Finance — July 9, 2017 at 2:45 am

Republicans increasingly uncertain of a legislative victory before August

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Sen. Mitch McConnell (R-Ky.) speaks to reporters after a ribbon-cutting ceremony for a highway project . (Austin Anthony/AP)

The Republican Congress returns to Capitol Hill this week increasingly uncertain that a major legislative victory is achievable in the three weeks before lawmakers leave town for their month-long summer recess.

Most immediately, GOP leaders and President Trump are under enormous pressure to approve health-care legislation — but that is only the beginning. Virtually every piece of their ambitious legislative agenda is stalled, according to multiple Republicans inside and outside of Congress.

They have made no serious progress on a budget despite looming fall deadlines to extend spending authorization and raise the debt ceiling. Promises to launch an ambitious infrastructure-building program have faded away. And the single issue with the most potential to unite Republicans — tax reform — has yet to progress beyond speeches and broad-strokes outlines.

The fallout, according to these Republicans, could be devastating in next year’s midterm elections. A demoralized GOP electorate could fail to turn out in support of lawmakers they perceive as having failed to fulfill their promises, allowing Democrats to sweep back into the House majority propelled by their own energized base.

Rep. Mark Meadows (R-N.C.), chairman of the conservative House Freedom Caucus, said if Republicans cannot deliver on their promises in the coming weeks, voters “are going to start saying, ‘What difference does it make who’s in power?’ ”

“There is a real anxiety among the people that I serve on why we’re not putting more things on the president’s desk,” he said. “They’re tired of excuses.”

All told, Republicans are in danger of squandering their grasp on the White House, the Senate and the House after a decade of divided government and years of stoking a conservative base to expect major policy wins. Unable so far to secure progress on his top priorities, Trump is also bumping up against history: Every president of the modern era has been able to claim at least one signature legislative achievement before the first August recess.

Sen. Roy Blunt (R-Mo.), a member of the Senate GOP leadership, said he worried that his party is not seizing the early months when a new president is historically best positioned to enact the boldest parts of his agenda.

“I think there’d be no reason for voters to look at this yet and think, ‘Oh my gosh, a lot of the most valuable time of an administration is already gone.’ But if you’ve watched this for years, when an administration really makes great successes, it’s usually in that first year — and, more importantly, in that first seven months of that first year,” he said.

The immediate obstacle has been the health-care legislation, which Republicans have campaigned on relentlessly since the Affordable Care Act passed in 2010 but is now mired in widespread unpopularity and GOP infighting.

Blunt said that after weeks of stalled progress, Republicans soon must decide whether the bill is viable: “This does not get better over time, and we’re losing valuable time to get other things that we need to do as well.”

A growing number of GOP leaders and K Street advocates think the party must move quickly beyond health care, win or lose, and proceed with a less internally divisive tax bill. Leaders had already abandoned, back in the spring, their earlier goal of passing tax reform over the summer. But with health care consuming the Senate, they have shown few signs of progress.

“Republicans recognize they’re not out of the woods,” said Thomas M. Davis, a former Virginia congressman who directs Deloitte’s federal lobbying practice. Davis said he thinks the Republican victory in a special congressional election in Georgia last month granted the party a reprieve — but it won’t last long without a legislative achievement.

“They’ve got a high wave coming at them in the midterms,” he said. “I think they realize they’ve got to buckle down and do things. They’ve got to produce, and tax reform would be the number one thing.”

Key Republican leaders have started looking beyond health care. Senate Majority Leader Mitch McConnell (R-Ky.) has acknowledged the possibility of a bipartisan repair to ailing health insurance markets should GOP senators fail to come to terms on a more ambitious ACA replacement. And House Speaker Paul D. Ryan (R-Wis.) has turned his attention squarely to tax reform as the health-care legislation that barely passed his own chamber sits in the Senate.

“Our job and our goal is to get tax reform done in 2017, so that when we roll into the new year in 2018 we roll into having a new tax code,” Ryan said at a Thursday event in his home district, according to remarks released by his office.

Even staunch conservative advocates of repealing the health-care law are preparing for a quick pivot to tax legislation.

Tim Phillips, president of the Koch network group Americans for Prosperity, said Friday that his group has been “disappointed” by Congress’s failure to act quickly to dismantle the ACA and now considers its repeal “a long-term effort.”

