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THE PROGNOSIS

President Trump thinks he's found just the remedy for the Senate's health-care ills.But the presidents antidote to the current lack of legislation to do away with the legislative filibuster shows he doesnt understand whats crippling Republicans from moving forward on health care, or how to heal the party's problems without causing a harmful side effect in the process.

You could almost picture Senate Majority Leader Mitch McConnell (R-Ky.) banging his head against a wall (or at least taking a long swig of Kentucky bourbon) when Trump tweeted this yesterday morning:

Trump was referring to the so-called nuclear option -- a tacticthat McConnell could choose to employthat would allow the Senate to pass all legislation with just 51 votes instead of what's become the more customary 60. As the Senate has become more partisan, more and more of the minority party's rights have been eroded -- first, in 2013, when under then-Majority Harry M. Reid(D-Nev.)the chamber moved to allow approval of executive branch and judicial nominations by a simple majority; and againmore recently, under McConnell's stewardship, by applying that standard to Supreme Court nominations, once considered untouchable.

But with his policy agenda in trouble in Washington,Trump wants to go even further.

If youre thinking of just the here and now, dropping the legislative filibusterwould give Republicans the best of both worlds.They could repeal and replace the Affordable Care Act without any help from Democrats. And they could do it through the normal legislative processinstead of having to maneuver through arcane and limiting rules accompanying the budget bill theyre currently using.

I think he wants to see action, thats what he wants, White House press secretary Sean Spicer said Tuesday when asked about Trumps tweet. He wants to see things move through the House and the Senate. He wants people to stop playing games.

Its not the first time Trump has suggested going nuclear.In another tweet earlier this month, the president called for action on legislation with 51 votesor else:

And Trump told Fox News in an April 28 interview that the filibuster concept is not a good concept to start off with ... Youre really forced into doing things that you would normally not do except for these archaic rules," Trump complained.

McConnell has shut down the idea of ditching the legislative filibuster before. And he again rejected the idea yesterday, real fast, when his office responded to Trump by noting that Republicans can already pass health care with a 51-vote majority by using the budget process.

Senator McConnell agrees that both health care and tax reform are essential and that is why Republicans in Congress are using the reconciliation process to prevent a partisan filibuster of these two critical legislative agenda items, said McConnell spokeswoman Antonia Ferrier in response to Trump's tweet.

Why is McConnell dead-set against widening his own partys unilateral ability to pass legislation? Because he knows it would hurt Republicans in the long-term. And it wouldnt help them that much inpassing a health-care bill now.

To state the obvious, at some point Democrats will probably regain control of the Senate. But the reasons that McConnell is resistinggo deeper than that. Many conservative thinkers feel that doing away with the legislative filibuster would benefit Democrats more than Republicans. Thats because progressives are generally more interested in passing new government programs whereas conservatives are hesitant to broadenthe government's role in just about anything.And the GOP is finding that eliminating government programs -- especially entitlements -- is no simple task, even when they're in themajority.

Ending the filibuster would make the consequences of any future Democratic victories much more punishing for conservatives and Republicans have never proven the ability to significantly roll back expansions of the welfare state that took place when Democrats were in power, the Washington Examiners Phil Klein wrote back in 2015.

It would become much easier for Democrats to enact theirpriorities if they needed only 51 Senate votes. But Republicans probably wouldnt have equal ease in rolling back their own wish list. Just look at how theyre struggling to pull back on the ACAnow that millions of Americans have federally-subsidized insurance plans because ofit.

Trump didnt just show a lack of foresight with his tweet. He also demonstratedhe doesnt fully understand just how hard it is for Senate Republicans to agree among themselves on a health-care bill. The GOP hasalready given itself a simple-majority threshold by using budget reconciliation. And the party isstill in real danger of hitting an impassable roadblock of its own makingwhen lawmakersreturn to town after the Memorial Day recess. There are plenty of ideological differenceson health care within the 52-vote Senate GOPconference itself.

At the end of the day, we have the power of 51 and are struggling so it seems like a false choice, a former Senate GOP staffer told me.

