Senate pivots to tax reform fight

Senators are digging in for a looming fall fight over tax reform, as Republicans look to move on from their setback on the ObamaCare repeal. 

Leaders on both sides of the aisle are setting up early goal posts for the upcoming battle, with GOP leadership wanting to get a bill to President Trump’s desk by the end of the year. 

Senate Majority Leader Mitch McConnell (R-Ky.) confirmed on Tuesday that Republicans will use the fast-track reconciliation process to move a tax-reform bill, which will allow them to clear legislation without Democratic support. 

“What we intend to do is to take up tax reform when we come back after Labor Day,” he told reporters, noting that a measure will start in the House. “The goal would be to finish that sometime this year.” 

{mosads}The legislation will go through the committee process, including markup by the Senate Finance Committee. That’s a change from the process for the GOP-only ObamaCare repeal bill, which was crafted behind closed doors and sparked months of criticism, including from some Republicans.

GOP senators appear hopeful that at least a few Democrats will join their effort on tax reform, though they are prepared to move a bill without them. 

“I’m hopeful we’ll have participation. It would be great if there were some Democrats willing to work with us,” Sen. John Thune (R-S.D.), the No. 3 Senate Republican, told reporters. 

Sen. Orrin Hatch (R-Utah), chairman of the Senate Finance Committee, said there could be bipartisan support for tax reform if senators in both parties agree to “get off their high horse.” 

“I think we are moving on to tax reform, but that doesn’t mean we can’t do more than one thing,” Hatch told reporters amid lingering questions over healthcare. 

Republicans appear to be pivoting to tax reform, one of their biggest agenda items, after they failed to pass their scaled-back ObamaCare repeal measure. 

With their agenda months behind schedule, the administration and GOP lawmakers are eager to score some legislative victories after voters gave them control of both Congress and the White House for the first time in roughly a decade. 

But there are already signs of division emerging, even before lawmakers have a tax bill to fight over. 

Senate Democrats sent a letter on Tuesday to President Trump, McConnell and Hatch outlining their priorities on tax reform, including asking that leaders not use reconciliation to pass the legislation. 

“Using a fast-track process like reconciliation would undoubtedly result in outsized political influence on the process and significantly hinder lawmakers’ ability to close loopholes and end special interest favoritism that plagues our current tax system,” the Democrats wrote.

Sen. Charles Schumer (D-N.Y.) warned separately on Tuesday that Republicans could go it alone on tax reform because the “hard-right Koch brother part of the Republican Party is desperate for tax cuts for the very rich.” 

Sen. Ron Wyden (D-Ore.), the top Democrat on the Senate Finance Committee, said that “as of this afternoon the middle class is in the dark about what they would get from tax reform.” 

Democrats added in their letter that tax reform shouldn’t include “tax cuts for the top 1 percent” and should be deficit neutral. 

But Republicans generally want taxes cut across the board and Vice President Pence said late last month that the White House wants to repeal the estate tax, as well. 

McConnell said most Democrats would not support “principles that would get the country growing again” but held out hope that some would work with the GOP on tax reform. 

“I don’t think this is going to be 1986, when you had a bipartisan effort to scrub the code. Maybe there will be a few — there were several Democratic senators that did not sign the letter who may be open to pro-growth tax reform,” he told reporters. 

Democratic Sens. Joe Manchin (W.Va.), Heidi Heitkamp (N.D.) and Joe Donnelly (Ind.), each up for reelection in red states won by Trump last year, did not sign their caucus’s tax reform letter. 

Meanwhile, McConnell, Hatch, House Ways & Means Chairman Kevin Brady (R-Texas), House Speaker Paul Ryan (R-Wis.), Treasury Secretary Steven Mnuchin and White House National Economic Council Director Gary Cohn — collectively known as the “Big Six” — have released a five-paragraph statement outlining their goals on tax reform. 

Hatch said on Monday that the Trump administration’s stated goal of a 15 percent corporate tax rate is “very unlikely.” 

But, aside from dropping the controversial border-adjustment tax, the statement did not provide much clarity on the tax issues that have been dividing Republicans.