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WASHINGTON -- President Donald Trump on Wednesday raised the possibility of a government shutdown ahead of a meeting with Democrats for a second consecutive week, even as tensions on Capitol Hill appeared to diminish after hard-line House conservatives backed off plans to oppose a short-term stopgap.

"It could happen," Trump said about a shutdown before a White House Cabinet meeting, pointing to Democratic demands on immigration policy. "The Democrats are really looking at something that is very dangerous for our country."

"They want to have illegal immigrants pouring into our country, bringing with them crime, tremendous amounts of crime," he added. "We don't want to have that. We want to have a great, beautiful, crime-free country."

Top congressional leaders from both parties are to meet with the president today at the White House as they seek a deal on lifting spending caps that would allow more funding for the military and nondefense programs. Democrats are also expected to bring up a potential deal on immigration that would include protections for nearly 800,000 people who were brought to the United States as children but now live here illegally.

Plans for a meeting between the president and leading Democrats scheduled last week fell apart after Trump tweeted, "I don't see a deal," hours beforehand.

The issue then, as now, was immigration. "Problem is they want illegal immigrants flooding into our Country unchecked, are weak on Crime and want to substantially RAISE Taxes," Trump wrote Nov. 28.

Responding to Trump's statement on Wednesday, House Minority Leader Nancy Pelosi, D-Calif., in a statement did not indicate that Democrats would be backing out of today's meeting.

"President Trump is the only person talking about a government shutdown," she wrote. "Democrats are hopeful the President will be open to an agreement to address the urgent needs of the American people and keep government open."

This week, the bigger issue for Republicans seeking to avoid a shutdown has been fellow Republicans.

Leaders of the hard-line House Freedom Caucus emerged from meetings Wednesday morning with House Speaker Paul Ryan, R-Wis., and House Majority Leader Kevin McCarthy, R-Calif., saying they had not yet decided whether the group's three dozen members would back the two-week stopgap favored by the GOP leaders.

But they said they had backed off pushing for a longer-term spending bill and were instead focused on setting up a more advantageous fight with Democrats shortly before Christmas.

"We're hopeful that in the next few hours we'll be able to figure out a strategy where we don't have to rely on any Democrats to make this work, and I think that's what we're all about," said Rep. Mark Meadows, R-N.C., the chairman of the Freedom Caucus.

Senate Majority Leader Mitch McConnell, R-Ky., meanwhile, made a trip across the Capitol on Wednesday afternoon, meeting in McCarthy's office with several House members. Two aides familiar with the meeting but not authorized to discuss it publicly said the lawmakers discussed the legislative agenda for weeks ahead.

After a monthslong detente during which they worked alongside House leaders to advance Republican health care and tax bills, the hard-liners in the Freedom Caucus have reasserted their presence this week as Friday's shutdown deadline looms.

They want GOP leaders to take a firmer stance in negotiations with Democrats -- including opposing efforts to link an increase in defense spending, supported by most Republicans, to an increase in nondefense spending, favored by Democrats.

"They know that Republicans want to fund the military, Democrats know that," Meadows said. "And so what they do is they hold that hostage in trying to get things that are not in the best interest of the American taxpayer, and so it is truly trying to have a real plan to break that."

Meadows and fellow Freedom Caucus leader Rep. Jim Jordan, R-Ohio, said they are seeking to make it as difficult as possible for Democrats to oppose spending bills that increase spending on the military but not on other domestic programs.

Democrats have the ability to demand changes in the spending bills -- such as a boost in domestic spending in areas such as health care and infrastructure -- because Republicans do not have enough Senate votes to block a Democratic filibuster in that chamber. And in the House, conservative Republicans have tended to oppose spending bills in recent years, forcing GOP leaders to solicit Democratic votes to keep government operating.

House Republican leaders are hoping to make a show of strength this week by demonstrating that they could pass an extension of funding until Dec. 22 with Republican votes alone, but the Freedom Caucus' demands have complicated that effort. Earlier this week, the group floated a Dec. 30 expiration date, claiming that it would help the GOP's negotiating position.

Meadows backed off that proposal Wednesday: "I don't know that the Dec. 30 deadline is as much the issue now as it is about breaking this defense and nondefense wall."

Besides financing the government for two weeks, the short-term measure would make money available to several states that are running out of funds for the Children's Health Insurance Program. That widely popular program helps provide medical care to more than 8 million children.

