Already, the pesky question of the deficit and debt is becoming a key point of division among Republicans in and out of Congress. Supply-side economic conservatives have urged the GOP to ditch its preoccupation with ensuring its tax plan does not add to the budget shortfall. “Revenue neutrality should not be the focus,” David McIntosh, the president of the Club for Growth, said in a statement last month praising the Trump administration for its break with the House GOP. “We should not merely shift the tax burden around to keep the same amount of tax dollars flowing in to the federal government.” The White House position won an important win when Senator Orrin Hatch of Utah, chairman of the Finance Committee, said last week that he was open to a plan that increased the deficit in the short term. Representative Mark Meadows of North Carolina, chairman of the House Freedom Caucus, has taken a similar position.
Republican tax-writers on the Ways and Means Committee, however, remain unbowed. Asked by a reporter on Sunday whether he was still committed to the concept of revenue neutrality, Roskam replied: “Look at my eyes.” The GOP has already moved to the right on the deficit question by changing the way the fiscal impact of their plan will be judged. Congressional score-keepers on the Joint Tax Committee will now assess the legislation by factoring in its projected impact on the economy—a method Democrats consider dubious and a way to mask budget-busting tax cuts.
True to form, House Republicans are trying to minimize their disagreements with the White House. “The good news is that the Trump plan and the House plan share 80 percent commonality,” said Representative Kevin Brady of Texas, the chairman of the Ways and Means Committee. “We have to work to narrow the differences between the rest.” He acknowledged that the White House’s suddenly hands-on approach to tax reform—which reportedly stems from its frustration with Ryan’s handling of health care—has set back the committee’s original timetable for action. Brady had hoped to begin hearings in April and send a bill to the House floor sometime this spring, but he will now wait for the Trump administration and Republicans in Congress to try to agree on a single plan first. The GOP has also abandoned its initial goal of pass tax reform by the August congressional summer recess; it is now eyeing the end of the year.
But even that is looking overly optimistic. Bridging a 20 percent gap between like-minded policymakers might not seem like a lot, but in a project as complex as rewriting the nation’s Byzantine tax code, there’s a devil in every detail. Differences on even 1 or 2 percent of a legislative proposal can doom it to failure. Lawmakers will face pressure from lobbyists representing just about every industry in America, who will seek to protect the hundreds of preferential loopholes Congress has enacted in the 30 years since it last undertook comprehensive tax reform. The GOP’s main revenue-generating proposals—House’s border adjustment tax and the White House’s floated elimination of the deduction for state and local taxes—have already run into significant opposition.
That’s why it seemed as if Republican leaders greeted Trump’s abbreviated tax proposal through gritted teeth. They wanted a partner to help push them up the hill, a president who would give them political cover and sell the public on the tricky tradeoffs required to deliver on what Ryan and Brady have called a “once-in-a-generation opportunity.” What they found instead, however, seems a lot more like a competitor.