Washington - Senate Majority Leader Mitch McConnell said that any tax
overhaul can’t add to the growing US budget deficit, a position that places him
at odds with President Donald Trump, who has called for a significant tax cut.
McConnell said in an interview Tuesday with Bloomberg News
that the nation’s “alarming” debt requires an approach that would balance tax
cuts with new sources of revenue to avoid changing overall government receipts.
“It will have to be revenue-neutral,” he said. “We have a
$21 trillion debt.” In an interview with The Economist that was published last
week, Trump said “it is OK” if tax legislation increases the deficit in the
short term in order to “prime the pump” for economic growth.
The Kentucky Republican didn’t commit to completing tax legislation
this year, but said he and other congressional leaders have begun regular
meetings with Treasury Secretary Steven Mnuchin and Trump’s chief economic
adviser, Gary Cohn, on potential legislation.
“I’m confident we can get it done,” he said. “I’m not going
to put a deadline on it.” McConnell said the lack of Democratic support for a
Republican tax package requires him to use budget rules that require revenue
neutrality in exchange for pushing through permanent tax changes with only 50
votes. The GOP controls only 52 of the chamber’s 100 seats.
‘Rather Bleak’
One potential revenue-raiser, a border-adjusted tax proposed
by House Speaker Paul Ryan, faces a dim outlook in the Senate, McConnell said.
“It’s a statement of the obvious that the prospects of that would be rather
bleak,” he said.
Ryan has proposed to replace the existing corporate income tax
with a 20 percent levy on US companies’ domestic sales and imports. Exports
would be excluded. The proposal is estimated to raise more than $1 trillion over
a decade. But it has drawn opposition from retailers, oil refiners and other
industries that rely on imports.
Leaders of those businesses say the tax would raise consumer
prices on basic items. The tax’s proponents argue that it would result in a strengthening
dollar, evening out the tax’s effect on prices over time. But some economists
question whether exchange rates would react predictably.
“The critics say it’s too risky, so you could blow up the
economy in the process,” McConnell said. He declined to give his own view of
the measure.
Meanwhile, McConnell said he’s taking part in ongoing
meetings with Mnuchin, Cohn, Ryan and Republican leaders of tax-writing
committees. They’re seeking to agree on a single approach to a tax overhaul
before proceeding. An initial meeting took place a few weeks ago, he said.
“We thought that would be a good way to begin would be for
us to reach some kind of agreement on what we’re for, rather than having a
whole lot of different versions,” McConnell said.
BLOOMBERG