Senate Majority Leader Mitch McConnell on Tuesday dismissed the idea that a bipartisan tax reform deal could be reached, and said Republicans plan to go it alone with a 51-vote procedure to pass legislation and thwart a Democratic filibuster.
"We have been informed by the majority of the Democrats in a letter I just received today that most of the principles that would get the country growing again they are not interested in addressing," McConnell said.
McConnell dashed the idea just as some Republicans and Democrats were talking about cutting a bipartisan tax deal, and suggesting the parties can work together if both sides are willing to drop the partisanship and cooperate.
Senate Republican Conference Committee Chairman John Thune said the GOP would be willing to try negotiating with Democrats on at least some part of tax reform rather than use the reconciliation process to pass legislation unilaterally with 51 votes.
"It would be nice if we could do something through the regular order process," Thune told the Washington Examiner. "And, I guess we should at least test the limits of what might be doable with Democrats."
Mulling a deal with Democrats on one of the GOP's top agenda items may be necessary now that Republicans have failed at trying to pass an Obamacare repeal and replace bill with just GOP votes.
The Trump administration, recognizing it may need Democrats to advance one of the president's signature campaign pledges, has in recent days reached out to party lawmakers about the matter through newly appointed White House Chief of Staff John Kelly. Over the weekend, Kelly phoned Democratic leaders in the House and Senate about a wide range of topics, congressional aides said.
"We absolutely can" work together on tax reform, Sen. Sherrod Brown, of Ohio, who is the top Democrat on the Senate Banking Committee, told the Washington Examiner on Tuesday. "There are all kinds of things we want to do together."
Minority Leader Chuck Schumer, D-N.Y., warned Tuesday that the GOP would face failure, as they did on the Obamacare repeal effort, if they do not include Democrats.
Republicans fell one vote short of passing a "skinny" Obamacare repeal bill that was to serve as a vehicle for new legislation crafted with the House. As a result, the health care effort appears stalled and has left the Trump administration fearing it can't be done by the GOP alone.
Schumer hopes to use that fear to bring leverage to Democrats, who would otherwise be shut out of the process.
"If they try to do it by themselves, they are going to have a very similar result I would predict," Schumer said.
But McConnell, R-Ky., noted Democrats have already demanded conditions for their cooperation on taxes and he doesn't agree with their terms.
In the letter sent to McConnell Tuesday, all but three Senate Democrats said they won't participate in talks on tax reform unless Republicans drop the 51-vote reconciliation process, pledge not to cut taxes on the top one percent of income earners, and promise not to cut money for Social Security and Medicare.
Democrats also want a guarantee that any tax reductions do not add to the deficit, a demand Senate Finance Committee Chairman Orrin Hatch, R-Utah, dismissed outright on Tuesday. Republicans and Democrats have a longstanding disagreement on tax reform and the deficit, as most Republicans believe tax policy should not be counted as adding to the deficit, while Democrats say it should.
At the very outset, however, Democrats at least want Republicans to drop the 51-vote threshold, known as reconciliation.
"If you don't do reconciliation, then we are part of the conversation," Senate Minority Whip Dick Durbin, D-Ill., told the Washington Examiner.
There may be a narrow path to bipartisan tax reform through a shared goal of stopping corporations from fleeing the United States to countries with lower tax rates. Both parties want to keep companies from leaving the United States, and even Democrats are willing to offer lower tax rates to get that done.
But Democrats want conditions. Durbin and Brown said they support legislation that would provide lower tax rates for companies that pay higher wages to workers.
"Companies that treat their workers well, do good things for the community get a lower corporate tax rate," Brown told the Washington Examiner. "[C]ompanies that treat their workers well, do good things for the community, get a lower corporate tax rate. That's something I think you will see real public consensus around."
"If we bring it home, the question is why are we bringing it home," Durbin said. "For CEO salaries and dividends, or are we bringing it home for capitalizing corporations and rewarding workers? That is where this conversation always falls apart. That is what tax reform debate is all about."
Both parties have a few weeks to mull over the next steps. Both the House Ways and Means and Senate Finance Committees will not begin marking up a tax reform bill until after Labor Day.
The process will start in the House, where panel chairman Kevin Brady, R-Texas, has already rejected one of the Democrats' terms.
Brady won't exclude tax breaks for the top one percent, and told Fox News last weekend that rates are "headed downward at every level."
McConnell suggested the three Democrats who did not sign the tax reform demand letter might be willing to support what he called a pro-growth tax plan. But he warned not to expect the kind of deal Congress secured more than 30 years ago, when Speaker Tip O'Neil, a Democrat, overhauled the tax code with Republican President Ronald Reagan.
"I don't think this is going to be 1996, when you had a bipartisan effort to scrub the tax code," McConnell said.