By Nancy Cook | PoliticoPro
President Donald Trump is on the precipice of signing a sweeping tax reform bill, his first major piece of legislation since taking office 11 months ago, the result of a strategic decision to do one simple thing: focus on the hard sell. Trump has spent weeks wooing, prodding, cajoling and personally calling Republican lawmakers to pass sweeping tax legislation in time for Christmas – a deadline Trump himself set months ago – but he and his staff have left many of the policy decisions up to Republican lawmakers and top congressional staffers.
In the final weeks of negotiations, Trump has acted as the cheerleader and closer. He’s personally phoned lawmakers whose support of the bill wavered at times — including Republican Sens. Bob Corker, Ron Johnson and Steve Daines — while staying in close touch with congressional leadership to check on progress toward a win, according to several White House aides, congressional officials and people close to the administration.
When the legislation came under fire from independent tax experts and Democrats for doing more to help the wealthy and businesses than average Americans, the White House organized a 30-minute speech in the grand foyer to showcase the way the tax bill would help families. Like the reality show host he was before running for the nation’s highest office, Trump called five families to the lectern to describe what they’d gain by the yet-to-be-unveiled Republican bill.
The tax bill “belongs to people like the Glicks, the Kovacs, the Giampolos, the Benjamins, the Howards, and the millions of Americans just like them across our nation, who pour out their hearts and souls every single day to take care of their families and the country they love and that we love,” Trump said last week, barely acknowledging the legislation’s signature business tax cuts.
As a real-estate developer, Trump knew that it was easier to put his name on other people’s buildings than to construct the edifices himself. And now, it seems, he’s discovered the same approach works in Washington, too.
“That is what businessmen do. They focus on the deal,” said Stephen Moore, an informal economic adviser to Trump and distinguished senior fellow at the Heritage Foundation. “The president has not been engaged on the specifics of the tax bill, but that is fine.”
The results of Trump’s strategy have been instructive for an administration stung by its failure to repeal Obamacare and in need of a major Republican victory ahead of the 2018 mid-terms. If the bill passes this week as expected, the president may have a playbook to follow for other battles in 2018 and beyond — be it infrastructure, welfare reform or revisiting health care.
“I’ve never seen anything like it,” said Randy Hardock, who served as the tax counsel to the Democratic chairman of the Senate Finance Committee, Lloyd Bentsen, during the 1986 tax overhaul. “It has only been six-and-half weeks since the first statutory language was released.”
The haste was partly strategic — it short-circuited lobbyists by leaving many unable to understand the bill’s nuances, and it gave Democrats little time to pinpoint areas to target and criticize. Even Republicans throughout Washington were kept in the dark about the contents of the final bill, which was released on Friday ahead of planned votes early this week. But the Christmas deadline also allowed the president to frame the legislation as a feel-good, end-of-year bonus, something lawmakers could take home to their constituents amid a dramatic escalation in the probes into Russian interference in the 2016 election.
The planning for the tax legislation began in earnest in April, after the bitter disappointment of the Obamacare repeal collapse. The White House knew it needed a victory and decided to tweak its approach as it took on tax reform, a long-time Republican goal, by getting outside groups on board at the outset.
“One lesson we learned from health care was to begin the outreach with business groups and conservative groups much earlier to allow them to feel included in the process,” said Marc Short, the White House director of legislative affairs.
Another problem with the administration’s approach to repealing the Affordable Care Act was the huge number of White House officials, some with different ideological viewpoints, who tried to negotiate the points of Obamacare repeal with Congress. That left lawmakers confused about the administration’s priorities, particularly since Trump himself wasn’t particularly interested or well-versed in the details of health reform.
This time around, the White House formed a dedicated internal team to ensure the administration closely coordinated on all tax questions.
Those officials included Treasury Secretary Steven Mnuchin and National Economic Council director Gary Cohn, coupled with top staffers like Justin Muzinich of Treasury and Shahira Knight of the NEC. The legislative affairs shop, led by Short, and the vice president’s office also played key roles in gaming out the strategy.
“Instead of having 13 people on the Hill saying, ‘This is what the president wants,’ we were able to enforce and tighten who spoke for the president,” said one White House official.
Early negotiations were conducted by a group known as the “Big 6” – comprised of congressional leaders, Mnuchin and Cohn – to develop and agree on the big ideas of tax reform.
The group met weekly for months, eventually unveiling in late September a nine-page framework that nailed down many of the broad ideas of a tax bill, such as a target corporate rate and the move to a territorial tax system. Many of those concepts had already appeared in the various campaign and transition tax plans the Trump team had developed.
While the Big 6 framework was criticized by some tax experts and lobbyists for its lack of specifics, the group’s overall work ultimately aided the process by forming a foundation – and getting some thorny policy fights out of the way. For instance, House leaders agreed to drop an idea known as the border adjustment tax, a controversial proposal to raise revenue that divided the business community and could have sunk the bill given the fierce lobbying effort it kicked up.
“The Big 6 helped to clear out what could have been irreconcilable differences and helped convince Speaker Ryan and Chairman (Kevin) Brady to drop the BAT,” said Rohit Kumar, a principal of PwC’s Washington National Tax Services and former deputy chief of staff to Republican Majority Leader Mitch McConnell.