“The priority is definitely tax reform,” he said. “If you think about the long-term direction of the nation, genuinely dramatic tax reform would do the most good for the largest number of Americans.”

Watching on the sidelines are Democrats, emboldened after spending weeks generating public opposition to the GOP health-care plan and whose cooperation will be needed to pass a series of complex items in the coming months.

Sen. Elizabeth Warren (D-Mass.) said she’s amazed that Republicans “are willing to burn time off the congressional calendar pursuing this terrible plan when deadlines are bearing down on us, like raising the debt ceiling.”

“They’re in the majority in the House and the Senate, they own the White House and that’s the direction they want to drive the country? A place where most of America doesn’t want to go? I don’t get it,” she added.

Mark Zandi, the chief economist at Moody’s Analytics, said the dysfunction in Congress stands to roil confidence in the U.S. economy, particularly if lawmakers flirt with defaulting on the debt limit.

Companies are already growing pessimistic about prospects for aggressive tax cuts, he said, and even the suggestion that Congress might fail to increase the debt limit could have serious market consequences. The overall picture is also causing major uncertainty for businesses that are trying to plan for the months and years ahead.

“Businesses are delaying investment decisions because they don’t know what tax rate they’re going to have in the future,” Zandi said.

Ryan has called for an ambitious restructuring of corporate taxation, eliminating loopholes and taxing imports to bring rates down from the current 35 percent rate to as low as 15 percent. But the plan to tax corporate imports, known as border adjustment, has encountered fierce head winds,even among some Republicans. Many GOP senators have rejected the idea, and lobbyists have lined up to preserve favorable treatment for various industries.

The Trump administration has yet to reach consensus with House and Senate Republicans on the parameters of a tax bill, though aides say talks are progressing.

No matter what happens on health care and tax reform, Republicans and Democrats also must agree on spending by the time the new fiscal year begins Oct. 1 — but no serious discussions about a plan have begun, according to multiple congressional aides.

Equally concerning for GOP lawmakers is that they must pass a budget ahead of tax reform to enact the special instructions that would allow them to approve a tax bill on a simple majority vote rather than the 60-vote supermajority required of most legislation in the Senate.

Also in the fall, Treasury Department officials expect to hit the nation’s borrowing limit. Treasury Secretary Steven Mnuchin has called for Congress to increase the debt limit by the end of July without attaching additional policy measures. But conservatives are pushing to include spending cuts, and GOP leaders have not yet taken concrete steps on the issue.

The key disputes of the moment are not between Republicans and Democrats but within the GOP. But on fiscal matters, both parties see bipartisan negotiations as inevitable.

House Republicans have floated a 2018 budget that boosts defense spending beyond the caps set in a 2011 bipartisan accord, and breaking them will require negotiations with Democrats who have long insisted on a corresponding rise in nondefense spending.

Rep. Joseph Crowley (D-N.Y.), the chairman of the House Democratic Caucus, said Democrats are also prepared to block spending bills that fund a U.S.-Mexico border wall or contain conservative policy “riders” they oppose.

“That is an opportunity for us to have the leverage we need to take care of the folks we care about,” he said.

Other legislative deadlines also loom: The Federal Aviation Administration, the National Flood Insurance Program and the Children’s Health Insurance Program are set to expire in October, and a Department of Veterans Affairs program that gives veterans more flexibility in where they seek health care — a program launched in response to years of scandal at the department — is set to run out of funding next month.

This week, McConnell is devoting most of the Senate floor time to confirming Trump nominees to mid-level Cabinet positions and the federal courts. Christopher A. Wray, Trump’s choice to be the new FBI director, is set to appear before the Senate Judiciary Committee for his confirmation hearing on Wednesday.

And Russia looms over the Capitol: Lawmakers are negotiating the final details of a bill to stiffen sanctions against the country while multiple committees are advancing their probes into Russia’s meddling in U.S. elections.

Behind closed doors, McConnell will remain focused on his attempt to persuade 50 of the 52 GOP senators to back a single health-care bill.

Leaders and their staff continued to work throughout the holiday week on ways to tweak the draft legislation they released last month, according to several senior GOP aides. A major part of the work has involved near-constant talks with scorekeepers at the Congressional Budget Office, the nonpartisan agency that provides economic analysis to Congress.

It could take at least another week before the CBO analysis is complete, the aides said, meaning that the earliest chance for a health-care vote would be the week of July 17.

Kelsey Snell and Karoun Demirjian contributed to this report.

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