McConnell says growth to pay for tax cuts

WASHINGTON -- The Republican Party hasn't abandoned the goal of making President Donald Trump's tax-cut plan revenue neutral, and the plan can make it so by lifting economic growth, Senate Majority Leader Mitch McConnell said.

When asked on Fox News Sunday if hoped-for tax cuts would increase the federal budget deficit, McConnell said they would not, "because that's a rather conservative estimate of how much growth you'll get out of this pro-growth tax reform."

In interviews on Fox and on CNN's State of the Union, McConnell declined to go into the details of the plan.

"It's going to be hashed out in the open," McConnell said on Fox.

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McConnell's comments came as Trump and Vice President Mike Pence joined a House Republican conference call Sunday afternoon to build momentum for the tax legislation, said a person familiar with the plans.

Trump urged House members to adopt the Senate budget this week and follow through on the tax overhaul, saying, "We are on the verge of doing something very, very historic," the person said. Trump added that 2018 will be a political failure for Republicans and a disappointment for the nation if they fail to overhaul the tax code, a GOP aide said.

The president also said that, beyond the looming elections, his plan was the right thing to do for the country, the person said.

The Senate on Thursday adopted a fiscal 2018 budget resolution that House Republican leaders agreed to accept, a show of unity aimed at speeding consideration of Trump's plan to enact tax cuts. Final approval of the budget measure will unlock a special procedure allowing Republicans to pass a subsequent tax code rewrite without Democratic support.

Trump on Sunday confirmed that Republicans are considering adding a tax bracket for the rich to their plan, saying it would provide a bigger benefit for the middle class.

"I would rather do that than do anything to hurt the middle class," Trump said on Fox.

However, Mick Mulvaney, director of the White House's Office of Management and Budget, said on Fox News Sunday that the White House doesn't necessarily want to add the new bracket, but supports whatever it will take for Congress to move a bill. The administration is still pushing for a 15 percent corporate rate, down from the current 35 percent, while the House leadership wants a 20 percent rate, he said. The administration also wants to double the standard deduction used by most Americans.

Trump indicated Sunday that he expects legislation approved and on his desk by Thanksgiving.

"I want to get it by the end of the year, but I'd be very disappointed if it took that long," he said on Fox. He said lawmakers should forgo their Thanksgiving break if they can't send him a bill to sign by then.

Mulvaney said approving a bill by December is realistic, noting that Congress may save as many as 10 or 12 legislative days with the House acting quickly on Senate amendments, he said.

But a tax bill has yet to be written. Members of Congress haven't agreed on what cuts to make, or where to make them.

"There's tremendous spirit for it, not only by the people we're dealing with in Congress, but for the people out there that want to see something," Trump said. "We're adjusting so that there's no way that the middle class doesn't greatly benefit."

Trump still thinks that ending the carried-interest tax break is something that "needs to be looked at very, very closely," Mulvaney said on CBS's Face the Nation. Carried interest is the portion of an investment fund return that's paid to managers. It is taxed as capital gains with a maximum rate of 20 percent, instead of as income with a maximum rate of 39.6 percent.

Other details were vague, including whether Trump favors a change in tax treatment of 401(k) retirement plans, which currently allow workers to save up to $18,000 annually in pretax contributions, or $24,000 for workers age 50 or older.

The New York Times reported Friday that the administration may seek to limit pretax contributions to as little as $2,400 annually. The move would require more Americans to pay taxes on retirement savings now, but then draw them tax-free at retirement. Shifting the tax collections to the present day would help offset proposed individual and corporate tax cuts.

Fidelity Investments is lobbying for a compromise: Limit pretax contributions to $9,000, thereby causing no change for most lower- and middle-income workers, while still raising about $100 billion in tax revenue over the next 10 years. Fidelity says lower- and middle-income workers who contribute more than $2,400 to their retirement plans generally save about $4,900 annually.

Fidelity has a stake in the issue. The Boston-based company is the largest provider of 401(k) plans, with some $1.7 trillion under administration or about 25 percent of the total market, and it fears any changes that could discourage Americans from saving.

Mulvaney said on Fox that balancing the federal budget merely by cutting spending hadn't worked, a failure he tied to "politics." Instead, the U.S. can reduce its debt by lifting economic growth to more than 3 percent, he said.

"We ought to be growing about 3 percent a year," McConnell said on CNN.

Senator Sherrod Brown, an Ohio Democrat, said on CNN that the trickle-down effects of a tax cut for the wealthy being urged by "the people closest to the president" haven't worked "from Hoover to Bush to Bush Two."

Information for this article was contributed by Mark Niquette, Kevin Varley, Ben Brody, Miles Weiss and Justin Sink of Bloomberg News; and by Sarah D. Wire of the Los Angeles Times.

A Section on 10/23/2017

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