Political News

Flush Over Tax Cuts, Trump Says ‘Phase 2’ Is Coming

Posted March 14, 2018 11:53 p.m. EDT
Updated March 14, 2018 11:54 p.m. EDT

ST. LOUIS — Amid all the turmoil and uncertainty, with his White House seemingly fraying, his legislative agenda stalled and his electoral base in danger, President Donald Trump these days finds one area of comfort: talking about his tax cuts. He finds it so reassuring, in fact, that he is increasingly talking about doing it all over again.

Trump came here to red-state Middle America on Wednesday to promote the economic benefits of the $1.5 trillion in tax breaks he signed in December, surrounding himself with workers and business owners who celebrated the prospect of more money in their pockets. As he basked in the praise, the president promised that he was not done.

“We’re now going for a Phase 2,” he told a selected group of supporters at a Boeing factory in St. Louis. He did not describe what would be in such a Phase 2 but said he would team up with Rep. Kevin Brady, R-Texas, chairman of the House Ways and Means Committee. “It’s going to be something very special. Kevin Brady’s working on it with me.”

Brady said earlier in the day that he hoped to pass another tax-cutting bill by the end of the year. “We’re really encouraged,” he said on Fox Business Network. “Mainstream optimism is at record levels. Our economy is really gaining momentum and booming in a big way. But look, we think even more can be done. We want to make sure that we’re encouraging innovation in America. We want to help families save for the long term.”

If Trump had a plan in mind, it was a mystery to many of his aides, who knew nothing about it. What Trump and Brady might be talking about, however, could be more of a branding exercise than a major legislative effort that stands any chance of becoming law this year.

The effort they are calling “Phase 2” appears to unify two lingering problems from the tax cut bill that Republicans sped through Congress late last year. In both cases, fixing them would require support from Senate Democrats, who are not inclined to lend any backing to a tax bill that they opposed and that was passed over their objections.

One problem is that tax cuts for individuals are set to expire at the end of 2025. That is a byproduct of the budget reconciliation process that Republicans employed to pass the bill without Democratic support. To comply with rules against increasing budget deficits after 10 years, Republicans made the individual cuts temporary.

Brady alluded to that Wednesday. “While the tax cuts for families were long term, they’re not yet permanent,” he said. “So we’re going to address issues like that, and we’re in discussions with the White House, with the president about this issue.”

A second issue, which Brady also addressed, is the host of legislative ambiguities and hiccups that companies and accountants have discovered in the law since it was passed. Those include the grain glitch, which inadvertently gave an advantage to agricultural cooperatives over other, independent businesses that farmers might sell to, and a provision that diminishes the tax benefits from renovating restaurants.

Senate leaders have discussed fixing the grain glitch in a coming spending bill. But a Republican Senate aide said there was little optimism for Congress pushing another stand-alone tax package this year.

Trump’s interest in repeating his tax cut success may not be surprising given the validation he received at the Boeing plant here. Bonnie Brazzeal, who works in the cafeteria at the College of the Ozarks, choked up when she told the president that she received a bonus from her employer as a result of the tax cut.

“I am very grateful for the bonus when the college gave it to us,” Brazzeal said. “I put mine in my savings for retirement.” She then wiped away tears.

Dennis Muilenburg, Boeing’s chief executive, attributed the company’s strong performance to Trump. “What you see is your leadership on tax reform and creating jobs,” Muilenburg said. “There’s no place that’s more evident than the factories of America, and you can see it here.”

Trump said that when it came to the economy, there was more to come. “I don’t see any downward movement,” he said. “I see just up.”