President Trump's Biggest Enemy on Tax Reform: Himself

Oct 13, 2017

Repealing Obamacare? Not this year. Building a wall on the Mexican border? Not yet. Throwing Hillary Clinton in jail? Not happening.

With so many of President Donald Trump’s campaign promises abandoned or stalled, his pledge to rewrite the tax code might be his best — and perhaps final — shot of showing his supporters that he can deliver.

Even though Republicans control the House, the Senate and the White House, legislative progress has been elusive and victories hard to find in the last nine months. The odds for big wins get tougher every day the calendar gets closer to next year’s midterm elections, and many Republicans are worried about their odds.

“We have 39 legislative days left,” Republican Sen. David Perdue said Friday in Manhattan as he briefed donors to the formidable network of advocacy groups and nonprofits helmed by billionaire brothers Charles and David Koch.

Those around the President, including many of his biggest boosters, are visibly frustrated with the pace and particulars. This was supposed to be the moment where, finally, Republicans could legislate a dream agenda without those pesky Democrats or White House vetoes. Many conservatives convinced themselves that their support for nominee Trump could be rewarded with a blank check. After all, Trump ran on emotion, not policy specifics.

Trump, however, hasn’t proven particularly effective at working the crowd at the Capitol. Yes, the Senate confirmed Neil Gorsuch for a lifetime seat on the Supreme Court — after a year of Senate Majority Leader Mitch McConnell refused to consider Barack Obama’s nominee, Merrick Garland.

“Damn near the only thing the Senate Republicans have done is confirming Neil Gorsuch,” laments Republican Sen. Ted Cruz of Texas.

Yes, parts of the Cabinet have been busy dismantling regulations on the energy industry, protections for transgender students and those who say they were sexually assaulted on campuses, while Trump has backed away from foreign policy deals on Iran's nuclear weapons and a trade deal with Asian nations. But the big-picture goals that need Congress’ sign-off are nowhere to be found. A big infrastructure package is a footnote, the Pentagon’s budget is functionally unchanged and Obamacare is still the law of the land.

“Herding cats is sometimes easier than keeping our team on the same page at the same time,” says Republican Sen. Tim Scott of a South Carolina.

There is clear frustration, especially among the moneyed backbone of the GOP, that the President doesn’t seem to get his long odds as he drives his megaphone into sideshows.

“We’re getting near that beautiful Christmas season that people don’t talk about anymore. They don’t use the word Christmas because it’s not politically correct,” Trump roared Friday in Washington as he addressed the conservative Values Voters Summit. It won him huge cheers, the latest installment in his culture war.

At the very same hour, it was clear many movement conservatives would rather the President keep his focus on tax cuts, whose promise has sparked a surge on the Wall Street. The Dow has risen 15% since Inauguration Day on the promise of this tax package. Tim Phillips, the head of the Koch-backed grassroots group Americans for Prosperity, was less than thrilled that the President — and Congress — are using Christmas as a deadline for tax legislation.

“Maybe you’ve seen the Drudge Report,” Phillips told donors on Friday. “It said Paul Ryan cancels Christmas. Maybe we can have a Christmas closing stretch.”

In the audience, the crowd groaned.

As much as the President likes to complain that Congress has not yet passed a tax overhaul, it’s worth noting that there is no bill that’s been introduced or specifics offered by the White House. Senior aides on Capitol Hill say they’re not eager to put their bosses’ names on legislation, only to be undercut a few weeks later when the President’s mood changes.

They are not being overly dramatic. Consider the question of immigrants who came to the country illegally as young children. President Obama gave them a reprieve, but Trump promised he would scrap it as part of his crackdown on immigration. But when Trump sat down with congressional leaders on Sept. 13 — one month ago — he suddenly reversed course and handed Democrats a promise to protect the young people. Then, weeks later, Trump returned to the issue and said any compromise would have to include measures that Democrats won’t support such as a border wall with Mexico.

Complicating matters further is the fact that Republicans want to attach tax cuts to the bigger budget deal. Doing so lets them change the tax code with only 50 votes and the backing of Vice President Mike Pence. But it also requires Congress to pass a budget — a herculean task in normal environments. Many Republican advisers are telling lawmakers to treat the budget as a placeholder, not a real governing document.

“Who wins Congress isn’t going to be decided on a budget,” one donor told lawmakers who huddled with the Koch network on Thursday evening. “It will be decided whether taxes go down or stay the same.”

Republicans are, perhaps wrongly, hoping Democrats don’t use the budget negotiations to wrest concessions from the President. Specifically, the fear is that protections for young immigrants brought to the country illegally could derail tax cuts. Already, the President has given Congress reason to doubt his durability on the issue.

