At the National Association of Manufacturers ("NAM") summit, Speaker of the House Paul Ryan (R-WI) will give what his office has described as a "major speech" about the details of a significant tax reform proposal. After the speech, Speaker Ryan is expected to participate in a Q&A discussion that will be moderated by NAM President and CEO Jay Timmons.
According to the NAM press release, the summit will focus on topics such as tax relief, regulatory reform, and infrastructure investment and modernization.
Speaker Ryan will deliver his speech on June 20, 2017 at 12:45 p.m., Eastern time.
Commentary / Mark Howe
The clock is ticking on tax reform; there is probably less than a year to get it done with the 2018 Congressional campaigns looming next summer. Within this one year window, there are three structural tests that a Trump-sponsored tax reform faces, and each should be followed with some attention. Whether Speaker Ryan is willing to address the structural hurdles will be a useful indicator of whether tax reform is real.
First, the two-page Trump tax plan by most measures would increase the national debt, and there are no mechanisms to fund the loss in revenue. House Speaker Paul Ryan's plan relies on the "border adjustment tax" to fund the tax cuts embedded in Republican tax reform, but the BAT may be dead. Neither the Trump administration nor Congress is talking about tying entitlement reform to any tax reform plan (where entitlements and interest on the national debt represent approximately 60-70% of Federal expenditures). The fiscal reality is that the national debt has doubled during each of the last two administrations, and this growth will put significant pressure on any form of tax reform. There is no obvious consensus on how to (i) deal with the gap between federal revenues and expenses or (ii) pursue deficit-financed tax reform.
The second structural issue lies in the fact that the Trump administration is transitioning from a family office-type operation to taking the reins of the largest institution in the country. That the Trump administration is still in the process of learning to master the art of running such a large bureaucracy was starkly illustrated by Secretary of the Treasury Steven Mnuchin and National Economic Council Director Gary Cohn's summary of the Trump tax reform plan presented on April 26 (see text of full White House briefing). Whether the Trump administration can harness the human capital available at Treasury and on Capitol Hill to craft and pass its own comprehensive tax reform within a one year window is an open question.
A third structural hurdle for tax reform is the unusual political and legal volatility associated with the Trump presidency. The special counsel investigation, among other things, is an example of the volatility that limits the ability of the administration and Congress to accomplish any of its policy goals.
To handicap tax reform in light of Speaker Ryan's speech, keep an eye on the backstory fight over deficit-financed tax reform, the administration's ability to harness the federal tax bureaucracy, and the impact of the current political volatility surrounding the administration.
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