Nearly every senator even many who most want to ditch the ACA -- seems to feelthat abolishing the legislative filibuster wouldbe foolhardy. Senate Finance Committee ChairOrrin G. Hatch (R-Utah) has said he would get Trump back in line on the issue. Even Sen. Mike Lee (R-Utah) sides with McConnell on the matter. We want to keep the current Senate rules, a Lee spokesman told The Health 202.

The outlier may be Sen. Ted Cruz (R-Texas). A spokesman pointed to comments the Texas senator made back in Aprilwhen he indicated he could be open in the future to going nuclear on legislation but wanted to wait and see how the facts develop.

At this point, there is not a majority for ending the legislative filibuster, Cruz said on April 6. My hope is that Democrats will stop their unreasonable across-the-board obstruction and allow the Senate to operate. If they continue an unmovable blockade, I suspect the votes will shift on that question as well.

But there may beenough health-care explosions on Capitol Hill without Republicans going nuclear too.

AHH, OOF and OUCH

AHH: Trump's appointee to lead the agency overseeing Medicare, Medicaid and Obamacare said Tuesday that the GOP health-care bill is "outdated" and what's more important is legislation in the Senate,when asked to respond to the CBO's projection that it would cost 23 million people their health insurance. Seema Verma, administrator of the Centers for Medicare and Medicaid Services, also raised questions about the CBO's ability to accurately score the bill, the Washington Examiner's Kimberly Leonard reports.

"We disagree with some of the premises that they are indicating in this report," Verma said, speaking to USA Today in a live-streamed interview.

OOF: Police arrested 32 people yesterday in North Carolina's legislative building for holding a sit-in to protest Republican lawmakers' refusal to accept the ACA's Medicaid expansion. Among them was North Carolina NAACP leader William Barber, a leader in the protests, which have resulted in 1,000 arrests since2013.The protesters, whoface charges of second-degree trespassing, were arrested after marching through hallways to the offices of legislative leaders and sitting outside them.

OUCH: The ousted executive of Molina Healthcare is blaming premium hikes under Obamacarenot on faults in the law itself, but on Republicans and their efforts to sabotageit. In a U.S. News and World Report piece, J. Mario Molina blasts Republicans for their narrative that the health-care law is in a "death spiral" that will inevitably "explode."

"That narrative is patently false," Molina writes."In fact, most of the instability driving up premiums in the marketplace can be directly traced to Republicans' efforts to undermine the health care law for their own political purposes."

Until he was fired a few weeks ago, Molina was CEO of the health-insurance company, which had invested heavily in the state marketplaces but suffered deep and unexpected losses last year. While the company has said Molina was let go over disappointing financial performance, Molina has suggested it's partly because of his public statements about the health-care law.

HEALTH ON THE HILL

--Congress is on recess all week, but the word on the street is that Senate staffers are busy craftinglegislative text of a health-care billso senators have something to consider when they return to town next week.

They better be working fastbecause Trump faces "anincreasingly narrow path to achievemajor legislative victories before the looming August recess, with only two months left to revive his health-care or taxinitiatives before Congress departs for a long break," the Post's Damian Paletta and Mike DeBonis report. "White House officials plan to push Senate Republicans in June to vote on a repeal of the Affordable Care Act, and they want to spend the rest of the summer whipping up support for major tax cuts."

But there's a lot that could get in the way. "Congress also faces an increasing number of legislative distractions that could further imperil Trumps agenda," my colleagues write."There is a big divide among Republicans over whether they can vote to pass a budget resolution in the coming months, and failing to do so could make it much more difficult to change the tax code. In addition, White House officials are now demanding that Congress vote to raise the debt ceiling before the August break pressing members to take a difficult vote before they head back to their districts."

In the meantime, insurersare trying to get a word in edgewise.They want the GOP health legislationto contain adequate funding for Medicaid, repeal all of the ACA's taxes and base subsidies on income, not just age, according to letters sent to Hatch.