The stakes are remarkably high. “If we do nothing,” Cruz says, “if tax reform crashes and burns, if (on) Obamacare, nothing happens, we could face a bloodbath. We have the potential to see a Watergate-level blowout.”

This is why so many Republicans are nervously watching the White House for clues.

Even before the President moved from Trump Tower to the White House, many of his past associates had warned that negotiations with him could often go south quickly. Good-faith talks lasted only as long as there weren’t headlines to be made. To that end, the tax code’s nebulous details aren’t really suited to negotiations-by-tweet or the political vamping that the President seems to like.

That explains why many in the President’s party are hanging back a little on the specifics of tax reform. There’s a reason a major rewrite hasn’t happened since 1986 — when Ronald Reagan was in his second term and his legacy was largely secure. Trump is in his first term, and he’s still trying to prove something.

Then there’s the personal aspect of all of this. Sen. Bob Corker, a Tennessee Republican who is choosing not to see a third term next year, has been critical of tax efforts that increase the national debt. The President’s tweets against Corker left the Tennessean sour and hardly eager to lend a hand to the President’s team. Similarly, other lawmakers such as Cruz and Sens. Rand Paul and Lindsey Graham have indicated they’re not automatic yes votes on the package if their wish lists aren’t considered.

Leaders inside the Koch network have made the tax issue their last, best demand of the President and his Republican friends. The Koch machine is spending millions of dollars on ads to raise the issue with voters, and they are counting on the subject to be the centerpiece of a 2018 midterm cycle where hundreds of millions of dollars more are at the ready to punish those who stand in tax reform’s way.

House Speaker Paul Ryan, who for weeks has made the policy-based argument against taxes, in recent days has shifted his rhetoric to a Trump-like populism. “An army of lobbyists will come to protect special interest provisions and to derail tax reform,” Ryan said this week when he visited the conservative Heritage Foundation. Pollsters say the Trumpian fire plays better than Ryan's professorial earnestness.

But, again, it comes back to the President. A favorite punchline among donors is that the President threw himself a victory party in the Rose Garden when the House voted to repeal Obama’s health care law, ignoring the grim odds the measure faced in the Senate. “He’s hearing what he wants to hear,” says one longtime Washington hand. “He’s not listening to the people who want him to succeed, really succeed.”

The President is a master of misdirection and drama. This week alone, he has claimed a victory in his crusade to make NFL players stand during the national anthem (a fight that hurt him as much as it helped); threatened to revoke network news divisions’ licenses (he lacks the authority to do that); and suggested his support for rebuilding Puerto Rico may be limited (85% of the American island is without power). None of this, say lawmakers, is making it easier to muscle a tax cut through the House or Senate.

“Trump gets in the way of what Trump wants to do, much less what members want to do,” said Doug Heye, a Republican strategist who has done stints as a senior aide in both chamber of Congress. “The Administration is getting in its way by the daily cacophony that surrounds all things Trump.”

Inside White House, officials recognize the problem, even as they put on a public smile. Consider the pair of NBC News reports that Trump had asked his national security team about increasing the U.S. nuclear arsenal tenfold, prompting Secretary of State Rex Tillerson to allegedly call the President a “moron.” The nukes revelation came just hours before the President was scheduled to meet with Canadian Prime Minister Justin Trudeau. So when reporters were led into the Oval Office for a photo-op, they asked Trump about the arsenal.

Administration officials have spent months preparing to renegotiate NAFTA with the United States’ neighbor to the north. Now, the President of the United States was lashing out at news organizations that reported on what he considered “fake news.” Instead of making the case for a rebooted trade deal, the boss was nursing a grudge against NBC News.

It was a minor kerfuffle, but one in a line of missteps of the President’s own making that is keeping real progress from taking place. In an interview with Fox News’ Sean Hannity later that day, the President claimed the economy was going so well that he had essentially eliminated the national debt. That was no more true than when he said the U.S. was the most taxed country on the planet. Confronted with disconnect on taxes by the conservative One America News Network, White House press secretary Sarah Huckabee Sanders had nowhere to go. “We’re just going to have to agree to disagree.”

That’s the rub for a lot of the White House staff, Republicans in Congress and their patrons. They know the President is making life harder: for himself, for the staff, for the Cabinet, for the Republican Party. He doesn’t care and is not willing to be guided. The President just keeps slinging fantasy, and it’s up to lawmakers to figure it out.

“I’m still looking to see if pigs are up there flying,” Perdue said of the President’s grandiose plans. So far, the pork remains grounded.

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