Urging Congress to pass tax legislation at a time when Washington has no draft bill, few details, and no apparent urgency proved a tough sell for President Trump on Wednesday.
With images of life-and-death dramas after Hurricane Harvey dominating the airwaves before Labor Day weekend, the president returned to campaign-like techniques to frame his tax priorities this fall. As expected, he decided his policy speech in Springfield, Mo., would not include much policy.
What the president attempted instead, reading from teleprompters, was to weaponize the concept of cutting taxes while appearing in a state he won last year by 19 points. Trump encouraged Missouri voters to unseat Democratic Sen. Claire McCaskill next year if she doesn’t support a tax measure at some point in the future.
“We must lower our taxes,” the president said to applause. “And your senator, Claire McCaskill, she must do this for you. And if she doesn't do it for you, you have to vote her out of office.”
The puzzle, however, was why he took aim so early at a Democrat when Senate Majority Leader Mitch McConnell has vowed to pass tax legislation through his chamber with Republicans only, if necessary, using budget reconciliation. Some political observers thought Trump handed McCaskill an issue through which to strengthen her bid for re-election if she continues to say she favors tax reform.
Standing inside a Springfield plant that makes blowers and fans, the president described the GOP’s tax endeavor as a way to boost U.S. growth, job creation and American competitiveness abroad. Successful results would help U.S. companies, deliver a “pay raise” to middle-class taxpayers, and allow the nation to compete more favorably with countries that offer lower tax rates, the president added.
“I'm calling on all members of Congress, Democrat, Republican and independent, to support pro-American tax reform,” the president said. “They have to do it. It's time. They have to do it.”
What Trump omitted from his remarks were details of a comprehensive plan. He did not mention deficits. Not a word about a timetable. And, no hints of deductions and slippery loopholes he would eliminate to simplify the tax code.
The president said he wants to slash the corporate tax rate to 15 percent from 35 percent, which many GOP lawmakers, especially in the Senate, believe is too precipitous a drop to clear Congress.
Trump also highlighted his ambition to adjust the tax code to encourage U.S. companies to book their profits and holdings under U.S. law rather than maneuver their accounts to take advantage of more favorable tax treatment offshore.
That was a prevailing ambition during the Obama administration, too, when the Treasury Department sought to change rules under existing law to thwart major U.S. companies from merging with smaller international companies based in low-tax countries solely to avoid liabilities under U.S. law.
Tax policy analysts believe corporations are responsible for shifting an estimated $2.6 trillion in profits into non-U.S. accounts to avoid paying nearly $800 billion in taxes. But analysts do not agree that plugging existing holes in tax statutes would preclude companies from exploiting new ones in the future.
“By making it less punitive for companies to bring back this money and by making the process far less bureaucratic and difficult, we can return trillions and trillions of dollars to our economy and spur billions of dollars in new investments in our struggling communities and throughout our nation,” Trump said.
The administration argues that luring cash and tax revenue back into the United States, perhaps initially under a low, one-time favorable tax rate, would result in corporations investing in new plants, construction, innovations and new jobs in America. Many economists, however, believe that major companies, which are already flush with cash, are more disposed to enrich their stockholders and investors than spend profits on U.S. expansions and new hiring.
But the president maintained that tax relief for corporations was a win for American workers.
“Millions of struggling citizens will be lifted from welfare to work,” he said during his half-hour remarks. “They will love getting up in the morning. They will love going to their job. They will love earning a big, fat, beautiful paycheck. They will be proud again.”
Because Congress faces a fall to-do list of expanding proportions, including keeping the government funded, lifting the cap on federal borrowing that will reach its limits next month, approving hurricane emergency funding, and deciding what to do about the pending expiration of the federal flood insurance program, Trump did not challenge lawmakers with a specific timetable for passage of tax reform.
The president opened his remarks Wednesday with encouragement for the heroics and professionalism of first responders along the Gulf Coast, as well as for the victims of Harvey’s wrath in Texas and Louisiana. The size of the administration’s pending funding request to Congress remains undetermined.
“We will be with you … to restore, recover and rebuild,” Trump said.
In January, administration officials said they were optimistic they’d craft a tax bill by August. Now, the president and his team hope they will see progress out of the tax-writing committees in the House and Senate this fall. Officials in the White House and Republicans on Capitol Hill have said the project could spill over into 2018.
The president reprised his campaign rationale for lower taxes by saying an overhaul would boost U.S. growth above an average 2 percent. His remarks coincided with a day in which the government revised the second-quarter growth rate upward to 3 percent, meaning the economy expanded without the tax relief Trump is seeking.
Without missing a beat, the president embraced the news as an endorsement of his administration’s policies and a portent that despite Harvey’s economic wallop and headwinds in Europe and abroad, a realistic GDP goal is now upwards of 3 percent.
Democratic lawmakers, reacting to Trump’s speech, said the minority party is not opposed to cutting taxes, but believes the lack of details from Republicans and the president’s tenuous economic arguments were impediments to securing bipartisan support.
“If the president is truly interested in tackling this challenge, I would advise him to get to work on a concrete proposal that demonstrably and directly benefits the middle class rather than pretending that cutting corporate tax rates will somehow trickle down,” House Democratic Whip Rep. Steny Hoyer said in a statement.
He invited Trump to confer with representatives of both parties. The president is scheduled to meet Sept. 6 at the White House with House and Senate leaders from both parties to discuss the legislative agenda ahead.
White House officials say the president will continue traveling the country to lobby for tax legislation, but declined to say where he will appear or when.
Alexis Simendinger covers the White House for RealClearPolitics. She can be reached at [email protected]. Follow her on Twitter @ASimendinger.