The influential insurerassociation, America's Health Insurance Plans, especially urged that aGOP plan includeimmediate steps to stabilize the individual market that"faces immediate and significant challenges, especially for the 2018 plan year." AHIP blamed the problems partly on"structural issues and policy decisions" made in the early years of ACA implementationand partly on uncertainty fromTrump's indecision on whether to keep funding extra cost-sharing subsidies. They are also concerned aboutthe likelihood that the administration won't enforce the individual mandate.

UnitedHealth Group, which pulled out of AHIP a few years ago, was even more critical of the Obamacare marketplaces. The major insurer wants themdisbandedentirely beginning in 2019 andoversight of the individual market returned to states, according to a letter to Hatchobtained by The Health 202. UnitedHealth also wrote that Congress should eliminate the ACA's essential health benefits andits metallic actuarial value-rating system, allow insurers to charge older people five times more than younger people instead of just three times and restore the ability of insurers to sell short-term and limited coverage policies.

Getting rid of the ACA's Health Insurance Tax (called HIT) is a biggie for UnitedHealth. The insurer says it is pricing the tax into 2018 policies, arguing that itwill cause annual premiums to rise by $210 for small employers and $530 for families buying coverage on their own. "Full repeal of the Health Insurance Tax (HIT) is one of the quickest and easiest ways to lower health care costs, prevent further disruption, and ensure market stability," the insurer wrote.

--Watch out if you happen to be Reps. Todd Rokita(Ind.), Luke Messer (Ind.), Lou Barletta(Pa.), Evan Jenkins W.Va.), Alex Mooney (W.Va.), Kevin Cramer (N.D.), Vicky Hartzler (Mo.) or Ann Wagner (Mo.). These Republican representatives running for Senate seats, or at least eyeing them,are top targetsof the Democratic Senatorial Campaign Committee, according to a memo the DSCC is releasing today. The memo also names Sens. Jeff Flake of Arizona and Dean Heller of Nevada, both facing tough reelection battles next year.

Here's how the DSCCplans toattack these Republicans, who have either voted for theACHA or expressed support for it. Itstopline messages include this messaging on health care:

1. Republicans will raise out-of-pocket costs with higher premiums, deductibles, and the cost of prescription drugs.

2. People with preexisting conditions will lose protection and can lose coverage.

3. Republicans impose an age tax on older Americans, forcing them to pay premiums as much as five times higher than what others pay.

Meanwhile, some lawmakers held town halls -- or were afraid to? -- in their states and districts, where health care was inevitably a topic:

From GOP congressman Darrell Issa'sDemocratic foe in California in 2018:

Issa pushed back:

One reporter made a funny comparison to The Office's Michael Scott:

CHART CHECKER

--A new poll confirms the GOP health-care plan isprettyunpopular, even when compared toObamacare, which itself hasn't always enjoyed the public's smile. Anew Kaiser Family Foundation poll finds that just 31 percent of Americans hold favorable views of the ACHA, while 49 percent view the ACA favorably. And asthe Senate considers its own version of a bill overhauling the ACA,a majority of the public wants the upper chamberto either make major changes to the House bill or not pass it all. Fewer want the Senate to pass the billwith only minor changes or in its current form.

Here are the survey's threemostinteresting takeaways:

1. For both the ACA and the GOP bill, the poll founda deep, partisan divide inhow respondents felt about them.Democrats favor the ACA over Republicans by a 6.5 to 1 ratio, while Republicans favor the AHCAover Democrats by a ratio of 8.3 to 1.

2. Many more people are blaming President Trump and Republicans in Congress than Democrats forproblems with the ACA moving forward. Sixty-three percent said it's Republicans' fault if the ACA continues to have problems,more than twice the share who say President Obama and Democrats are responsible.

3. The four top elements Republicans want in a health-care bill are: Allowingstates to have Medicaid work requirements; providingfunding for state high-risk pools;changingMedicaid funding to a block-grant system and stoppingfederal Medicaid payments to Planned Parenthood.

Here are some more interesting reads about Capitol Hill and beyond:

Here are some more good reads about how health care is playing during recess:

Rep. Dana Rohrabacher is confident in his chances in 2018, even as Democrats prepare a rare challenge.

David Weigel

Patrick Soon-Shiong has faced questions about possible conflicts of interests.

