After a rough summer of divisions within his own party in Congress, President Trump began his long-awaited push for tax cuts Wednesday, a move likely to unify Republicans and raise pressure on Democrats in conservative states for some rare cooperation.
Traveling to Missouri, the home state of Democratic Sen. Claire McCaskill, the president offered broad outlines of his unfinished plan for tax reform, calling it “the foundation” for better jobs and prosperity. He urged voters to punish lawmakers who don’t cooperate with him this fall.
“I want to work with Congress, Republicans and Democrats alike, on a plan that is pro-growth, pro-jobs, pro-worker and pro-American,” Mr. Trump told employees at a factory in Springfield. “Your senator, Claire McCaskill, she must do this for you. If she doesn’t do it for you, you have to vote her out of office.”
Treasury Secretary Steven Mnuchin and White House chief economic adviser Gary Cohn have yet to hash out details of a tax reform plan with congressional Republican leaders, but the president said it should include tax relief for middle-class families, simplification of tax forms, elimination of “special interest loopholes” and a cut in the business tax rate from 35 percent to 15 percent.
“My administration is embracing a new economic model. It’s called, very simply, the American model,” Mr. Trump said. “Under this system, we will encourage companies to hire and grow in America, to raise wages for American workers, and to help rebuild our American cities and communities.”
The reaction from Republicans was swift and positive, after a summer of increasing rancor in which Mr. Trump engaged in public feuds with Republican lawmakers on issues such as the Senate’s failure to repeal Obamacare and a move by Congress to stiffen sanctions against Russia.
House Speaker Paul D. Ryan, Wisconsin Republican, said tax cuts and tax reform are the “top priority” this fall.
“We are united in our determination to get this done,” he said.
Sen. Dean Heller, a Nevada Republican who has clashed with Mr. Trump, said Congress is ready for tax reform and that the president’s speech was encouraging.
“I’m looking forward to working with the administration on this issue and having a seat at the table to make sure that the final product is what’s best for Nevada,” said Mr. Heller, a member of the tax-writing Senate Finance Committee.
The response from Democratic lawmakers ranged from skepticism to hostility.
“The president has repeatedly talked a good game when it comes to the working class,” Senate Minority Leader Charles E. Schumer of New York said in a conference call with liberal activists. “But just about everything he’s done has been to benefit the wealthy special interests, adding to the burden of those in the middle class. We Democrats will not go along with a tax plan that includes a tax cut for the folks who need it least.”
Rep. Richard E. Neal of Massachusetts, the ranking Democrat on the tax-writing House Ways and Means Committee, said Democrats stand ready to work with Republicans on tax reform, but he accused Mr. Trump of plotting relief mainly for the wealthy.
“If President Trump’s previous tax plans are any indication, the wealthy and big corporations will be the ultimate winner at the expense of the middle class,” Mr. Neal said. “Middle-class families have heard enough empty promises and rhetoric from Republicans.”
‘A rare opportunity’
One potential exception on the Democratic side is Ms. McCaskill, the two-term senator who represents a state that Mr. Trump won by 18.5 percentage points over Hillary Clinton in the presidential contest in November.
Ms. McCaskill faces re-election next year, and she said prior to Mr. Trump’s visit that she is eager to work with him on tax relief “as long as we’re doing it all through the lens of strengthening Missouri’s working families.”
“This is an area on which I’m optimistic President Trump and I will find common ground,” she said in a statement last weekend. “I welcome President Trump to Missouri, and I’m looking forward to working with him to make bipartisan tax reform a reality.”
Mr. Trump said Democrats are blocking his agenda, and he singled out Ms. McCaskill as one of the guilty parties.
“She’s going to make that commitment,” he said of tax cuts. “We just can’t do this anymore with the obstruction and the obstructionists. The Dems are looking to obstruct tax cuts and tax reform.”
After failing to get a bill through the Senate last month to repeal and replace Obamacare, Mr. Trump said the spotlight is on Congress to succeed on tax reform.
“I don’t want to be disappointed by Congress, do you understand me?” Mr. Trump said. “I think Congress is going to make a comeback. I hope so. The United States is counting on it.”
Getting a major tax overhaul through Congress is difficult in any given year — the last time was 1986 under President Reagan — and it looks increasingly difficult this year.
Mr. Mnuchin’s initial deadline of August already has passed without a bill, and lawmakers are confronting a September in which they must approve a federal budget for fiscal 2018 and address the administration’s request to raise the debt ceiling.
Hanging over those deadlines are challenges such as Mr. Trump’s insistence on funding for a border wall, an expense that Democrats consider a nonstarter.
Still, with Republicans holding majorities in the Senate and the House, plus the White House, advocates of tax reform say Congress has a rare opportunity to achieve a pro-growth fix that also simplifies the tax code. Deficit hawks are urging the administration and lawmakers to craft a solution that doesn’t simply cut taxes and add to the nation’s $20 trillion debt.
“President Trump and Congress have a rare opportunity to reform our outdated tax code in a way that grows the economy, not the national debt,” said Michael Peterson, president and CEO of the Peter G. Peterson Foundation. “As we move toward more detailed proposals, lawmakers should work across party lines to craft durable, comprehensive tax reform that is both pro-growth and fiscally responsible.”
Middle-class tax relief
In recent negotiations, administration officials and congressional leaders have considered scaling back some of the president’s more ambitious proposals, such as reducing the corporate tax rate to 20 or 25 percent and keeping the top individual tax rate at 39.6 percent instead of lowering it.
While there was no clarity on those points Wednesday, comments from the president and his top advisers emphasized tax-relief for the middle class.
“Americans understand that middle-income taxpayers and their families need tax relief and a simple tax code so they keep more of their paycheck and spend less time filling out their taxes,” Mr. Mnuchin said.
Bolstering the president’s pitch for tax reform Wednesday was more good economic news: The Commerce Department revised the second-quarter gross domestic product up to 3 percent, from 2.7 percent, the highest level of economic growth in two years.
Mr. Trump has been promising a target of at least 3 percent growth annually, and he seized on the news as an indication of even better things to come.
“In the last 10 years, our economy has grown at only around 2 percent a year,” the president said. “We’re going to change that around, folks. The last administration, on an annual basis, never hit 3 percent. So we’re really on our way. This is our once-in-a-generation opportunity to deliver real tax reform for everyday hardworking Americans.”
Sen. David Perdue, Georgia Republican and a member of the Senate Budget Committee, said the clock is ticking.
“There are only 61 session days until the end of the year to pass a plan that eliminates the repatriation tax, lowers the corporate tax rate, and simplifies the individual tax system to bring relief to working men and women,” Mr. Perdue said. “Consumer confidence is at a 16-year high, and many businesses are investing and creating more jobs than ever before. We are on the cusp of an economic turnaround, and these tax changes must happen this year in order to have any real impact on business decisions that can produce significant economic growth.”