Trump promises America tax cut

But provision in bill to repeal health law rider fuels backlash

In this Thursday, July 20, 2017, file photo, Budget Director Mick Mulvaney gestures as he speaks during the daily press briefing at the White House in Washington.
In this Thursday, July 20, 2017, file photo, Budget Director Mick Mulvaney gestures as he speaks during the daily press briefing at the White House in Washington.

WASHINGTON -- President Donald Trump on Monday promised Americans a tax overhaul by Christmas, a day after the White House signaled its willingness to strike a health care provision from Senate tax legislation.

Speaking before a Cabinet meeting, Trump said: "We're going to give the American people a huge tax cut for Christmas -- hopefully that will be a great big, beautiful Christmas present."

At issue is a provision that would repeal a requirement that Americans have health insurance or pay a fine. The provision is not in the version of the tax overhaul passed last week by the House. It is in the bill the Senate Finance Committee has approved.

Repealing a central mandate of the Obama-era health law has emerged as a major sticking point for Republican Sen. Susan Collins of Maine, whose vote the White House needs. Collins said Sunday that the issue should be dealt with separately.

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Collins said she hasn't decided how to vote on the bill because it will be amended before it reaches the Senate floor. But her vote is crucial in a chamber where Republicans hold a slim 52-48 advantage.

Last week, Sen. Ron Johnson of Wisconsin became the first Republican to declare opposition, saying the plan wouldn't cut business taxes enough for partnerships and corporations. GOP Sens. Bob Corker of Tennessee, John McCain and Jeff Flake of Arizona, and Rand Paul of Kentucky have also expressed concerns.

Republicans can lose just two senators on the final vote, which would allow Vice President Mike Pence to cast a tie-breaking 51st vote.

Striking the health care provision would blow a big hole in the senators' tax cut plan, leaving them $338 billion short of their revenue goal over the next 10 years.

Senators would have to find the money elsewhere to meet a revenue goal mandated by the budget resolution passed by the Senate and House earlier this year. But so far, there is no consensus among senators on how to come up with the money.

Trump's budget director, Mick Mulvaney, said the White House is open to scrapping the provision, which would repeal a key component of the health care law enacted by President Barack Obama. Trump had pressed for the provision to be added to the bill.

Trump did not directly address the issue Monday. He said that the administration would focus on health care, infrastructure and welfare "soon after taxes."

But California Governor Jerry Brown had a warning for Republican lawmakers in Washington: The tax bill that's under debate isn't going to help them.

The GOP risks voter revolt at the ballot box in 2018 and 2020, losing the unified control it now enjoys in Washington, if the legislation passes, Brown said in an interview Friday at the governor's mansion in Sacramento. The bill prioritizes the wealthy and corporations over ordinary working Americans, and will increase the national debt without commensurate stimulus to economic growth, he said.

"Who's to say that the rich need more money right now?" said Brown, a Democrat. "If you give them more money, what are they going to do with it? Are they going to put it to work in Michigan and Ohio and Pennsylvania, all the people that voted for Trump? I think there's going to be a rude awakening when people wake up and say they were misled."

Studies have shown that many of the tax bill's benefits would go to the highest earners, and some middle-class taxpayers might actually pay more. Residents of Democratic states like California, who pay high state and local income taxes, would be hurt most by provisions in the bill that eliminate their ability to deduct such levies when calculating what they owe in federal income tax.

Under the House bill, mortgage interest would be deductible on loans up to $500,000 for newly purchased homes instead of the current $1 million for couples filing jointly. That may hurt values in California, where the median price for a single-family house was $553,490 in September, more than double the national level, according to the state's Realtors association.

Asked whether he thought the plan intentionally took aim at California, Brown said, "I'm sure that was on the minds of some people."

It's too early to know the full extent of the tax plan's damage, said Brown, 79. Yet as the country's most populous state and largest economy, "California is one of the major contributors to the wealth of America. So when you step on California, you're stepping on America," he said.

Backers of the House version say its cuts would spur enough economic growth to offset the measure's $1.4 trillion cost, as estimated by Congress's Joint Committee on Taxation. (The committee hasn't yet released cost estimates that would account for macroeconomic changes.) Brown called the economic theory underpinning that assumption, which doubles as the "pillar" of the Republican Party, "total mythology." Instead, he said, the bill will "exacerbate inequality and, perhaps as bad, it will increase our national debt."

Brown, who has just over a year remaining in his fourth and final term as governor, said the tax plan won't soothe the economic anxiety felt by so many low- and middle-income Americans that propelled Trump to the White House. As a result, they'll blame the party in power.

"I don't think you can tweet your way to success and pay off the very powerful and not take care of the struggling people," he said. "There will be buyer's remorse."

Information for this article was contributed by Darlene Superville of The Associated Press; and by Esme E. Deprez, Anna Edgerton and Jeffrey Taylor of Bloomberg News.

A Section on 11/21/2017

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