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President Donald Trump speaks to the media prior to departing on Marine One from the South Lawn of the White House in Washington, DC, September 27, 2017, as he travels to Indiana to unveil his tax reform plan.
“We remain pessimistic that serious reform will be passed and that Republicans will be able to raise enough revenue to permanently cover the costs of significantly lowering the corporate tax rate,” Alexander said in a note. “Substantial tax reform, which includes closing loopholes and creating winners and losers, has not occurred since 1986.”
The current proposal has resistance on both sides. The provision to cut corporate taxes and lower the rate for top-tier earners and remove the estate tax has Democrats angered that it’s a giveaway to the rich. Republicans, meantime, rue that cutting taxes without closing loopholes will balloon the $693 billion budget deficit and the $20.4 trillion national debt.
Sen. Bob Corker, in particular, has indicated that he will oppose any bill that increases the deficit. The South Carolina Republican and Trump engaged in a very public Twitter battle over the weekend. Corker has said he will not run for re-election in 2018.
To be sure, given the tense political climate, there’s some pessimism that a tax deal will get done.
Greg Valliere, chief global strategist at Horizon Investments, pointed to an interview budget director Mick Mulvaney gave with “Meet the Press” this week indicating that the administration would be willing to take on higher deficits if it meant stronger growth.
“This Keynesian dogma, coming from a former hard-line deficit hawk, has bewildered many Republicans like Corker, while supply-side Republicans are dismayed that abolition of the estate tax looks less likely,” Valliere wrote in his daily note. “There’s no margin for error on a tax bill, as Republicans waver and Democrats reject any compromise.”
For now, Valliere said, “bipartisanship is dead,” and that will make it all the more difficult for Trump to push his tax plan through.
WATCH: Opposing factions in the tax wars debate whether cuts bring growth.