The negotiations come as House and Senate negotiators are seeking to finalize a Republican tax overhaul that would represent a crowning legislative achievement for the GOP in a year otherwise devoid of them.

Conservative leaders say they are concerned that GOP leaders may use the hoopla surrounding a final vote on the tax bill to obscure a separate vote on spending legislation that could include numerous Democratic priorities.

Earlier in the day, Meadows told reporters that conservatives were not keen on creating any "distractions" before the tax legislation becomes law.

"We've got to get across the finish line on tax reform, any distraction from that is a problem, and so the general consensus of most of our members is we want to talk to leadership and make sure that we've got tax reform on the right track, and that may allow for greater flexibility on some of the spending issues."

Asked if a shutdown would be a distraction, he said, "Of course."


On Wednesday, the Senate voted 51-47 to formally begin negotiations with the House in an effort to reconcile their two tax bills. Days and nights of tough negotiations await.

McConnell, meanwhile, said he was willing to compromise on a major sticking point for lawmakers from high-tax states such as New York and California.

GOP leaders are pushing to send a final blended package to Trump to sign before Christmas. Republicans see the tax overhaul as a pressing political imperative to preserve their majorities in Congress in next year's elections.

"The American people deserve taxes that are lower, simpler and fairer," McConnell said. "By voting to go to conference, we will be one step closer to getting it done."

Before the Senate vote, McConnell said he favors expanding a deduction for state and local taxes to enable Americans to deduct local income taxes as well as property taxes.

The proposal is a possible solution to a standoff with rebellious House Republicans from high-tax states. The tax bills passed by the House and Senate would end deductions for state and local income and sales taxes, while allowing only a deduction of up to $10,000 for property taxes.

Several GOP lawmakers from high-tax states voted against the House bill last month.

"The state and local tax deduction is not as important to Senate Republicans as it is to House Republicans," McConnell said on the Hugh Hewitt radio show.

"There's some in the House who would like to see that applied not just to property, but to income tax, you know, where you can sort of pick which state and local tax you want to deduct," McConnell said. "That sounds like a kind of reasonable idea."

The House and Senate bills both would provide deep tax cuts for businesses and more modest tax breaks for families and individuals. The tax cuts in each bill add up to about $1.5 trillion over the next decade.

Rep. Kevin Brady, R-Texas, said negotiators are looking at several options to help people who live in high-tax states, including expanding the state and local tax deduction to include income taxes.

"That's one of the options that our lawmakers have brought to us from California and New York and Illinois and others. So yes, we are looking at it," said Brady, who is one of the lead negotiators for House Republicans.

Brady said lawmakers also are considering adjusting the tax rates, adjusting the tax brackets, increasing the child tax credit and eliminating the alternative minimum tax, which was intended to ensure that high-earners pay at least some tax.

The House package eliminates the alternative minimum tax; the Senate bill reduces the number of people who would pay it.

The House bill increases the child tax credit from $1,000 per child to $1,600; the Senate bill increases it to $2,000.

Meanwhile Wednesday, Senate Finance Chairman Orrin Hatch acknowledged that "there is a drive" to set the corporate rate at 22 percent instead of the 20 percent that Senate and House bills have proposed.

"They want more money, that's why," Hatch said, referring to other lawmakers.

Still, the Utah Republican said his preference is 20 percent, down from the current 35 percent level.

Senate Majority Whip John Cornyn shot down reports of an increase in the proposed corporate tax rate, saying it's too early to consider raising the rate since Senate conference committee members haven't even been named yet.

Trump unexpectedly suggested over the weekend that he was flexible on the 20 percent rate -- after the White House had previously insisted that it was a requirement for him.

"It could be 22 [percent] when it comes out," Trump said Saturday. "We are going to see what ultimately comes out."

Every 1 percentage point change in the corporate tax rate is roughly equivalent to about $100 billion in revenue over 10 years. Setting the rate at 22 percent instead of 20 percent would free up roughly $200 billion in revenue.

Information for this article was contributed by Mike DeBonis of The Washington Post; by Stephen Ohlemacher, Marcy Gordon, Alan Fram, Andrew Taylor and Ken Thomas of The Associated Press; and by Erik Wasson, Sahil Kapur, Laura Davison, Kaustuv Basu, Laura Litvan and other staff members of Bloomberg News.

A Section on 12/07/2017

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