Politico

Two key Iowa senators say any repeal of Obamacare is unlikely.

Press Herald

Officials at the Office of National Drug Control Policy under President Barack Obama wanted to take a more lenient stance on marijuana, with one former official telling HuffPost that staff pushed to ease federal prohibitions against the drug. But they never made that case directly to the public.

Huffington Post

DAYBOOK

Today

Coming up

SUGAR RUSH

Do you know what "covfefe" means? We sure don't. Trump tweeted out this early this morning: "Despite the constant negative press covfefe..." Then erased it. Then tweeted the below. Internet memes abound.

Watch Sen. Bernie Sanders blame "oligarchs" for attempts to change the Affordable Care Act:

This is hard to believe, but Keri Russell says her kids aren't impressed with her:

Continue reading here:
The Health 202: Why Republicans won't go nuclear even for Obamacare repeal - Washington Post

I think the President could be better served than hes been served, Chris Christie, the governor of New Jersey, said, of the officials in Donald Trumps Administration.CreditPHOTOGRAPH BY MARK PETERSON / REDUX

The unpopular New Jersey Governor Chris Christie (now at seventy-six-per-cent disapproval), who last year bowed and scraped his way into candidate Donald J. Trumps inner circle, has begun to emit hesitant signals that he wishes hed bet on another horse. Christie, who had briefly been considered for the Vice-Presidency and other Administration jobs,agreed in March to head a White House task force on opioid addiction. But, after the Times reported that Trump had urged James Comey, the F.B.I. director, to end the investigation of his national-security adviser, Michael Flynn, who may have been compromised by Russian agents, Christie was asked whether he thought that such an action would be appropriate. Next question, the governor replied. I dont answer hypotheticals. A few days later, though, after the Times reported that Trump had told Russian officials that Comey was crazy, a real nut job, Christie, a former U.S. Attorney, sounded as if hed had enough: I would disagree with the characterization of Jim as a nut job, he said. Ive known Jim for a long time. As for Flynn, he added, If I wasPresident of the United States, I wouldnt let General Flynn in the White House, let alone give him a job. Furthermore, Christie had said as much to Trump. I didnt think that he was someone who would bring benefit to the President or to the Administration, Christie told reporters. And I made that very clear to candidate Trump, and I made it very clear to President-elect Trump. As for those to whom Trump has given staff jobs, Christie said, I think the President could be better served than hes been served. I think that leads to a lot of the confusion and a lot of the tumult.

Perhaps this is making too much of one mans views, but, because its Christie, such an early, enthusiastic supporter, it means somethingperhaps an inclination toward personal redemption that has little to do with ideology and everything to do with the risk to the nation posed by a dangerous man (dangerous in his ignorance and arrogance) who, rather than growing in office, seems to be shrinking, and vandalizing, the office to fit his striking limitations. It will be instructive to watch others with ties to the Administrationthose who know betterif and when they begin to act in ways that honor their convictions and sense of patriotic duty.

One such person is Rod J. Rosenstein, the Deputy Attorney General. Rosensteins May 9th memorandum sharply criticized Comey for his handling of the Bureaus investigation of Hillary Clintons e-mail habits, and recommended appointing someone else to run the Bureau. But, once it became clear that Rosensteins words were being used as the justification for firing Comey, he found himself ensnared in the Trumpian universe of crisscrossing narratives and motives. As the Senate Minority Leader Charles Schumer informed him in a letter, his reputation as an independent, apolitical actor throughout his three decades at the Department of Justice had been imperiled.

Rosenstein defended his assessment of Comey but, as it became obvious that he had been played by the President (whod wanted to get rid of Comey before reading any memos from anyone), and by Jeff Sessions, the malleable Attorney General, one could imagine a breakfast-nook conversation at the Rosenstein home. In this imagined dialogue, his wife, Lisa Barsoomian, who is also a lawyer, would have said, Rod, you only get one reputation per lifetime. Rosenstein may have rescued hisfor now, at leastby appointing the former F.B.I. director Robert Mueller, who had a long working relationshipwith Comey, as a special counsel to investigate whether Russia interfered with the 2016 election.

