GOP looks to president for unity

The goal is for Congress and the White House “to be in the same place” on health care, Senate Majority Leader Mitch McConnell said Tuesday, adding, “We’re not there yet.”
The goal is for Congress and the White House “to be in the same place” on health care, Senate Majority Leader Mitch McConnell said Tuesday, adding, “We’re not there yet.”

WASHINGTON -- Republicans confronted a conservative rebellion in their own party Tuesday over their long-promised plans to repeal and replace the health care law, and they beseeched President Donald Trump to settle the dispute.

"He's the leader on this issue right now; he's the one that's got to hold us together," said Rep. Dennis Ross of Florida as he left a meeting during which, he said, Republican leaders urged the rank and file to "stay strong" on the issue and told them: "'Now is not the time to back down.'"

The pep talk from leadership came amid signs of trouble for the emerging House GOP health care plan even before legislation is officially released. Conservatives are objecting to new tax credits that would help consumers buy health care, arguing they amount to a costly new entitlement.

Influential House conservatives say there's no way that approach can gain approval in the House.

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The dispute comes a month into Trump's presidency and seven years after the Patient Protection and Affordable Care Act was passed by a Democratic-controlled Congress with Barack Obama in the White House. Now the Republicans are in charge of the White House and Congress. But after spending those intervening years promising to uproot the law and replace it with something better, they find themselves divided.

Most Republicans and their aides said they didn't know if Trump would endorse their plan, though several asked him to do so.

"What the president can say is that the plan that gets presented to the conference is the one you need to vote 'yes' on," said GOP Rep. Bill Flores of Texas. "That's how he can be helpful."

House Speaker Paul Ryan of Wisconsin sought to put a positive face on the divisions.

"I feel at the end of the day when we get everything done and right, we're going to be unified," he said.

After a recess week filled with raucous town hall-style meetings, lawmakers' return to the Capitol this week immediately put deep divisions on display. The two leading conservative groups in the House both announced their opposition to the House leadership's health care plans based on a leaked draft and reports that the bill would cost more than expected while covering fewer people than the Affordable Care Act.

Three key conservative senators, Mike Lee of Utah, Rand Paul of Kentucky and Ted Cruz of Texas, added their voices in opposition, too, announcing that they will "accept nothing less than full repeal of Obamacare."

"I think we have the votes now to tell the leadership that this is what we want to do," Paul said on a conference call with House conservative leaders Tuesday.

Senate Majority Leader Mitch McConnell of Kentucky is summoning Republicans to a meeting this afternoon to hash things out.

"The goal is for the administration, the House and the Senate to be in the same place," he said on health care. "We're not there yet."

Health care is far from the only issue dividing Republicans. Plans to overhaul the tax code have them tied in knots, and senior lawmakers are busy throwing cold water on Trump's budget proposal, which was made public in broad outlines on Monday. The budget envisions a $54 billion surge in U.S. military spending while slashing domestic programs and foreign aid.

Asked Tuesday whether the Senate could pass a budget that slashes the State Department budget by a third as Trump envisions, McConnell replied: "Probably not."

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GOP Rep. Mike Simpson of Idaho, a senior member of the Appropriations Committee, said the budget as presented could not possibly pass in the House, either.

"No, no. There's a lot of members that have a lot of interest in a lot of these programs," Simpson said. "There's more to our government than just defense."

Yet for defense hawks, Trump's Pentagon spending didn't go far enough. Sen. John McCain of Arizona complained that Trump's plans represented just a small increase over Obama's own Pentagon wish list.

Trump's budget would leave large deficits intact while sparing Social Security and Medicare, the entitlements that make up an enormous and growing share of the federal budget. That puts Trump in direct conflict with Ryan and other leading Republicans who have long advocated adjusting entitlement programs to put them on a more sustainable footing and get deficits under control.

Ryan, pressed on whether he still favored changing entitlements, something that has been his legislative calling card for years, claimed that repealing and replacing the health care law actually qualifies as entitlement reform.

Bannon and border tax

Beyond health care, Ryan has turned to Steve Bannon, Trump's top strategist, in an effort to salvage his tax plan, which features a widely criticized border-adjustment tax.

