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If Republicans can’t do tax reform, they can’t do anything: GOP ex-governor

  • Tax reform is the "political holy grail" for Republicans and therefore should get done, former Minnesota Gov. Tim Pawlenty told CNBC on Monday.
  • Congress gets things done when there's a political imperative or crisis, said Pawlenty.
  • "If they don't do it between now and the 2018 elections they're going to be in big trouble."

Tax reform is the "political holy grail" for Republicans and therefore should get done, former Minnesota Gov. Tim Pawlenty told CNBC on Monday.

"Tax reform is across-the-board popular in the Republican Party," the Republican said in an interview with "Closing Bell."

"If they can't do this, they can't do anything. This is low-hanging fruit."

In an event on Monday, Senate Majority Leader Mitch McConnell and Treasury Secretary Steven Mnuchin touted tax reform, with Mnuchin saying the Trump administration is "100 percent committed" to getting it done.

Republican leaders are expected to start working tax reform through Congress next month.

"Congress gets things done when there's a legal deadline or there's a political imperative or crisis," said Pawlenty, CEO of the Financial Services Roundtable.

"If they don't do it between now and the 2018 elections they're going to be in big trouble."

He said there needs to be at least a significant reduction in the corporate tax rate, as well as middle-income tax relief. The other details can be worked out, he said.

Pawlenty is also not too concerned about taxes being derailed by the drama surrounding President Donald Trump. The president has been widely criticized for blaming both white nationalists and counterprotesters for violence at a Virginia rally this month organized by neo-Nazis and white supremacists.

Trump "clearly has some challenges because of the distractions and some of the decrease in his popularity, but keep in mind this is equally important to Congress and they can pass this on their own, assuming they don't hit a tripwire of his, and he'll sign it," he said.

However, Jared Bernstein, former economic policy advisor to Vice President Joe Biden, said while Congress writes the law, the president needs to be actively engaged. For example, President Ronald Reagan played a critical role in organization tax reform in the 1980s, he told "Power Lunch."

"You need a president who's got more interest and credibility than Trump has on the issue," he said.

And right now, there are so many open questions about what the GOP tax bill may look like.

"It's a little remarkable at this point that they don't have a plan," he said.

— Reuters contributed to this report.

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