In their most forceful message to lawmakers yet, four of America’s biggest business groups have united to urge congressional Republicans to start laying the groundwork for tax cuts immediately.
Business has become frustrated by a lack of progress in the president’s reform agenda, bogged down by wrangling over the shape of its health care policy in the Senate.
No other reforms under consideration in Congress are more important than tax cuts, the four groups said, indicating they’d be happy if the administration at least partly stopped devoting so much time to replacing and repealing Obamacare and started focusing on tax, too.
There has been buzz eluding to the fact that tax savings they’re looking to achieve by cutting into the health care program would be used to help determine and fund whatever tax program is then proposed. However, it appears that business leaders feel that will take too long and want to see real change much sooner.
“We understand that the Senate is actively considering health care legislation, but it is important that the House start the budget process now, so that reconciliation instructions will be available to move tax reform legislation expediently.”
The call was voiced in a joint letter to House Majority Leader Mitch McConnell and House Speaker Paul Ryan signed by CEO peer group Business Roundtable, the U.S. Chamber of Commerce, the National Association of Manufacturers and the National Federation of Independent Business.
It comes after the International Monetary Fund this week cut its growth forecast for the U.S. economy to 2.1% in 2017 and 2018, partly because it had removed the assumed stimulus from proposed tax cuts from its forecasts.
In the letter, the business groups ask the administration to adopt a fiscal year 2018 budget resolution that includes so-called “reconciliation instructions” that would pave the way for tax cuts.
“We understand that the Senate is actively considering health care legislation, but it is important that the House start the budget process now, so that reconciliation instructions will be available to move tax reform legislation expediently,” the letter said.
Republicans only have a slim 52-48 Senate majority, exposing them to filibusters by Democrats. With reconciliation instructions established, Republicans could avoid a Democrat filibuster and pass tax reform legislation with a simple majority.
Several restrictions, however, would still apply.
Perhaps the most relevant in this case is one that states that reconciliation bills can’t increase deficits outside the 10-year budget window. That means Republicans will have to agree on tax reform that is revenue neutral if they want it to last more than a decade.
Details of Trump’s tax plans remain scant and there’s still some conjecture, including among CEOs, over how cuts will be funded. Some House Republicans, including Ryan, still like the idea of imposing a 20% levy on imports, or a so-called border adjustment tax, but retail CEOs and other lawmakers fear it could push up the cost of households goods.
Treasury Secretary Steve Mnuchin has suggested that a proposed cut in the corporate tax rate to 15% would largely fund itself by stimulating the economy, though Republican debt hawks will nevertheless be wary that cutting taxes so deeply will blow out the budget and breach the 10-year reconciliation revenue rule.
Whatever the administration decides to do, business wants it to start deciding now.
“The federal tax code has weighed America down for far too long,” the business groups’ letter said. “You now have a once-in-a-generation opportunity to substantially improve America’s economy, but accomplishing this task may well require the special legislative procedures attendant to a budget resolution’s reconciliation instructions.”