President Trump’s embarrassing breach with the nation’s business leaders was a long time coming. Trump’s talk of reworking trade deals makes them nervous. Most of them disagree with his efforts to reduce immigration, because they need the workers. When Trump uttered incendiary remarks following the racially charged violence in Charlottesville, Virginia, the dam broke and a critical mass of CEOs finally started to quit Trump’s White House advisory councils — which Trump promptly shuttered.
But there will be a détente, because Trump and America’s CEOs still have one important thing in common: They all favor tax cuts, especially a reduction in the corporate rate, to bring it more in line with the lower tax rates in other developed countries. If anything, Trump’s need to sign a tax bill has intensified, since so many other parts of his agenda are going astray. And the departure of Stephen Bannon, Trump’s controversial chief strategist, may signal that Trump himself is moving a bit more toward the mainstream.
Trump has undoubtedly harmed his political standing with repeated blunders, such as his implied defense of white nationalists who marched in Charlottesville. Republican members of Congress are increasingly bold in criticizing Trump, with Sen. Bob Corker of Tennessee even questioning Trump’s “stability.” But Trump doesn’t need much political strength to give CEOs what they want. All he needs is a pen to sign a tax-cut bill, assuming Congress is able to produce one.
And the Republican Congress really needs to produce a tax-cut bill. This will be difficult for sure, since various GOP factions will insist on favored policies at odds with what other factions want. But tax cuts, unlike health reform, are a staple of the Republican playbook, and there are several detailed plans the GOP can use as a starting point.
“Republicans cannot run for reelection in 2018 having captured all of government, and tell their base ‘we’ve accomplished nothing,’” says Tom Block, Washington policy strategist for investing firm Fundstrat. “They’ve got to pass a tax bill before the primary season starts.” That means by spring of 2018.
Additional matters likely to create a stir
There’s other complicated business to get done first — raising the debt ceiling, always a contentious issue, and then passing a budget for fiscal year 2018, which begins October 1. Those efforts will produce fireworks and scary headlines, but deals are likely on both matters. Republican leaders in the House and Senate will then turn to tax cuts, perhaps using portions of a bill drafted last year by House Speaker Paul Ryan as a framework.