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Republican attempts to court Democrats on tax reform fall flat

  • Republicans are getting the cold shoulder as they ramp up the pressure on Democrats to support tax reform.
  • "We want a real seat at the table," says Rep. Henry Cuellar, D-Texas. "We don't want to be props."

Republicans are getting the cold shoulder as they ramp up the pressure on Democrats to support tax reform.

First it was Sen. Ron Wyden of Oregon, rebuffing an overture from White House chief economic adviser Gary Cohn. Then Sen. Joe Donnelly of Indiana issued a biting statement declaring his independence on tax reform a week after flying with President Donald Trump on Air Force One. And Sen. Joe Manchin of West Virginia was not swayed despite being courted by a top White House official this week.

"We want a real seat at the table," Rep. Henry Cuellar, D-Texas, a member of the centrist Blue Dog Coalition, told reporters this week. "We don't want to be props."

Republicans have pinned their hopes of maintaining their majority on Capitol Hill in 2018 on passing a sweeping rewrite of the nation's tax code. They have proposed an aggressive reduction in corporate and individual rates that would also eliminate many popular deductions. It's a heavy political lift with high stakes for a party that failed to deliver on its signature campaign promise to repeal Obamacare.

There's not much room for error. House Republicans on Thursday passed a budget — widely seen as the first step in tax reform — with just two votes to spare. Eighteen GOP lawmakers voted against the document.

In the Senate, Republicans hold a razor-thin majority of 52 seats. Already, some of them have voiced concerns about various aspects of the tax plan, from the repeal of the estate tax to the impact on the national debt. Winning over even a few Democrats would provide Republicans a more comfortable buffer from defections within their own party.

But Democrats so far have been wary of the GOP outreach. After the White House requested a meeting with Wyden, the ranking member of the powerful finance committee and a key thought-leader on tax policy, the senator met with Cohn in his office for roughly half an hour Wednesday.

After it ended, Cohn told CNBC that "everything's going well" on tax reform. Wyden had a different take.

"It's clear this meeting was meant to 'check the box' instead of engaging in a real, substantive conversation about how to achieve lasting bipartisan tax reform," his committee spokesperson said.

Donnelly is another top target for Republicans. On the day the White House tax framework was unveiled with GOP leadership last week, Trump traveled to Donnelly's home state of Indiana to deliver a campaign-style speech. Trump first thanked the senator but then warned that if he opposed the tax plan, "we will campaign against him like you wouldn't believe."

On Thursday, Donnelly delivered his own sharply worded response in an online video.

"Right now, the only plan out there is missing a lot of important details," he said. "And like most Hoosiers, I'm not gonna buy a car before kicking the tires. That's not standing in the way. That's just common sense."

Republicans are using both carrots and sticks to get Democrats on board. Americans for Prosperity, a conservative group tied to the billionaire Koch brothers, launched a $4.5 million ad campaign targeting Donnelly along with Sens. Claire McCaskill of Missouri and Tammy Baldwin of Wisconsin. Baldwin is expected to introduce her own tax bill on Friday that expands the low-income tax credits, among other things.

In a statement, Americans for Prosperity said it is "calling on these senators to support, not obstruct, this bold tax reform plan that will benefit hard-working middle-class Americans in their states."

"We are hopeful we can count on these senators to do the right thing, and our activists are ready, willing and able to swiftly bring to bear the full weight of our grassroots infrastructure to get this plan to the president's desk this year," the group said.

The White House is keeping up the pressure. Trump is bringing small business owners to discuss taxes at the White House on Friday in honor of National Manufacturing Day. It's no accident that several of the attendees represent companies based in Manchin's home state of West Virginia.

White House legislative director Marc Short visited Manchin in the senator's office on Tuesday to talk taxes. A Manchin spokesman said the senator wants to work with the White House on a tax plan that "helps the middle class and grows the economy." When asked if Manchin believes the current framework does that, the aide simply replied, "No."

Manchin is one of only three Democratic senators who did not sign a letter laying out the party's requirements for supporting a tax plan: It cannot cut taxes for the wealthy or increase the deficit, and it must go through regular order, rather than the special reconciliation process that Republicans hope to use to pass a bill. Sen. Heidi Heitkamp of North Dakota and Donnelly also did not sign the letter.

Several Democrats have proposed their own plans for tax reform. The Blue Dogs outlined several principles this week that include elements of the GOP tax framework, such as lower rates for corporations and pass-through businesses and moving to a territorial tax system.

But other ideas, such as tying tax reform to infrastructure, have already been discarded by Republicans. The Blue Dog proposal also calls for a tax package that does not increase the deficit. Republicans are likely to adopt a measure that calls for a $1.5 trillion tax cut over the decade.

California Rep. Jim Costa, one of the coalition's co-chairmen, called GOP projections that the tax plan would generate 3 percent growth and pay for itself "fantasyland."

Still, Costa said his members would be willing to negotiate with Republicans in hopes of replicating the bipartisan success of tax reform in 1986. Several have already been in contact with senior administration officials, he said.

"The reality is that Americans have been frustrated by the inability of lawmakers on both sides of the aisle to reach agreement," he said. "They want Washington to get something done."

— CNBC's Mary Catherine Wellons contributed to this report.

Correction: White House legislative director Marc Short visited Manchin in the senator's office on Tuesday to talk taxes. An earlier version misstated the day and location.

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