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Tax writers see peril in Trump's Obamacare persistence

Republicans acknowledge that the aggressive timeline they have set up for overhauling the tax code this fall leaves them little room for error.

There could be one problem with that: Obamacare isn’t going away.

President Donald Trump has dropped hints that he might stop the Affordable Care Act’s cost-sharing reduction payments, through which federal funds flow to insurance companies to keep down coverage costs for low-income people.

At the same time, Sen. Lamar Alexander (R-Tenn.), the health committee chairman, is working with Democrats on potential measures to shore up the health care law.

That’s left key Senate tax writers frustrated that there’s potentially another issue to take precious time away from their tax reform efforts. Senators left Washington on Thursday for a monthlong recess and will return to a September already overloaded with legislative deadlines. With key Trump administration officials and some congressional leaders having said they want to get a tax revamp signed into law this year, tax writers believe they’ll need to make serious progress starting next month.

“We’re not going back to health care. We’re in tax now. As far as I’m concerned, they shot their wad on health care and that’s the way it is. I’m sick of it,” Senate Finance Chairman Orrin Hatch (R-Utah) said Wednesday, a day before he outlined his committee’s agenda for the fall.

A senior Senate aide added that it would be a mistake for Republicans to return to an issue that has largely ground policymaking to a halt during a year in which the GOP has had full control of Congress and the White House for the first time in a decade.

“Further action on health care would only draw more attention to an issue that’s dividing Republicans and take focus away from the important topic — taxes — that has the ability to unite but will need members’ full attention,” the aide said.

Hatch said Thursday that the only health item that his panel would deal with in September is an extension of the Children’s Health Insurance Program, funding for which runs out on Sept. 30. The Utah Republican said he hoped the rest of the committee’s focus could be on tax reform, and later told reporters that he plans to have a September markup on taxes.

The problem for the Finance Committee is that there’s no shortage of key initiatives facing a late September deadline. Treasury Secretary Steven Mnuchin has said the debt limit needs to be raised by Sept. 29, because government funding is set to run out on Sept. 30. Congress also needs to reauthorize the National Flood Insurance Program and the Federal Aviation Administration by the end of the month.

Current and former congressional aides say many of the decisions on those September issues will be made above the committee level, freeing Finance to dig in on tax reform.

But the fear for Hatch and others is that further work on health care could linger for months, taking attention away from a potential tax overhaul that will require input on a wide range of complicated, dense provisions. The Finance Committee has its own jurisdiction over health matters, making it even more likely it would be dragged in should another Obamacare debate pop up in the fall.

“What we ought to focus on is how we cut taxes in such a way that the average person in our country who has not experienced this recovery has more money in their accounts at the end of the week or the end of the month,” said Sen. Tim Scott of South Carolina, another GOP tax writer. “That’s what we should focus on, and I think we’ll have some success there.”

Alexander is working with Sen. Patty Murray of Washington, the top Democrat on the health committee, on a measure that could offer states more flexibility on Obamacare while also funding the cost-sharing subsidies.

Alexander has asked Trump to continue funding the subsidies while the bipartisan work on health care continues, but the president has repeatedly threatened to stop the payments. That would further destabilize Obamacare markets, likely forcing a response from Congress.

GOP senators said last week they didn’t expect Trump to follow through on his threats. But if he did, “you’re talking about chewing gum and walking at the same time. It isn’t an either-or,” said Sen. Pat Roberts (R-Kan.), a longtime Finance member. “I think it’s probably on a dual track, which isn’t saying much about health care because we haven’t exactly decided what the right thing to do is.”

Marc Short, the White House’s director of legislative affairs, and Rep. Mark Meadows (R-N.C.), chairman of the ultraconservative Freedom Caucus, have both suggested that tax reform needs to be wrapped up by the end of November, before next year’s political campaigns ramp up.

Other Republicans haven’t put forth quite so aggressive a timeline, but they acknowledge that the GOP has lots of work left to get a tax reform bill in place — especially if, as expected, they get little to no help from Democrats.

The so-called Big Six — Mnuchin; Gary Cohn, director of the National Economic Council; Senate Majority Leader Mitch McConnell; Hatch; House Speaker Paul Ryan; and House Ways and Means Chairman Kevin Brady (R-Texas) — released a statement recently summarizing broad areas of agreement on tax reform.

But there are still any number of key policy decisions that the GOP needs to make, including how low to drop the tax rates for businesses and individuals, how aggressively to allow businesses to write off investments, and how many tax changes need to be permanent.

Both the House and the Senate also have yet to pass a budget, which the GOP will need to pass tax reform through budget reconciliation, a process that allows certain fiscal measures to get through the Senate with a simple majority.

That’s led some observers to say it’s understandable why key Republicans are worried about Trump making a move on the cost-sharing payments or Obamacare remaining in the spotlight in general.

“There are things you want to do, things you must do and things you are forced to do. The challenge is not letting the latter two kill the first,” said Sage Eastman of Mehlman Castagnetti, who was a top aide to former House Ways and Means Chairman Dave Camp (R-Mich.).

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