Monday 22 October 2018

Trump buoyed by tax cuts vote but faces rising tide in Russia scandal

The US President has finally won in the Senate but old ally Michael Flynn could sink his administration

Hail to the chief: President Donald Trump is greeted with a salute as he walks down the steps of Air Force One at John F. Kennedy International Airport in New York on his return to his home city yesterday to attend a series of fundraisers Photo: AP Photo/Susan Walsh
Hail to the chief: President Donald Trump is greeted with a salute as he walks down the steps of Air Force One at John F. Kennedy International Airport in New York on his return to his home city yesterday to attend a series of fundraisers Photo: AP Photo/Susan Walsh

Ben Riley-Smith and David Millward

Donald Trump took a giant step towards securing the biggest US tax cut in three decades, winning over the final Republican waverers in the Senate.

But the US President has also been dragged further into the scandal surrounding his former national security adviser Michael Flynn.

Mr Flynn is believed to be ready to tell the investigators probing Russian interference in last year's presidential election that Mr Trump directed him to make contact with officials from Russia.

On Capitol Hill, Republicans voted to add $1.4trillion over 10 years to the $20trillion national debt, financing changes they claim would further boost an already growing economy.

Billed by the President as a coup for middle-income families, it is widely expected to benefit the rich and will slash corporation tax.

It passed by 51 votes to 49, giving Mr Trump the first major legislative achievement of his administration, having failed to fulfil his election pledge to repeal Obamacare.

Despite having a 52 to 48 seat majority in the Senate, the administration still had to cut deals with a number of Republicans to get the bill through.

Presiding over the Senate, Vice President Mike Pence announced the vote to applause from Republicans. Senator Bob Corker was the only lawmaker to cross party lines.

"Obviously I'm kind of a dinosaur on the fiscal issues," said Mr Corker, who battled to keep the bill from worsening the government's accumulated $20trillion in IOUs.

The legislation proposes to slash corporation tax from 35pc to 20pc , scrap an inheritance tax called the "estate tax", and increase tax-free income.

Mr Trump has repeatedly framed the tax cut as a win for the middle classes and demanded that it is approved by Congress before Christmas.

He has also warned that Republican congressmen facing re-election at the mid-terms next year will struggle if tax reform falls.

However independent analysis suggests high earners and corporations are the big winners, while some analysts have warned that those on lower and middle incomes could find their taxes increase, especially with a number of allowances being scrapped.

There have also been concerns about the $1trillion addition to the US deficit brought by the tax cuts.

Democrats were dismayed. "The federal treasury is being looted tonight!" left-wing Senator Bernie Sanders roared in the chamber.

"The Republicans have managed to take a bad bill and make it worse," said Senate Democratic leader Chuck Schumer."Under the cover of darkness and with the aid of haste, a flurry of last-minute changes will stuff even more money into the pockets of the wealthy and the biggest corporations."

No Democrats voted for the bill, but they were unable to block it because Republicans hold the Senate majority.

Concessions were made to key moderates John McCain of Arizona and Susan Collins of Maine. Trump also managed to mollify "fiscal hawks", with the exception of Mr Corker.

Fear within the Republican party helped push through the tax cuts. The risk of a backlash from wealthy donors and conservative supporters if the party failed to deliver on another campaign promise ahead of mid-term elections next year ultimately helped get the legislation approved.

"I think after failing twice on healthcare, folks went back home and talked to the real people of America," said Republican Senator John Kennedy. "And they were told: 'Look, we sent you up there to fix our problems. Fix them or we'll find somebody who will.'"

Mr Trump had met Republican senators on Capitol Hill for lunch last week, a gathering described as thoughtful and positive.

"Nobody called anybody names or talked about anybody's native American heritage, or anything," said Mr Kennedy, referring to Mr Trump's habit of picking fights with perceived enemies.

The Senate and the lower House of Representatives still have to negotiate a compromise bill and contentious votes are also likely in the weeks ahead.

Mr Flynn, who last Friday admitted lying to the FBI, has agreed to work with investigators as part of a plea bargain.

