Top Tax Writer in House Won't Back Down on Offsetting Cuts
Trump, Mnuchin said last week tax overhaul can add to deficit
(Bloomberg) -- House Ways and Means Chairman Kevin Brady isn’t giving up on a tax package that pays for itself, even though President Donald Trump has said he’s willing to accept a bill that adds to the deficit in the short term.
During an interview on Bloomberg Television Monday, Brady said it’s essential to offset tax cuts with revenue raisers so they don’t add to the deficit and can generate the maximum amount of growth over the longest period of time. That’s because of Senate budget rules that would require a tax bill to be revenue neutral to be permanent if it’s passed without Democratic support.
“We think the greatest growth for the greatest number of years is when tax reform is bold, when it’s balanced within the budget counting on economic growth and it’s permanent,” Brady said. “History shows the most growth for the greatest number of years comes when tax reform is permanent, when businesses can count on this rate.”
Last week, Trump told the Economist in a joint interview with Treasury Secretary Steven Mnuchin that “it is OK” if a tax bill increases the deficit in the short-term in order to “prime the pump” for growth. Trump and his economic advisers have said the tax-cut plan they released April 26 will pay for itself by eliminating deductions and loopholes, and by helping to create annual economic growth of 3 percent.
“Without revenue neutrality, I don’t see a way lawmakers can make tax changes last longer than 10 years,” said Kyle Pomerleau, director of federal tax projects at the conservative Tax Foundation. “And without permanence, it is unlikely President Trump would get anywhere near the economic growth he wants from tax reform.”
Cool Receptions
Mnuchin and National Economic Council Director Gary Cohn are continuing to meet with stakeholders and lawmakers on Capitol Hill to discuss tax changes, White House spokesman Sean Spicer told reporters during his daily briefing on Monday. “But that conversation continues.”
The House plan proposes a border-adjusted tax and the elimination of corporate interest deductions to help pay for tax cuts -- both of which have received a cool reception from the White House and Senate GOP.
Brady’s comments may signal how far away House Republicans and the White House are on tax plans, even though Brady and House Speaker Paul Ryan have said they agree on 80 percent of tax matters.
The tax-writing House Ways and Means Committee will hold its first tax-related hearing Thursday, and will hear from business leaders about what kinds of tax changes will help to stimulate hiring and wages, according to Brady.
“A lot more work has to be done -- tax reform as you know is the challenge of a generation for any Congress,” Brady said. “We do have a lot of work to do but I’m confident we can finish it this year.”’
--With assistance from Lynnley Browning and Sahil Kapur
To contact the reporters on this story: Alexis Leondis in Washington at aleondis@bloomberg.net, David Westin in New York at dwestin@bloomberg.net.
To contact the editors responsible for this story: John Voskuhl at jvoskuhl@bloomberg.net, Laurie Asseo