Bannon once described Ryan as "the enemy," but now the former Breitbart News chief is the speaker's best chance to win approval for his border-adjustment tax, which Republicans currently say has almost no hope of clearing the Senate.

In a handful of White House meetings, Ryan found that Bannon was perhaps the most enthusiastic backer of the border-adjustment plan, according to a senior administration official and a person familiar with the sessions.

An endorsement from Trump could help save the plan, which is running into strong opposition from the energy industry and retailers.

Inside the administration, the proposed tax has several backers, including Stephen Miller, a senior Trump policy aide; Chief of Staff Reince Priebus, a longtime Ryan ally; Commerce Secretary Wilbur Ross; and trade adviser Peter Navarro, according to a senior administration official. Jared Kushner, a senior adviser and Trump's son-in-law, is said to be open to the proposal but hasn't made up his mind.

National Economic Council Director Gary Cohn and Treasury Secretary Steve Mnuchin are against the border adjustment part of Ryan's plan, the official said. Those and other White House officials have met with Ryan a handful of times to discuss policies including a tax overhaul, according to a person familiar with the meetings.

But the argument that the border tax could boost goods stamped "Made in America" resonates with Bannon, the person said, citing the strategist's push for Trump's protectionist stance during the campaign.

The proposed border-adjustment plan would tax U.S. companies' domestic sales and imports at a new 20 percent rate, while exempting their exports. The change -- which would replace the existing 35 percent tax on companies' global income -- would encourage companies to bring manufacturing back to the U.S. and reverse the tide of corporate tax inversions, Ryan says.

The border-adjustment tax is estimated to raise more than $1 trillion over 10 years -- revenue that Ryan and other supporters say is needed to help pay for other tax cuts for U.S. businesses and individuals. The eventual tax bill must reduce the deficit or be revenue-neutral to be considered under a maneuver called reconciliation, which would allow the Senate to bypass the usual 60-vote threshold and pass it with only GOP votes.

The border-adjustment concept faces fierce opposition from retailers like Wal-Mart Stores Inc., automakers including Toyota and oil refiners that rely on imported goods and materials. They argue the tax will be passed along to U.S. consumers, who'll face higher prices for everyday materials.

Slashing the corporate and individual tax rates was a central campaign promise of Trump's and a longtime dream for conservative lawmakers like Ryan.

Cohn and Mnuchin, who like Bannon are veterans of Goldman Sachs, oppose the border-adjustment concept, which critics say would be very disruptive to the global economy for its effect on trade, consumer prices and global commodity markets.

Cohn, the former president and chief operating officer of Goldman Sachs, is said to be working on a White House tax plan that Trump promised would be "phenomenal." Cohn said last month that he was meeting with members of Congress on proposals to cut income taxes for businesses and individuals, but hasn't spoken publicly about the border-adjustment element.

Ryan has spoken with Cohn at least five times in the past two months about tax changes, according to the person briefed on the meetings.

Ryan's plan has also attracted some conservative opposition, including from Americans For Prosperity, a conservative advocacy group founded by billionaire brothers Charles and David Koch.

Trump has previously said the border-adjustment proposal was "too complicated," although more recently he told Reuters it could lead to more American jobs. When questioned about Trump's evaluation of the effect the border-adjustment plan would have on consumer prices, White House spokesman Sean Spicer said the plan would be a net benefit for Americans.

"It'll actually benefit consumers, benefit workers and benefit our economy," Spicer told reporters last week. "We are probably one of only a handful of developed countries that don't have a tax system that looks at this."

Ryan recognizes the opposition but says he's ready for the "drama" of the biggest tax overhaul in three decades.

"It's going to be up, it's going to be down, it's going to be on, it's going to be off," Ryan told reporters Feb. 16. "You're going to report 150 stories on tax reforms between now and when we get tax reform done."

Information for this article was contributed by Erica Werner and Alan Fram of The Associated Press and by Anna Edgerton and Jennifer Jacobs of Bloomberg News.

A Section on 03/01/2017

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