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Trump's fixation on slashing the corporate tax rate to 15% shows he doesn't understand Congress

When top congressional and administration tax reform negotiators met at the White House with President Donald Trump on Tuesday their message was basically the same. They stressed the urgency of getting the House moving on a tax bill by the end of the month.

If that timetable slipped, one of the president’s top agenda items could get pushed into next year and maybe vanish entirely, joining Obamacare repeal as an epic legislative failure. But Trump had his own message. He told the so-called “Big Six” negotiators that he still wants to get to 15 percent as the top corporate tax rate even though no one working on tax reform thinks that’s possible without blowing up the deficit or requiring big cuts to existing deductions that would not be politically tenable.

Trump’s fixation on getting to 15 — instead of the 20 to 25 percent range targeted by other administration officials and senior GOP legislators — highlights a fundamental problem with his presidency thus far. Trump doesn’t understand how Congress works or why the president can’t just simply have whatever he wants whenever he wants it.

On Obamacare, Trump just assumed Congress would be able to repeal and replace even if he never really had any idea what a replacement would look like and made no consistent case for an alternative. He complained endlessly about Senate filibuster rules even though Senate Republicans needed just 51 votes to repeal Obamacare and couldn’t get there.

And instead of trying to work with Mitch McConnell to figure out a path forward on health care, Trump got frustrated and angry and torched his relationship with the Senate Majority Leader, who holds the keys to getting any of Trump’s agenda enacted into law. Trump is now working to try to repair that relationship ahead of a tax reform push.

Trump also has now scrambled the political calculus around raising the nation’s debt limit and funding the government by rescinding the Deferred Action for Childhood Arrivals program for immigrants who came to the U.S. as children. Trump’s attorney general, Jeff Sessions, called DACA dead and ripped beneficiaries of the program as job stealers.

On Tuesday night, however, Trump tweeted that if Congress does not act in the six-month window he provided, he would “revisit” the issue. Trump’s Justice Department on Wednesday said it had no idea what the president meant by this.

Trump appears to mean that he could extend the program if Congress doesn’t. In saying so, he effectively gave away any leverage he had to try to force congressional action by Republicans, who have no idea how they might pass a DACA extension and desperately want to punt the issue back to the White House.

Now Democrats on Capitol Hill are saying they will support a bill to tie Hurricane Harvey relief to a debt-ceiling increase but only to lift the nation’s borrowing limit for three months. They want to maintain the debt limit as a bargaining chip to force a DACA extension. House Speaker Paul Ryan on Wednesday criticized the three-month extension gambit as unworkable.

So there is now no clear path forward on raising the debt limit or keeping the government open past Sept. 30 and no clarity on what might happen to the 800,000 people who benefit from the DACA program.

All this must be sorted out before Republicans in Congress can really turn to putting together a tax bill that can pass both the House and Senate. Which makes Trump’s insistence on 15 percent even more frustrating to those working on the issue. The Big Six long ago moved away from 15 percent and set to work making the hard choices on deductions and investment expensing necessary to get to a rate as close to 20 percent as possible.

The president demanding Republicans find a way to get to 15 percent sets their work back and sets the stage for disappointment when legislation finally emerges that has a higher target for the top corporate rate.

Trump will be making the case for tax legislation in a speech in North Dakota on Wednesday, aimed at pressuring the state’s vulnerable Democratic senator, Heidi Heitkamp, to get on board with Republicans on the issue. At this point, however, it remains unclear that there will even be a tax reform bill this year for Heitkamp to support or oppose.

— Ben White is Politico’s chief economic correspondent and a CNBC contributor. He also authors the daily tip sheet Politico Morning Money [politico.com/morningmoney]. Follow him on Twitter @morningmoneyben.

Source: cnbc economy
Trump's fixation on slashing the corporate tax rate to 15% shows he doesn't understand Congress

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