Donald Trump initially demanded that the Republican tax plan drop the corporate tax rate to 15%, but even GOP officials, as irresponsible on this issue as they are, told the president the goal was unrealistic. They could do 20%, but no lower.
Trump was grudgingly satisfied, but he made clear that Congress shouldn’t even consider pushing the corporate rate any higher in the legislation. The president declared publicly that the 20% rate was “very much a red line” he would not cross. Trump’s Treasury secretary, Steven Mnuchin, added soon after, “The president’s number one issue that is not negotiable is 20% corporate taxes.”
The rigidity of the White House’s position created all kinds of problems for the president’s congressional allies, but Republican lawmakers honored Trump’s demands – even if it meant killing popular ideas and writing a plan that raised taxes on millions of middle-class families. For all intents and purposes, the 20% corporate was the point of the legislation.
And so, it came as something of a surprise when the president suggested over the weekend that he’d consider crossing his own red line. The Washington Post reported:
Hours after the pre-dawn passage of a $1.5 trillion tax cut, President Trump suggested for the first time Saturday that he would consider a higher corporate rate than the one Senate Republicans had just endorsed, in remarks that could complicate sensitive negotiations to pass a final bill.
On his way to New York for three fundraisers, Trump told reporters that the corporate tax rate in the GOP plan might end up rising to 22 percent from 20 percent.
Referring to the corporate rate, the president said, “It could be 22% when it comes out, but it could also be 20%. We’ll see what ultimately comes out.”
So much for the “red line” that’s “not negotiable.” No wonder some Republicans weren’t pleased.
Sen. Marco Rubio (R-Fla.), for example, had pushed a change to his party’s plan that would have created a 22% corporate rate, instead of 20%, with the difference going towards expanding the child tax credit. His plan was defeated, at least in part because of Trump’s “red line,” prompting Rubio to ask incredulously over the weekend why 22% is suddenly “an option.”
For the record, Rubio played a good hand badly. If the Florida Republican told Republican leaders that he’d oppose the tax plan without his child-tax-credit idea, it’s very likely he would’ve gotten what he wanted. Instead, Rubio made clear he’d vote for the regressive bill with or without his amendment, which meant he ended up with nothing.
But even putting that aside, Rubio’s not wrong to be annoyed. He was told the 20% rate was “not negotiable,” only to then hear from the president himself that the opposite is true. There are a few lessons that the senator and others can take away from the ordeal:
1. Trump bluffs badly and rarely sticks to his “red line” positions.
2. Trump doesn’t really understand the details of policy arguments, which makes it practically impossible to negotiate with him.
3. Trump won’t hesitate to contradict himself and his own top administration officials who stick out their necks to defend his poorly thought out pronouncements.
As for where the corporate tax rate will end up once Republicans wrap up their negotiations, your guess is as good as mine, but the president just sent a pretty clear signal that the line the White House drew in the sand no longer exists.