Senate Democrats Lay Out Conditions for Working With GOP on Tax Policy

By Richard Rubin Features Dow Jones Newswires

Senate Democrats outlined their conditions for working with the Trump administration and congressional Republicans on tax policy, and their principles didn't seem to leave much room for common ground.

Continue Reading Below

In a letter dated Tuesday, Democrats argued against tax cuts for the top 1% of households, declared it crucial that Republicans not use the fast-track procedures known as reconciliation and said they wouldn't back deficit-financed tax cuts.

"Tax reform cannot be a cover story for delivering tax cuts to the wealthiest," says the letter, which was just signed by 45 of the 48 members of the Senate Democratic caucus. "We will not support any effort to pass deficit-financed tax cuts, which would endanger critical programs like Medicare, Medicaid, Social Security and other public investments in the future."

Each of the Democrats' conditions will be hard for Republicans to meet in the tax bill they hope to turn into law by the end of the year, unless they alter the direction the party has been heading in or more Democrats prove willing to bend.

Republicans plan to use reconciliation, which will allow them to pass a bill without Democratic votes, though they have said they are open to working with Democrats. The GOP proposal includes rate cuts for businesses and individuals that will almost certainly lower taxes for many high-income households, though Treasury Secretary Steven Mnuchin said Monday that most households paying the top tax rate won't get a tax cut.

And although Republicans are aiming for a plan that doesn't increase budget deficits, they haven't shown yet how their math adds up.

Continue Reading Below

Among Democrats, just Joe Manchin of West Virginia, Heidi Heitkamp of North Dakota and Joe Donnelly of Indiana didn't sign the letter. All of them are up for re-election in 2018 in states that Mr. Trump won last year, and the letter likely singles out those three Democrats as the pool of possible votes for a GOP tax plan.

Seven other senators up for re-election in states won by Mr. Trump signed the letter, and five of those are on the tax-writing Senate Finance Committee.

Marc Short, the White House legislative affairs director, said Monday that President Donald Trump would be visiting states in the Midwest with the aim of persuading lawmakers. He also cited meetings that administration officials have had over the past few months with Democrats in Congress.

"We welcome Democrats' support in tax reform," Mr. Short said.

No Democrats supported any version of the health-care bills that advanced through the House and failed in the Senate last week. Given the gap between the parties on fiscal policy, the same thing may happen on health care.

"The White House has not reached out to Senator Heitkamp on this," said Julia Krieger, a spokeswoman for the senator. "She has said many times that she is open to working with anyone on tax reform, and that those reforms must support working families."

Mr. Donnelly has had several contacts with the administration about his proposal to limit tax and other benefits for companies that shift jobs abroad but the White House hasn't reached out directly to him on the broader tax agenda, according to the senator's office.

Write to Richard Rubin at richard.rubin@wsj.com

(END) Dow Jones Newswires

August 01, 2017 07:14 ET (11:14 GMT)