He is prepared to say that Mr Trump "directed him to make contact with the Russians", according to a bombshell report by ABC News.

The claim sent the US stock market tumbling and brought the Russian election scandal a step closer to the Oval Office in a dramatic day.

Jared Kushner, Mr Trump's son-in-law, was also named in US media reports as another figure who asked Mr Flynn to reach out to officials from Russia, among other countries.

The White House fought back, labelling Mr Flynn a "former Obama administration official" who spent just 25 days in the Trump administration.

Allegations that Mr Trump's campaign colluded with the Russian government - blamed for hacking Democratic Party emails during the campaign - to win the election have dogged his first year in office.

Mr Flynn is the first White House official to be charged as part of an investigation into Russian meddling led by special counsel Robert Mueller.

Three other Trump campaign figures - Paul Manafort, Richard Gates and George Papadopoulos - were charged in October.

A former general and senior intelligence official, Mr Flynn played a prominent role in Mr Trump's campaign and became US national security adviser after the election victory, before resigning a month later over his conversations with the Russian ambassador to the US.

Last Friday he pleaded guilty to lying to the FBI on January 24 - a mere four days after Mr Trump's inauguration - about conversations he had with the Russian ambassador Sergey Kislyak.

Mr Flynn admitted to urging Mr Kislyak not to hit back at new American sanctions on Russia during a meeting in December 2016, after Mr Trump won the election.

He also conceded he had asked the Russian ambassador to delay a vote on a UN security council resolution in the same month.

That is believed to be a reference to a resolution condemning Israel's settlements in Palestinian territory, which Mr Trump opposed but Mr Obama's administration planned to sit out. While neither admission proves collusion between the Trump campaign and Kremlin before the election, it suggests that after victory, Trump advisers reached out to Russia to undermine Mr Obama's policies.

The more significant development could be Mr Flynn's willingness to work with investigators, given the central role he played during Mr Trump's campaign.

Mr Flynn has agreed to detail how "a senior official" of Mr Trump's transition team at his Mar-a-Lago resort discussed what to tell the Russians, according to prosecutors.

Details about what another "very senior member" of the Trump transition team said about the UN vote are also set to be revealed.

Numerous US media outlets named Mr Kushner, who is married to Mr Trump's daughter Ivanka, as the unnamed figure who discussed the UN vote.

ABC News, the US broadcaster, went a step further by saying Mr Flynn is prepared to say that Mr Trump "directed him to make contact with the Russians".

His decision to work with Mr Mueller's investigation in turn for leniency comes after reports his son Michael Flynn Jnr was being looked into. There were reports Mr Flynn Snr was facing paying more than a million dollars in legal fees if he did not co-operate and would even have to put his house up for sale.

Mr Flynn, a retired lieutenant general, said in a statement : "After over 33 years of military service to our country, including nearly five years in combat away from my family, and then my decision to continue to serve the United States, it has been extraordinarily painful to endure these many months of false accusations of 'treason' and other outrageous acts.

"Such false accusations are contrary to everything I have ever done and stood for. But I recognise that the actions I acknowledged in court today were wrong, and, through my faith in God, I am working to set things right.

"My guilty plea and agreement to cooperate with the Special Counsel's Office reflect a decision I made in the best interests of my family and of our country. I accept full responsibility for my actions."

Ty Cobb, the White House lawyer, said: "Michael Flynn, a former National Security Advisor at the White House for 25 days during the Trump Administration, and a former Obama administration official, entered a guilty plea to a single count of making a false statement to the FBI.

"The false statements involved mirror the false statements to White House officials which resulted in his resignation in February of this year. Nothing about the guilty plea or the charge implicates anyone other than Mr Flynn.

"The conclusion of this phase of the Special Counsel's work demonstrates again that the Special Counsel is moving with all deliberate speed and clears the way for a prompt and reasonable conclusion."

US stock markets took an initial hit after the news, with the Dow Jones dropping 1.4 per cent and the S&P 500 falling 1.6pc before rallying later.

James Comey, the former FBI director fired by Mr Trump, reacted by quoting the Bible in a tweet: "But justice roll down like waters and righteousness like an ever-flowing stream."

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