Trump Seems to Embrace Key GOP Tax Proposal

President’s fly-in to GOP retreat in Philadelphia a warm affair

Senate Majority Whip John Cornyn, and Senate Majority Leader Mitch McConnell listen as President Donald Trump speaks Thursday at the congressional Republicans’ retreat in Philadelphia. (Bill Clark/CQ Roll Call)
Senate Majority Whip John Cornyn, and Senate Majority Leader Mitch McConnell listen as President Donald Trump speaks Thursday at the congressional Republicans’ retreat in Philadelphia. (Bill Clark/CQ Roll Call)
Posted January 26, 2017 at 3:07pm


PHILADELPHIA — President Donald Trump appeared to endorse a key House Republican tax proposal as he continued his opening-week charm offensive Thursday, also telling GOP lawmakers he stands “shoulder-to-shoulder” with them. 

And the new chief executive, during his first domestic trip since being sworn in last Friday, predicted this Congress will be the “busiest” in decades.

During his first six days as America’s 45th president, the former reality television star and businessman has flashed both his bombastic campaigning style and a warm, joke-cracking persona in social and business meetings. So it was an open question as to which Trump would arrive in Philadelphia to address his fellow Republicans, on whom he will depend to pass his policy agenda.

What GOP members got was the charmer in chief.

Rather than blast Mexican President Enrique Pena Nieto for canceling a meeting at the White House next Tuesday over a flap stemming from Trump’s border wall executive order, he claimed the decision to scrub the session was mutual.

His press secretary, Sean Spicer, revealed more details about how Trump intends to pay for his border wall. 

“When you look at the plan that’s taking shape now, using comprehensive tax reform as a means to tax imports from countries that we have a trade deficit from, like Mexico,” Spicer said on Air Force One, according to reporters traveling with Trump. “If you tax that $50 billion at 20 percent of imports – which is, by the way, a practice that 160 other countries do – right now, our country’s policy is to tax exports and let imports flow freely in, which is ridiculous. By doing … that, we can do $10 billion a year and easily pay for the wall just through that mechanism alone. That’s really going to provide the funding.”

Trump joked with the House and Senate Republican leaders seated behind him on the stage, at one point even teasing Senate Majority Leader Mitch McConnell. “Mitch, don’t worry about it,” Trump said with a smile after informing the crowd that “we’re going to have so many trade deals” to replace the Trans-Pacific Partnership pact that he formally pulled the United States out of this week.

[Major Trading Alliance Wobbles on Trump Border Wall]

And he drew laughs when he accused Senate Democrats of delaying votes on his Commerce Secretary-designee Wilbur Ross, which he said will impact his Friday talks with British Prime Minister Theresa May. “They want to talk trade,” he said of the British. “So I’ll have to handle it myself, which is OK.”

In most administrations, the U.S. trade representative has actually taken the lead in negotiating trade pacts, not the Commerce secretary. The new president’s pick to be the trade representative, Robert Lighthizer, was one of his later nominations, announced on Jan. 3.

His message to the GOP members Thursday was best summed up when he told them he plans to be their “partner,” vowing to “stand shoulder-to-shoulder” with them as they, together, “make America great again.”

On his way back to Washington, Trump even fired off a tweet to thank the members for their “support.”

But Trump, who unlike past presidents did not take questions after his remarks, let them know he expects them to work toward what he described as a shared legislative agenda.

He also was playful with House Speaker Paul D. Ryan, noting that in the past, the Wisconsin Republican would write reams of legislative text only to see it go nowhere. “Now, it’s going to happen,” he promised.

“This Congress is going to be the busiest Congress we’ve had in decades — maybe ever,” Trump said in his trademark bombast. “Think of everything we can achieve,” he added, though he also urged them to remember they were doing it for “the people.”

“Now we have to deliver. Enough ‘all talk, no action,’” he said to tepid applause.

Before Trump took his maiden flights on the Marine One executive helicopter and Air Force One, some experts had said it was unclear whether his policy ideology and agenda neatly aligned with that of congressional Republicans. To that end, he seemed to embrace the House Republicans’ border adjustment tax proposal.

“I want to go a different route. We have no choice,” he said of America’s trade deals with Mexico. “Paul Ryan and other leaders in Congress and I and Mike Pence … we’re working on a tax reform bill that will reduce our trade deficits, increase American exports and will generate revenue from Mexico that will pay for the wall if we decide to go that route.”

Ryan, when asked Thursday before the president’s speech if Trump had told him specifically that he likes the border adjustment proposal, said, “We’re in a very good place on tax reform.”

“It can get complicated when you get into the details of tax reform, but once we go through how tax reform works and what it’s going to take to get the kind of competitive tax system, the kind of competitive tax rates, I think most people agree that this is the right approach,” the speaker said.

The House Republican tax overhaul blueprint calls for a cash-flow based tax system that would remove the existing tax on exports and institute a tax on imports, regardless of where the product originates. This provision, which they refer to as “border adjustability,” is designed to allow the U.S. to compete with foreign countries that have valued-added taxes or similar systems that tax imports.

[Who’s Going to Pay for the Wall? Congress!]

Republicans argue that U.S. companies that make products here and sell them overseas are at a disadvantage because they are double-taxed, paying the U.S. an export tax and the destination country an import tax.

Trump’s apparent endorsement of the proposal came just hours before he is slated to meet with Rep. Kevin Brady of Texas and Sen. Orrin G. Hatch of Utah in the Oval Office. The two Republicans are the respective chairmen of the House and Senate’s tax-writing committees. Notably, Brady has been engaged in a public tour lately talking up the border adjustment proposal.

Illinois Rep. Peter Roskam, chairman of the Ways and Means subcommittee on tax policy, said earlier Thursday that Trump’s proposal for a 35-percent border tax was not the same thing as what House Republicans were proposing in their blueprint, but that he believed the president would eventually come to their side.

“I think when it all comes down to it, Donald Trump looks at this and says,  ‘I will support this,’” Roskam said, adding, “In the great scheme of things, there’s not many other options that don’t get you into a trade war.”