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Trump, Republicans pushing for tax reform without policy details

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President Trump met with House Speaker Paul Ryan, Senate Majority Leader Mitch McConnell, and Rep. Kevin Brady on tax reform in the White House. (AP Photo/Evan Vucci)

President Trump won't have specific legislation or even a set plan to tout Wednesday when he delivers a speech on tax reform in Mandan, N.D.

In fact, Trump and the Republican leaders he is working with don't have an agreed-on plan yet, contrary to some previous indications from the administration. Many of the most basic questions about their approach have yet to be answered, even as they aim to have legislation signed this year.

They have, however, talked through different permutations of tax reform, and have worked through some of the details of those different combinations of tax provisions. After meeting Tuesday, they claimed progress.

"In a sense, many of those decisions are linked," said House Ways and Means Committee Chairman Kevin Brady, speaking to reporters Tuesday afternoon at the Capitol after visiting the White House to talk taxes with Trump and congressional GOP leaders. The overarching framework, he said, was to drive rates as low as possible on business and individual income, and to create a new system of international taxation for businesses.

Pulling one lever could require adjusting all the others. One such decision, for instance, is what goal to set for the corporate tax rate, which is currently the highest in the world at 35 percent. President Trump last week called for a rate of 15 percent.

But lowering the rate that far would likely cost the treasury far more than could be raised by limiting business tax breaks, meaning that tax writers would likely have to scale back their ambitions for other parts of the reform in order to make up for that lost revenue.

Such specifics about rate targets and offsets were missing from the short, very vague joint statement on tax reform issued by the White House with congressional Republican leaders in July. Nevertheless, that statement is the "basis from which you're going to have the regular order process take up the legislative side of this," a White House official said Tuesday.

The administration has created some confusion about the status of the tax reform effort. Last week, Treasury Secretary Steven Mnuchin said in an interview with CNBC that the administration had submitted a "very detailed plan" to Congress. A day later, however, National Economic Council director Gary Cohn, the other administration official deeply involved in talks with congressional Republicans, appeared to contradict Mnuchin by saying their negotiations had produced a "skeleton," and that Congress was supposed to add muscle and skin.

The White House official said Tuesday the "Big Six" group of Republicans — Paul Ryan, Mitch McConnell, and Senate Finance Committee Chairman Orrin Hatch, in addition to Mnuchin, Cohn, and Brady — has been making progress on some details, and said "we really hope that September is the month where we're going to be able to begin to release some of these things."

While some options may have been discussed in detail, high-level decisions about what will be in the package and what will be left out had still not been decided as lawmakers returned to Washington on Tuesday. After the GOP met with Trump Tuesday, White House press secretary Sarah Sanders released a statement saying that they had agreed only that the tax-writing committees should continue working in order to produce legislation "expeditiously as possible."

A major expansion of tax benefits for childrearing championed by Ivanka Trump had not been ruled in or out of the talks between the White House and congressional leaders.

One basic question that the Republican leaders still haven't settled is whether to commit to a comprehensive, permanent reform of the tax code. Pursuing that option while using the reconciliation process, which allows for legislation to pass with only a simple majority, would require them to find a way to ensure that the legislation is not scored as adding to deficits in the long run. Some Republicans have lobbied instead for a net tax cut, which would have to be only temporary. They may choose a combination of permanent and temporary provisions.

The leaders also haven't decided how low to try to go on tax rates, and what tax credits and deductions might be sacrificed in order to pay for those rate reductions.

While previewing the president's trip Tuesday, a senior White House official explained that the 15 percent corporate rate target is aspirational, saying that "the White House is working very closely with our friends on Capitol Hill and working through what that number ends up being."

Nevertheless, all sides claimed progress from Tuesday's meeting. And the White House explained that Trump doesn't need a set-in-stone plan to make the pitch to the public that they need tax reform.