I got a crash course this week in just how challenging passing a big tax bill by the end of the year will be in conversations with Treasury Secretary Steven Mnuchin and House Ways and Means Committee Chairman Kevin Brady.
Speaking at the Politico Pro Summit in DC, Brady would not pledge to me that the document coming from tax negotiators the week of Sept. 25 will include any new detail on the level of corporate rates or the treatment of expensing and the corporate interest deduction.
Brady also took issue with President Donald Trump’s recent pronouncements that any final tax plan will not provide a net tax cut for the wealthiest Americans. He said he expected that the top marginal rate would come down along with the corporate rate and that everyone would get a tax cut.
Mnuchin later promised me that we would get specific details the last week of September on rate levels and deductions. “You’ll have extensive details on all of that,” he said. Mnuchin also doubled down on Trump’s pledge not to cut taxes for the wealthy.
“We are looking for a middle-income tax cut. On the high end the plan is to eliminate state and local deductions,” he told me. “And even if we do end up with a slight reduction on the high end that will be offset by a reduction of deductions so their taxes won’t go down.”
As this was going on, Senate Finance Committee Chairman Orrin Hatch said at a hearing that he would look at whatever comes out at the end of the month but that his committee won’t be a “rubber stamp” and that the Senate will create its own plan.
Meanwhile, my Politico colleagues report that the House wants to move aggressively on speeding up capital investment deductions while the Senate fears doing so would be far too expensive.
So let’s just catch up to what has to happen between now and the end of the year to meet Trump’s goal of a giant tax deal by Dec. 31.
The House and Senate have to pass a budget with reconciliation instructions for doing tax reform with 51 votes in the Senate. Right now, House Republicans are demanding details on tax reform before passing such a budget and those details don’t yet exist.
Then Brady needs to release the “chairman’s mark,” or first draft, of a tax bill and it has to work its way through committee and to the floor. The Senate may then come up with its own very different bill and eventually the two will have to be reconciled. Democrats meanwhile will push hard for actual hearings on tax reform.
Once any deduction changes — from eliminating the state and local deduction to curbing the corporate interest deduction — are made public, lobbyists will begin their frenzy. Oh and while this is all going on, Republicans may take another run at repealing Obamacare.
Once tax bills become public, the Congressional Budget Office and others will score the plans and likely conclude that they shower enormous benefits on the wealthiest Americans. That could turn Trump himself against the bill and push him toward some new deal with Democrats.
Taken together, the timeline for any kind of very big tax bill looks incredibly ambitious and difficult to navigate. And it argues more for Republicans deciding to just cut corporate rates by some relatively small amount, switch to a territorial system and call it a day. Or they could just fail entirely. The bearish case on tax reform is now much easier to make than the bullish case.
Mnuchin and I talked about more than just taxes, of course.
I had to ask him why, exactly, he made the highly unusual request to use a government plane for his European honeymoon with Scottish actress Louise Linton.
“Let me be clear. I’m very sensitive to the use of government funds. I’ve never asked the government to pay for my personal travel,” he told me. “This had nothing to do with convenience. This was purely about national security.”
Commentators mostly scoffed at this. The Treasury secretary is not among those who must use federal airplanes out of national security concerns. Many previous Treasury secretaries have flown commercial both domestically and abroad while on private (and often public) travel.
Mncuhin also denied reports that his recent trip aboard a government plane to Kentucky — made famous by Linton’s Instagram post — had anything to do with checking out the eclipse. “You know, people in Kentucky took this stuff very serious. Being a New Yorker … I was like, the eclipse? Really? I don’t have any interest in watching the eclipse.”
Perhaps he missed the many photos of hardened New Yorkers gathering in the streets to gawk at the eclipse.
— 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.