Republicans Turn Eyes to Tax Overhaul After Health-Care Bill Falls Short -- Update
March 24 2017 - 7:10PM
Dow Jones News
By Nick Timiraos and Richard Rubin
WASHINGTON -- A chorus of Republicans said Friday they would
turn their attention to overhauling the U.S. tax code after their
legislation to repeal and replace major provisions of the
Affordable Care Act couldn't draw enough vote to clear the
GOP-controlled House.
House Speaker Paul Ryan (R., Wis.) said he had spoken with
President Donald Trump and his top advisers about moving onto the
tax plan. "We have more agreement on the need and nature of tax
reform," Mr. Ryan told reporters.
From the Oval Office late Friday afternoon, Mr. Trump told
reporters "we are going, right now, for tax reform."
Earlier Friday, Treasury Secretary Steven Mnuchin, at an event
in Washington sponsored by media company Axios, said the
administration's forthcoming plan to overhaul the U.S. tax code
would face smoother sailing than the plan to revamp
health-insurance markets that unraveled Friday.
"Health care is a very, very complicated issue," Mr. Mnuchin
said. Redesigning the tax code "is a lot simpler."
Taxes could be a challenge as well, however, and lawmakers have
been talking about rewriting the tax code for years. President
George W. Bush advanced a series of tax cuts in 2001 and 2003, but
Washington hasn't completed a comprehensive overhaul of the U.S.
tax code since 1986.
Previous GOP attempts have barely gotten out of the gate,
blocked by competing business interests and the difficult
trade-offs needed to lower tax rates without drastically increasing
budget deficits.
Republicans will also have to deal with other issues, including
preventing a lapse in government funding in April and raising the
federal debt limit in the fall.
Republicans have been planning to advance the tax bill through a
process known as reconciliation that would allow them to pass it
without Democratic votes. Those rules forbid the plan from
increasing budget deficits beyond the budget window, typically 10
years.
Congressional leaders had attempted to use the same legislative
vehicle to advance the health-care bill without attracting
Democratic support. It ultimately left them with a thin margin for
error in the face of internal party divisions.
The stalled effort to replace Obamacare creates new challenges
for the Trump administration and congressional Republicans, a point
Mr. Ryan conceded Friday. GOP leaders had said the health bill
would pave the way to a major tax bill. Repealing Obamacare would
cut spending on health-care subsidies and cut $1 trillion in
taxes.
Mr. Ryan said Friday the health bill's taxes would now remain
and that they wouldn't be repealed as part of the broader tax
effort. The upshot is that levies on health-care providers and
high-income individuals would remain in place for the foreseeable
future.
"Defeat on health care is a blow that could make it harder to
pass a more ambitious tax plan such as the one proposed by House
Republicans," said Andy Laperriere, a policy strategist at research
firm Cornerstone Macro LP. He said the odds had gone up that the
ultimate product "tinkers around the margins and is a
disappointment to the market."
Mr. Mnuchin dismissed any suggestion that, for political
expedience, the White House would forsake comprehensive legislation
by seeking instead to pass a handful of smaller tax bills.
"We're not cutting this up and doing little pieces at a time,"
he said Friday.
Some Trump supporters have criticized the administration for
pursuing health-care legislation ahead of the tax overhaul, but Mr.
Mnuchin said the administration had taken that route because the
tax plan wasn't finished.
"We are designing it from scratch," he said. "We would not have
been ready to go a month ago on tax reform and now we are."
Rep. Kevin Brady (R., Texas), chairman of the House Ways and
Means Committee, has said his panel will move a major tax bill by
the end of the spring, but no bill has been released.
As on health care, Republicans already have faced some divisions
on taxes, including over how much they should be allowed to add to
deficits, and whether they should come up with new sources of
revenue to make up for lower tax rates.
The House Republican plan includes a border-adjustment provision
that would tax imports and remove taxes from U.S. exports to raise
nearly $1 trillion in new revenue, but the provision has met fierce
resistance from some Republican lawmakers in the Senate.
Mr. Mnuchin said the administration has reservations about the
border-adjustment provision and said he was worried about how
currency movements that result from those tax changes could create
headwinds for U.S. exporters.
"It is a very complicated issue," he said. "Whatever we do, we
want to make sure it's simple and it works."
Write to Nick Timiraos at nick.timiraos@wsj.com and Richard
Rubin at richard.rubin@wsj.com
(END) Dow Jones Newswires
March 24, 2017 18:55 ET (22:55 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.