Friday 15 December 2017

Trump woos Democrats in bid to pass big tax cuts

Mr Trump appears to be retreating from his promise to secure federal funding for his controversial border wall. Photo: Reuters
Mr Trump appears to be retreating from his promise to secure federal funding for his controversial border wall. Photo: Reuters

Ruth Sherlock Washington

Donald Trump is expected to include childcare welfare credits in his tax reform plans to win support from Democrats - a move said to have been promoted by his daughter Ivanka - as he scrambles to turn his campaign pledges into law.

The US president enjoys a Republican majority in Congress, but after failing to overhaul America's healthcare system, is now under pressure to secure at least one major piece of legislation ahead of marking his first 100 days in office on Saturday.

Mr Trump will unveil a plan today that he has said will include "maybe the biggest tax cut" America has "ever had". His proposal is expected to include his election pledge to slash the corporate tax rate from 35pc to 15pc. He has also promised to significantly reduce the top individual tax rate.

Mr Trump is said to be pushing for the policy even at a cost of jettisoning his promise to shrink the size of the country's budget deficit.

The Tax Policy Centre, a liberal-leaning research group, has concluded that this new tax law would add at least $7 trillion (€6.4trn) in US government debt over a decade.

Reducing the corporate tax rate as much as Mr Trump intends would cause a $2trn budget shortfall over a decade, according to the congressional Joint Committee on Taxation.

Supporting a policy that comes at such a massive cost could damage the credibility of many Republican members of Congress who have spent years railing against the rising national debt under the former president, Barack Obama, so Mr Trump (below) is now trying to woo Democrats.

It was reported yesterday that the plan is expected to include a childcare tax credit developed by Ms Trump, the president's daughter, who is an unpaid adviser. It will likely also increase spending on infrastructure.

The idea will draw from a bipartisan proposal made by Chuck Schumer, the Democratic minority leader from New York, and Rob Portman, a senator from Ohio, in the summer of 2015.

Democrats have often complained of being shut out of tax talks with their Republican counterparts. Aides on the Senate finance committee have said they were not included in a briefing by the president's economic team on Capitol Hill yesterday.

Steven Mnuchin, Mr Trump's treasury secretary, has previously said the tax cuts would pay for themselves through the economic growth they would generate.

The concept, to engineer up to 3pc economic growth - a dramatic increase from the 1.6pc achieved last year - was popularised as "trickle-down" economics during the Reagan years.

Meanwhile, Mr Trump appears to be retreating from his promise to secure federal funding for his controversial border wall, a shift that could make it possible for Congress to finish work on spending legislation in time to avoid a government shutdown.

"Building that wall and having it funded remains an important priority to him but we also know that that can happen later this year and into next year, and in the interim you see other smart technology and other resources and tools being used toward border security," Trump adviser Kellyanne Conway said last night.

Mr Trump said he may put off until September asking Congress to include the money in the federal budget. That could remove, at least for now, one of the biggest deal-breakers he's inserted into talks to pass a bill this week that would finance the government through September, the end of the fiscal year.

Democrats, whose votes will be needed to help pass the spending plan, hope he'll blink to avoid an embarrassing milestone for a new president trying to prove he can govern. A partial shutdown would start on Saturday.

"The president's comments this evening are welcome news given the bipartisan opposition to the wall, and the obstacle it has been to the continuing bipartisan negotiations in the appropriations committees," said House Democratic Leader Nancy Pelosi. "It's time for Congress to act to make it clear that government will remain open for the American people."

"We feel very confident the government's not going to shut down," White House press secretary Sean Spicer said, although he said he wouldn't guarantee it. (© Daily Telegraph, London)

Irish Independent

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