Trump, Congress kick the can on government shutdown, approve disaster aid
Striking deal with Democrats, president shocks everyone and puts big question mark on tax reform
After a meeting with congressional leaders in the Oval Office on Wednesday, President Trump emerged siding with Democrats on a proposal to keep the government funded until mid-December and provide US$7.85 billion in aid for hurricane Harvey disaster relief.
The move allows for an unexpected show of bipartisanship in the wake of one of the worst flooding disasters in US history, but could further exacerbate Trump’s rift with his own party, leaders of which were blindsided by the surprise decision.
Despite speculation that the White House is somehow trying open the door to cooperation with the Democrats on tax reform, which would never happen, the move more likely puts the tax agenda in peril. As Politico wrote yesterday, Congress had been planning to spend December focusing on tax reform, but now…:
…the agreement announced Wednesday guarantees they’ll have to also contend with raising the debt limit, always one of the toughest votes lawmakers face, as well as averting a government shutdown — not to mention a slew of other pending business.
That threatens not only to test Congress’ bandwidth. It also raises the embarrassing prospect of having to simultaneously raise the legal cap on borrowing while approving deficit-swelling tax cuts.
What’s more, it could give Democrats leverage over Republicans’ tax plans because the GOP will need their votes to avert a default.
“This changes the whole dynamic of how a tax bill happens,” said a longtime tax lobbyist.
Democrats may withhold their votes on must-do legislation unless Republicans agree, for example, to pare back their tax plans. Many Democrats worry Republicans will push through huge tax cuts that will then create more pressure to cut entitlements to put the government’s books in order.