Even among congressional Republicans, one can see some glimpses of slouching toward redemption. While the House Speaker, Paul Ryan, has squirmed away from principled stands, Senator Richard Burr, of North Carolina, who chairs the Intelligence Committee, appears to be doing his job, which requires recognition of reality; so, as the Times reported, do some other Republicans on his committee. Burr certainly wants Trump to have a successful Presidency, but he also sounds eager to understand what possessed the American President when, as the Washington Post first reported, he offhandedly disclosed highly classified informationcode-word informationto the Russian Ambassador and foreign minister. In a joint press conference with the committees Democratic co-chair, Mark Warner, of Virginia, Burr urged the White House to tell him more. He said that hed been unable to get through by telephone (Maybe theyre busy) and insisted, My major concern right now is that I dont know what the President said. I know what Ive read. I dont go on anonymous sources orI want to talk to people who were in the room.

Senator Ben Sasse, of Nebraska, a Republican who was never a Trump supporter, sounds as if he no longer has any doubt about what the nation is confronting. In a recent appearance on CBSs Face the Nation, he said, We are in the midst of a civilization-warping crisis of public trust. Of Comeys dismissal, and more, he added, We need a shared narrative about how we are as a people, what government can and cant do, and what the beating heart of the First Amendment and free press and freedom of assembly and speech and religion means to us. Other Sasse-ist Republicans, notably Senators John McCain and Lindsey Graham, have never concealed their dismay at having Trump in the White House.

There you have itmaybe. A mere four months into the Trump era, one can already hear stirrings of honorable intent, and conscience, and a recognition that many of todays actors will be sternly judged, as the novelist Kate Atkinson once put it, when we are safely in the future.

See more here:
Republicans and the Road to Redemption - The New Yorker - The New Yorker

Atlanta Journal Constitution (blog)

How Much Trump Is Good for the GOP in House Races? New York Times The race between the Republican Karen Handel and the Democrat Jon Ossoff in this reliably Republican district has become a proving ground for the surrogates tasked with defending the party's majority. Both sides together could spend more than $40 ... Democrats are outspending Republicans in Georgia 6th raceAtlanta Journal Constitution (blog) all 26 news articles »

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How Much Trump Is Good for the GOP in House Races? - New York Times

Republicans are running out of time to make major legislative achievements before they break for their August recess and President Trumps 200th day in office later that month.

Congress will be in session for just 31 legislative days between now and the end of July, when the five-week recess begins.

Speaker Paul RyanPaul RyanFive goals for Republicans this summer Five tax reform issues dividing Republicans GOP leader tempers ObamaCare expectations MORE (R-Wis.) and Senate Majority Leader Mitch McConnellMitch McConnellTrump calls for end to filibuster Five goals for Republicans this summer GOP leader tempers ObamaCare expectations MORE (R-Ky.) have both put more of an emphasis on the 200-day mark than Trumps first 100 days.

The two want to show that Republican control of Washington is a status quo the voters should support as they make their case for next years midterms.

Theres still time for Republicans to make some gains.

Adopting a budget

Republicans frequently blasted Democrats when they controlled Congress for going years without adopting a budget.

Then they were unable to adopt a budget last year due to internal divisions about cutting spending, though the inaction didnt hurt the GOP legislative agenda.

This time, failing to adopt a budget would imperil GOP hopes for passing tax reform through special budget rules that would prevent a Democratic filibuster.

Without a budget, in other words, the GOP may have to forget about a broad tax overhaul, a longtime dream of Ryans.

Figuring out a budget for next year will also have consequences for keeping the government funded after September.

Some Republicans want a bipartisan budget deal similar to those hammered out over the past four years, that would establish top-line spending levels for appropriations bills and raise the debt limit at the same time.

We need that kind of agreement to provide budgetary stability, said Rep. Charlie Dent (R-Pa.), a senior member of the House Appropriations Committee.

Raising the debt limit

Top Trump administration officials told Congress this week that lawmakers may have to approve a debt ceiling increase sooner than expected.

