means Committee and a GOP pointman on an issue that scrambled the normal party alignment in divided government.

But Rep. Sander Levin, D-Mich., countered that the legislation heading toward a showdown vote included “no meaningful protections whatever against currency manipulation” by some of America’s trading partners, whose actions he said have “ruined millions of middle class jobs.”

The legislation would allow Obama to complete global trade deals that Congress could approve or reject, but not change. Other presidents have had the authority, which is dubbed “fast track.” The White House wants the authority as he works to wrap up a round of talks with 11 Pacific Area countries.

The same measure included a renewal of assistance for workers who lose their jobs as a result of global trade. Normally, that is a Democratic priority, but in this case, Levin and other opponents of the measure mounted an effort to kill the aid package, as a way of toppling the entire bill.

The president’s last-minute visit to Capitol Hill marked a bid to stave off a humiliating defeat at the hands of his own party on a top second-term priority.

The move caught the GOP off-guard. House Republicans, already in the awkward position of allying themselves with Obama, found themselves being asked by their leaders to vote for a worker retraining program that most have long opposed as wasteful. Many were reluctant to do so, leaving the fate of the entire package up in the air, and Obama facing the prospect of a brutal loss — unless he can eke out what all predict would be the narrowest of wins.

“If we have to pass something that’s a Democratic ideal with all Republicans to get the whole thing to go,” said Rep. Tom Rooney, R-Fla., “we could be in trouble.”

The main trade bill at issue would give Obama so-called “fast track” authority to negotiate trade deals that Congress could approve or reject, but not amend. He hopes to use the authority, already agreed to by the Senate, to complete a sweeping pact with 11 other Pacific Rim nations which would constitute the economic centerpiece of his second term. Obama says such a pact with Japan, Mexico, Singapore and other nations constituting 40 percent of the global economy would open up critical new markets for American products.

Business groups like the Chamber of Commerce crave the deal; labor unions are ardently opposed, pointing to job and wage losses from earlier trade pacts opponents say never lived up to the hype from previous administrations.

Those colliding interests have produced unusual alliances on Capitol Hill, with House Republicans working to help a president they oppose on nearly every other issue, and most Democrats working against him.

Yet in a convoluted series of events Thursday, the fast-track bill, long the main event, seemed to fade in importance even as Republicans began sounding confident it would command enough votes to pass. Instead, Democrats began eyeing the possibility of taking down the related Trade Adjustment Assistance bill — a maneuver that would be made possible only because of how House leaders decided to link the two of them in rules governing how they would come to a vote.

Republicans said that the sequencing was determined at the behest of House Minority Leader Nancy Pelosi, D-Calif. Pelosi, trying to maintain leverage, has remained noncommittal on the whole issue to the end, even as she worked behind the scenes with House Speaker John Boehner, R-Ohio, this week to solve a last-minute hang-up involving Democratic concerns about cutting Medicare funds to pay for worker retraining.

Nancy Pelosi. Photo by Greg Nash

The intricate solution to the Medicare issue lay in finding another revenue source —various tax penalties — and also lining up the votes in a certain order that made passage of the fast-track bill contingent on passage of the trade adjustment bill. That created the opening for Democratic fast-track opponents to take aim at the trade adjustment measure.

“The TAA is the handmaiden to facilitate the whole deal,” said Rep. Peter DeFazio, D-Ore. “We have the potential to stop this whole train.”

Friday’s outcome appears to depend on how many Democrats defect on the trade adjustment bill — and whether Republicans can make up their numbers. The biggest questions hanging over the House late Thursday were: How many of the 188 Democrats will vote against TAA because it’s the best way to kill fast track? And how many of the 246 Republicans might hold their noses and vote for the jobs program in a bid to save fast track?

The trade issue’s divisiveness was evident when the House voted narrowly, 217-212, on a procedure Thursday to advance the package to Friday’s expected showdown.

The White House, recognizing the precarious position the package is in, dispatched top officials to Capitol Hill Thursday to meet with Democrats, and Obama himself made a surprise appearance at Thursday night’s annual congressional baseball game. Arriving as Democratic and Republican lawmakers faced off at Nationals Park, Obama was greeted with chants of “TPA! TPA!” from the GOP side — the acronym for the Trade Promotion Authority fast track bill.

___

Associated Press writer Darlene Superville contributed to this report.

*********************************

Washington (CNN)In another sign that his trade plan might be in jeopardy, President Barack Obama is on Capitol Hill on Friday morning to meet with Democrats to push for support on a vote related to trade authority.

