No Border Adjustment Consensus for Republican Study Committee

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By Aaron E. Lorenzo

House conservatives are continuing to grapple with the border adjustment provision to tax imports and exempt exports, even after debating the issue during a meeting in New York.

There simply isn’t consensus among members of the House Republican Study Committee—the largest caucus in Congress—according to its chairman, Rep. Mark Walker (R-N.C.).

“It’s probably the most all-over-the-map discussion we had there for these couple of days,” he told Bloomberg BNA.

House Ways and Means Committee Chairman Kevin Brady (R-Texas) took his tax reform pitch directly to the group’s New York meeting, which ran Feb. 8-10. Those in attendance fully support Brady’s efforts to reshape the U.S. tax code and reduce tax rates to improve economic growth, but they nonetheless want more schooling on the process, Walker said.

Independent estimates indicate the plan would raise more than $1 trillion to help pay for lower tax rates. Brady has insisted that the border adjustment idea would also improve U.S. business competitiveness against global rivals.

That is a necessary outcome, Walker said, pointing to general agreement among congressional Republicans and President Donald Trump that the U.S. trade deficit is way too wide. “We know that something has to be done,” Walker said.

Brady hasn’t convinced everyone that border adjustments are the solution, but he is pushing hard. Business groups are split: Those in import-heavy industries, like retailers, are generally at odds with exporters so far.

‘Positive Conversations.’

“Chairman Brady had positive conversations with his RSC colleagues about our entire Built for Growth tax reform blueprint—including how we are working to end the ‘Made in America’ tax,” said Ways and Means Communications Director Emily Schillinger. “He enjoyed having the opportunity to talk in more detail about how important it is to ensure that we tax imports and exports equally in our country.”

The dialogue included a lot of back and forth on the matter, according to Walker, who said he holds Brady in the highest regard. The two have met individually and spoken by phone too, but question marks nonetheless remain within the larger RSC bloc.

“Is there a way around this?” Walker said.

His group had 178 members in the last Congress and is recruiting more, so a current headcount isn’t yet public, but most attended the New York meeting.

A senior House aide said that Brady, who was in New York all three days, was very welcoming in his outreach effort. Walker staffers have also met with Ways and Means tax aides, and Brady recently sat down with members of the far right-leaning House Freedom Caucus, in addition to presenting the overall proposal to all House and Senate Republicans at their annual retreat last month in Philadelphia.

About two-thirds of the New York meeting’s attendees are RSC members, and the remaining third are in the Freedom Caucus, Walker said. There is overlap among the two groups too.

Five Months

Labeling tax reform a “five-month project,” the House aide said Brady and other advocates should use that period to improve messaging on border adjustments while congressional Republicans work to replace the Affordable Care Act, even though some might want to flip that order.

The broader House GOP membership also needs to learn more about reconciliation, a fast-track process that might be used to secure tax reform passage with a simple Senate majority, the aide said.

RSC members also want more transparency on a process that doesn’t look like it will wrap up until this summer, the aide said.

More town halls where members can interact with their constituents and media outreach would help, the aide said, in addition to hearings, which Brady has said he is considering.

The committee hasn’t held hearings on tax revamp plans this year despite Brady’s push and the backing of House Speaker Paul D. Ryan (R-Wis.), who wants tax legislation passed sooner rather than later.

On top of reservations among some House Republicans, a couple of Senate Republicans have signaled concerns at this point of the process too, particularly over border adjustability. “We need to push the Senate to act,” the aide said.

The RSC’s New York meeting was sponsored by the conservative Heritage Foundation.

To contact the reporter on this story: Aaron E. Lorenzo in Washington at aaron@bna.com

To contact the editor responsible for this story: Meg Shreve at mshreve@bna.com

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