Treasury Secretary Steven Mnuchin urged lawmakers to pass a clean debt ceiling hike with no strings attached before leaving for the summer break.

I think its absolutely important that this is passed before the August recess and the sooner the better, Mnuchin said before the House Ways and Means Committee.

Conservative groups want to tie spending restrictions to a debt bill. The conservative House Freedom Caucus announced this week that they would demand any debt hike be paired with spending cuts.

Striking a bipartisan deal to avoid a bruising debt limit fight would let GOP leaders demonstrate they can govern responsibly, as they did with the four-month spending package earlier this month. But a wide-ranging budget and debt limit deal would be a disappointment for conservatives hoping to get policy wins under unified GOP control of government.

My concerns with the past years is that in a bipartisan fashion weve been kicking the road and adding to the debt substantially. Thats my concern with the past years. Going forward, when you win the House and the Senate and the White House, and youre the small-government party, thats my concern, said Rep. Dave Brat (R-Va.), a Freedom Caucus member.

Avoid a government shutdown

Congress is far behind where it normally is at this stage of the year in the annual appropriations process.

The House will enter June without having approved a single appropriations bill, and appropriators concede that theres no time to pass each individual spending bill given other priorities.

We can get the bills ready to get all 12 bills out of committee. The real question is, do you have the time to do them on the floor? Probably not. So you're going to have 'minibuses' or an omnibus, Rep. Tom Cole (R-Okla.) told reporters.

At a minimum, Republicans need to show that at a minimum they can keep the lights on while controlling Congress and the White House.

Government funding wont run out until the end of September, but the GOP will want to start putting together a plan this summer.

In frustration over accepting this months spending compromise, President Trump called for a good shutdown in September to fix the mess in Washington. But most Republicans in Congress want to avoid such a situation, believing they and Trump would get the blame for a shutdown.

Tax reform

Republicans cant move a 2018 budget, which they need for tax reform, until they finish work on a fiscal 2017 budget needed to repeal ObamaCare.

That means a tax reform vote in either chamber is still a long way off. But Republicans are eager to get moving.

The border adjustment tax proposal pushed by Speaker Paul Ryan (R-Wis.) to tax imports and exempt exports is withering in the face of opposition from conservative groups, retailers and fellow Republicans who warn it would increase prices on consumer goods.

Yet Republicans need to find some other way to pay for their tax reform proposal if they dont want to add to the deficit.

The border adjustable piece, I wish they would whip that to find out what the sense is. And if you dont have the votes on it, then you got a trillion dollar hole that you gotta fill. And theres ways to do that linked to the budget, Brat said.

Healthcare

In the Senate, the GOPs goal is to finish work on legislation repealing and replacing ObamaCare by the August recess.

Whether they can do it is anyones guess. There are severe differences among Republican senators over how to move forward, and McConnell has been careful about setting expectations.

GOP senators distanced themselves from a Congressional Budget Office analysis this week that predicted 23 million people would lose insurance over the next decade under the House bill. It also projected higher costs for older and sicker people.

Senate GOP staff will be drafting legislation during the Memorial Day recess, with a discussion draft possibly circulating when senators return.

Theres an added reason for the Senate GOP to move quickly.

It is using the same budget reconciliation rules to avoid a Democratic filibuster on healthcare that it intends to use on tax reform.

But its unclear how long the reconciliation vehicle for the healthcare bill will last.

The reconciliation measure is for fiscal year 2017, and Committee for a Responsible Federal Budget senior advisor Ed Lorenzen noted that the Senate parliamentarian has not yet ruled if reconciliation instructions expire at the end of the fiscal year in September.

If the parliamentarian were to rule the 2017 vehicle expires in September, Republicans would have to either pass the healthcare measure quickly or try to move a bill the old-fashioned way with Democratic votes.

Read more:
Five goals for Republicans this summer - The Hill

The Senate is emerging as a possible hurdle to achieving tax reform this year, as Senate Republicans have failed to say which tax breaks they're willing to take away in order to pay for tax rate reductions, unlike House Republicans who have already offered some ideas.