House Democrats, the vast majority of whom are trying to defeat fast-track trade legislation, will gather to hear from the President at their 9:30 a.m. caucus meeting, according to a Democratic aide. A final vote on the legislation is expected Friday, after a procedural vote narrowly passed Thursday evening.

A House Democratic member told CNN the President’s outreach is coming too late and doubts it will save the package Friday.

“Where has he been? He went to the baseball game and didn’t talk to anyone,” this member told CNN.

Democrats will need the majority of votes to carry the Trade Adjustment Assistance bill — which is critical for passing Trade Promotion Authority legislation — but this member, who is an opponent of both bills said there are 124 “hard nos” (out of 188). If that number holds and Obama doesn’t flip votes the TAA bill won’t pass and TPA won’t even get a vote.

With the toxic politics of trade dividing their party, House Democratic Leader Nancy Pelosi and her leadership team has been largely on the sidelines. The Obama administration, instead, is relying on Wisconsin Rep. Ron Kind and a small band of pro-trade House Democrats to pass the President’s top key economic issue.

RELATED: Obama trade agenda in jeopardy as Hill Dems feud

House Speaker John Boehner has said for months the President’s trade agenda can’t pass without help from Democrats, so the low-key Wisconsin legislator has been methodically working behind the scenes to boost the meager Democratic vote — hovering around 20 — higher.

“Our rules, no rules or China’s rules — it can’t be made any simpler than that,” Boehner says, describing his pitch on why members should vote for the bill. He argues that if Congress won’t give the President this authority to negotiate with a host of trading partners, the United States will be at a competitive disadvantage.

Kind is serving his 10th term representing the 3rd Congressional District, located on the western side of Wisconsin. From his post on the powerful Ways and Means Committee, he’s been involved in other key policy battles that divided Democrats, including health care, which he called “exhausting.”

Although he wasn’t in Congress for the fight over the North American Free Trade Agreement (NAFTA) that passed narrowly in 1993, Kind says the fallout from that deal — with jobs going overseas — set up a tough road for Democrats to publicly support legislation setting up another major trade deal.

“Early on I was just encouraging my colleagues to keep your powder dry. There’s going to be a lot of pressure from a lot of groups out there to pin you down early before you have all the facts and information. Keep your mind open and let the administration make the case and not get too far out ahead of it,” he said.

Democrat versus Democrat

Most congressional Republicans back trade promotion authority — the so-called fast-track bill — which would help negotiations between the U.S. and a dozen countries working to finalize the Trans-Pacific Partnership trade deal. The bill guarantees Congress will vote on that deal with limited debate and no amendments. Without the fast-track authority, Obama administration officials say the international negotiations on the broader trade deal will fall apart.

Kind says he’s surprised so few Democrats in the House are willing to support the White House on this issue.

“Every president, from FDR minus Nixon, has had this authority and we should have a very good reason why we would deny our own president, President Obama,” he said.

The challenge intensified in the final stretch before Friday’s vote. A revolt by House Democrats to a bill linked to the fast-track authority — one approving worker retraining programs for those displaced by new trade — threatened to take down the trade bill.

But Kind wasn’t ready to concede, and said he was still hopeful his colleagues would “see the light and give this president the benefit of the doubt.”

Behind the scenes link to the White House and Republican Leaders

In the face of massive and sometimes ugly resistance from members of their own party, labor and environmental groups, Kind and his allies from the pro-business “New Democratic Coalition” have been the bridge to the White House and top House Republicans.

Kind is diplomatic when pressed about Pelosi’s role, which has mostly been on the edges of the debate, repeatedly declining to say whether she will vote for the fast-track bill.

“I think she has created enough space for all of us to make up our own minds,” he said.

As part of outreach efforts to Democrats, Kind and his allies have invited virtually every Cabinet official to come up to Capitol Hill and sell the need for the legislation.

He pushes back at those who knock Obama for not wining and dining lawmakers in an effort to secure their votes.

“There’s all this criticism about him not schmoozing enough with members, not working it, massaging the egos here,” Kind said. “But I give him credit for the intellectual approach he brings to the job. He lays out the case, he lays out the merits and he has enough respect for members for us to figure it out ourselves.”

Kind said he’s been in regular contact with the President, White House chief-of-staff Denis McDonough, U.S. Trade Representative Michael Forman, and other key officials, giving them feedback on which members need information, phone calls and raising red flags on issues.

Before McDonough entered a meeting of all House Democrats on Thursday to appeal for support for the bills, he huddled in the hallway briefly with Kind.

http://www.cnn.com/2015/06/12/politics/white-house-tpp-trade-deal-congress/