- The Washington Times - Sunday, July 30, 2017

After their health care bill collapsed in spectacular fashion last week, Republican congressional leaders insist they won’t make the same mistakes with tax reform, the other big-ticket promise they made to voters, and to which they will turn next.

But there are enough similarities between the two issues that lawmakers are worried.

Republicans go into the debate with only vague principles, have struggled to pique Democrats’ interest and have received conflicting signals from the White House about priorities.

Still searching for their first major legislative win under President Trump, Republican leaders said they have to surmount those problems and deliver reform.

“We looked at health care and said, ‘Let’s make sure we do tax reform better and differently,’” House Speaker Paul D. Ryan, Wisconsin Republican, said in an interview that aired Sunday on Fox News.

He joined other top Republicans on Capitol Hill, as well as the Treasury secretary and White House economic adviser, to release a broad set of goals and a vague timeline for tax reform and promised to put legislation through committees in the fall.

Mr. Ryan and Ways and Means Committee Chairman Kevin Brady, Texas Republican, also abandoned their push for a $1 trillion tax on imports.

But some members of the tax-writing Ways and Means Committee said dropping the border adjustment raises questions about how to make up an estimated $1 trillion in revenue that Republicans were going to use to pay for lowering other rates.

“As I’ve always said, without border adjustment you’re going to have a lot higher rates, and I think it makes it complicated to solve the overseas issues,” said Rep. Devin Nunes, California Republican and a Ways and Means Committee member.

Republicans were also counting on repealing Obamacare first, including erasing $1 trillion in taxes on items such as investment income to pay for the law.

Axing those taxes, as part of a bill that lowered the overall deficit, would significantly lower the federal budget baseline and give leaders more wiggle room on the ultimate cost of their tax package.

That option is no longer viable because of the failure of the health care legislation last week.

“If the representations we got earlier in the year are true that you cannot have tax reform without health care reform, then it gets harder,” said Rep. Mo Brooks, Alabama Republican.

Mr. Brady said Congress could try to repeal Obamacare levies as part of the tax code overhaul, but that would disrupt what is already a tightrope walk.

“I want those $1 trillion of taxes out of the economy — that’s what that repeal bill is designed to do,” Mr. Brady said. “We can’t afford to import those into tax reform [because] the result would be higher tax rates for more families and local businesses.”

Under fast-track budget rules, Republicans can pass a broad tax code overhaul with a simple majority in the House and Senate, bypassing a Democratic filibuster, as long as it doesn’t add to the deficit in the long run.

But a revenue-neutral bill almost certainly means a much more limited set of reforms.

Rep. James B. Renacci, Ohio Republican and another Ways and Means Committee member, said he hasn’t given up hope for a big deal, even without the extra room that could have been bought with the border adjustment tax or Obamacare repeal.

“I think we need to come up with something where we [can] get enough votes to pass it and move it forward even if that means it’s not revenue-neutral in some cases,” he said.

First up for Republicans, however, will be passing a budget so they have a framework for tax reform.

A plan passed the House Budget Committee this month but has stalled as committee Chairman Diane Black searches for support.

“We look forward to having continued conversations with Chairman Black on the budget, but there are still not enough votes to pass” it, Rep. Mark Meadows, the North Carolina Republican who chairs the influential House Freedom Caucus, said last week.

Lawmakers need a budget vehicle in order to unlock fast-track procedures known as reconciliation, which can avoid a potential Senate filibuster — though it also places limits on what can be done legislatively.

Republicans found that out during the Obamacare debate, which was also conducted under reconciliation. Rank-and-file Republicans chafed at having to scratch some ideas because they didn’t fit under the strict rules governing budget debates.

Republicans also have spent essentially half the year trying to pass health care reform, adding pressure to deliver a legislative win and have something they can take back to voters for the midterm elections next year.

“We’re just going straight ahead,” Mr. Brady said. “Despite the setback, the letdown on health care, I think people are awfully excited about being able to unify behind this in August and through the fall.”

Democrats have been left out of tax negotiations. Republican leaders saying the two parties can’t even agree on goals. Republicans say they want a more competitive code but that Democrats want to use a tax overhaul to soak the rich and increase government revenue.

“Republicans are dripping tax ideas out like a leaky faucet with no specifics to back them up,” said Sen. Ron Wyden of Oregon, the top Democrat on the tax-writing Finance Committee. “We need sustainable, comprehensive tax reform, not a massive tax cut for the wealthy.”

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