The Big 6 parameters also helped the White House get buy-in from conservative and business groups, prompting organizations like the Business Roundtable to throw millions of advertising dollars behind the fledgling tax bill.
When congressional leaders took charge of the details in the fall, administration officials such as Mnuchin, Cohn, and Knight stayed in touch as the Hill delved into the specifics of a sweeping tax bill.
Meanwhile, members of the administration pitched the broad parameters of the tax overhaul around the country. Ivanka Trump made tax-related appearances in California, Maine, New Jersey, and Pennsylvania. She also privately met with over 20 lawmakers on Capitol Hill and hosted several bipartisan dinners on taxes at her home in the Kalorama neighborhood in Washington.
Trump himself gave public speeches in Missouri and North Dakota, and Agriculture Secretary Sonny Perdue promoted the overhaul in places like upstate New York that had strong farming communities. Trump, Pence, Cohn and Mnuchin stayed in touch with individual lawmakers, with whom each had developed one-on-one relationships. Some White House officials tried to keep Mnuchin away from House Republicans, sending him to California to deliver speeches the week the House unveiled its version of the bill, according to one White House official. Mnuchin did, however, develop ties in the Senate including to Corker — one of the Senate’s final remaining Republicans to publicly get on board with the final bill.
The Treasury Department also helped convince lawmakers to support the legislation by calculating, district-by-district, how the tax bill would benefit families of four in individual members’ cities and towns.
While the White House focused much of its public outreach on the bill’s benefits for individuals and families, Trump was particularly passionate about where the corporate tax rate would land. He viewed that number as “all of the muscle” of the tax bill, said Larry Kudlow, an informal economic adviser to the president.
“The president always had policy goals or parameters for the tax bill, and a lot of this in his mind was always on the business side,” Kudlow added.
At a private dinner in September with grassroots conservative leaders, Trump was asked about the status of corporate rate and told the attendees in an animated fashion that he’d wanted it originally at 15 percent but had agreed to allow it to go up to 20 percent.
“He stressed that we have to go big on the corporate rate and that made an impression. It told us that we can stake a lot on that number and not be undercut later,” said Tim Phillips, president of the Koch-backed Americans for Prosperity and one of the dinner’s attendees. “The president was personally invested in that number.”
Trump was so attuned to the corporate tax issue that he grew visibly frustrated in the Oval Office when he thought the rate might rise to too high, according to White House aides. Knight, the NEC staffer who briefed the president on tax policy, told Trump about two weeks ago about a proposal to bump up the corporate rate to 25 percent, according to two White House aides.
Democratic Sen. Joe Manchin of West Virginia had told Short, Cohn, and Knight in a meeting on Capitol Hill with other Democratic senators that he would consider supporting the Republican tax plan if, among other asks, the corporate rate rose to 25 percent; the middle class cuts were made permanent; and Republicans scrapped their plan to repeal Obamacare’s individual mandate for as part of the tax bill, according to a Manchin aide.
But despite the White House’s hopes for bipartisan support, Trump believed a 25 percent corporate rate was unacceptable – even though he had earlier speculated the rate could rise to 22 or 23 percent, setting off a week’s worth of jockeying among lawmakers and outside groups at a key juncture.
The latest version of the tax bill released by GOP leaders last week puts the rate at 21 percent.
“We landed the corporate rate at a good place, but it was a real concern over the past few weeks,” said one White House official about the constant back-and-forth negotiations.
At other times, Trump’s tweets and off-the-cuff comments caused policy problems for congressional tax-writers – like when he tweeted that Congress should not change the taxation of retirement accounts, an idea they were exploring to pay for slashing rates.
The White House tentatively plans to sign the tax bill later this week on Wednesday or Thursday before Trump departs for his Christmas break at Mar-a-Lago in Florida.
Some top White House officials met recently to think through the lessons learned from tax reform and how those principles can be applied to 2018 agenda items, though it is not clear what the White House will tackle next. The Republican margin in the Senate is about to grow slimmer after Democrat Doug Jones won a special election in Alabama to replace former Republican Sen. Jeff Sessions, now Trump’s attorney general.
Part of the administration challenge for next year will be continuing to sell the bill, which—despite being a sweeping and historic achievement for Republicans not seen since 1986—does not fulfill all of the policy goals originally laid out by Trump during the campaign.
It doesn’t, for example, reduce the complexity of the tax code. The benefits Americans see from the bill will also depend extensively on where they live: Some blue state residents will feel the negative effects of a reduced deduction for state and local taxes and a lower cap on the mortgage interest deduction.
The provisions that help individuals also expire at the end of 2025 – meaning that most Americans will see a tax hike in the coming years, while the corporate tax cut remains permanent. Republicans worded the bill that way to keep its costs down and allow them to pass the bill using a particular budget process, but it leaves them open to criticism that they favored certain types of businesses over individuals.
Over the weekend, Trump said that if the economy was doing well in years to come, then another administration or Congress could revisit extending the individual provisions.
But the White House is betting that if the president keeps selling this bill as a boon for the middle class and says that tagline enough times, Americans will eventually come to believe it too.
“The perception is that this bill is disproportionately tilted to help higher-income folks,” said Hardock, the former Democratic tax counsel during the 1986 tax reform. “All of that is true to an extent, but this is still a very large tax cut for most people in this country. The question is: will that be enough to help change people’s perception, when they see real money in their pay checks?”