If Congress doesn't eliminate big tax breaks, it won't be able to lower tax rates without blowing out the federal deficit. Republicans have set ambitious goals for tax rates, with President Trump calling to lower the corporate tax rate from 35 percent to 15 percent and House Republicans setting a target of 20 percent.

In their tax reform blueprint, House Speaker Paul Ryan and House Republicans identified three major ways they would raise revenue: One would be eliminating all itemized deductions, except for those for mortgage interest and charitable giving; another would be to prevent businesses from deducting the cost of interest on loans; and last would be the border adjustment.

While border adjustment has stirred the most recent controversy, all three would be difficult to pass. While none has a strong advocate in the Senate, all three have critics.

"That's obviously one of the problems you have with any kind of tax reform, is everybody loves their tax preference," said Sen. Ron Johnson, R-Wis.

Senate Finance Committee Chairman Orrin Hatch has suggested that all three of the House's major revenue-raisers, or "pay-fors," do not enjoy support in the Senate at the moment.

"I don't think in the final analysis they'll be able to do that," Hatch said of the idea of limiting the ability of businesses to deduct interest payments from taxable income, speaking after a meeting with the White House and House on tax reform this month.

Like every tax break, the deductibility of business interest payments has a dedicated coalition of businesses defending it. Real estate investors, private equity funds, telecommunication companies and other groups that have debt built into their business models will lobby to keep it in the tax code.

In theory, Republicans could be able to overcome industry resistance if they did so together. But one issue is that the White House has shied away from clearly advocating the elimination of many big breaks. "My preference is to maintain interest deductibility," Treasury Secretary Steven Mnuchin said in congressional testimony on Wednesday, hedging that it was on the table.

As for the border adjustment tax, which would raise about $1 trillion, a number of senators have expressed doubt or outright opposition, and no senator has championed it.

Nor have any senators proposed curbing itemized deductions the way House Republicans have. Those include deductions for medical expenses, state and local taxes and much more.

The Trump administration has placed itself squarely behind ending the state and local tax deduction, a major itemized deduction that is worth well over $1 trillion over a decade. Although less ambitious than the House plan to end all itemized deductions, it is an ambitious proposal.

Yet no senator has committed to it. Asked Thursday if attacking the break is feasible in the Senate, Hatch simply waved the question off.

If Republicans hope to pass meaningful tax reform, though, they will have to get Senate support for limiting some big tax breaks.

Each break makes an enormous difference in terms of the tax rates that can be achieved. In the House blueprint, for instance, the inclusion of the border adjustment tax allows them to lower the corporate tax rate to 20 percent. Without it, they would be able to lower the rate to only 30 percent without adding to the deficit, said Kyle Pomerleau, the head of the tax modeling team at the Tax Foundation. A 30 percent corporate tax rate would still be well above the average for advanced economies and even higher than former President Barack Obama's target of 28 percent.

Another example: Eliminating the state and local tax deduction would raise about $1.8 trillion over 10 years in the Tax Foundation's model, which is based on one of the models used by Congress' own tax experts. That revenue pays for nearly all of the individual tax cuts in the House Republican plan, Pomerleau said, including the reduction in the top tax rate from 39.6 percent to 33 percent, the collapse of seven brackets into three and cuts to capital gains taxes. "Without that," Pomerleau said of eliminating the state and local tax deduction, "it's really hard to get anything on the individual side."

At the same time, curtailing the ability of residents to deduct their state and local taxes would be a declaration of war on high-tax blue states and on the real estate industry, which hates the idea of families losing a break that helps them with property taxes.

The only way to get the public to go along with a tax reform that got rid of that tax break would be to simultaneously promise them that their rates will be lowered dramatically.

So far, unlike the House and White House, the Senate has not proposed a framework for reducing tax rates. That is part of the reason senators have been reluctant to run afoul of special interests by putting their tax breaks on the table, suggested Dean Zerbe, Alliantgroup national managing director and a former staffer on the Finance Committee.

"You always want to kind of have dessert at the same time you're serving the vegetables," he said.

See the article here:
Senate Republicans have no answer to the trickiest question on tax reform - Washington Examiner