How Trump could try to go it alone on taxes

  • President Trump is issuing executive orders and enacting polices unilaterally.
  • Now, he may try to set his sites on tax cuts without Congressional approval.
  • Ironically, the justification for that could come from the Democrats.
President Donald Trump, flanked by business owners Leslie Baudry (L) and Rich Baudry, speaks before signing an executive order on health insurance on October 12, 2017 in the Roosevelt Room of the White House in Washington, DC.
Mandel Ngan | AFP | Getty Images
President Donald Trump, flanked by business owners Leslie Baudry (L) and Rich Baudry, speaks before signing an executive order on health insurance on October 12, 2017 in the Roosevelt Room of the White House in Washington, DC.

Remember the date October 12, 2017. Because that was the day that President Donald Trump finally ripped off the shackles and started to use the full powers of the presidency in a decidedly unilateral fashion.

In the course of 24 hours on that day, President Trump and his administration did the following:

1) Announced it will withdraw from Unesco, the United Nations cultural organization, because of what it believes is the group's anti-Israel bias.

2) Signed an executive order directing the Labor Department to explore ways to allow cheaper and less extensive health plans to be sold to the public again.

3) Informed Mexican and Canadian NAFTA negotiators that any deal the U.S. makes to renew NAFTA may have a five-year "sunset clause."

4) Ordered the deployment of yet another U.S. naval ship into the waters near the Korean Peninsula, the guided missile cruiser USS Monterey, to boost anti-missile defenses there.

5) Moved to immediately stop making subsidy payments to insurers who sell Obamacare health plans.

6) Confirmed that it would decertify the Iran nuclear deal as part of a broad new strategy on Tehran, (that move was finalized Friday).

Approve or disapprove of all of any of the above, there's no denying they are the actions of a president who is feeling less and less restrained by party loyalties, less patient with the congressional negotiation process, and less concerned by the constant criticism he faces in the news media.

So what's next?


Now taxes may seem like one area where no president can act unilaterally or even quickly, and a quick look at the Constitution seems to confirm that. But that may not stop President Trump from trying a few maneuvers that would essentially cut taxes for corporations and individuals. And the kicker is that two people the Trump team could cite to justify such an action are none other than President Barack Obama and Senator Bernie Sanders.

Because back in 2014 and 2015, it was the Obama team that was seriously considering changing tax rules without Congressional approval. One key issue was corporate tax breaks, which Senator Bernie Sanders publicly urged President Obama to nullify unilaterally. In his argument, Sanders insisted that the president had the right to close certain tax break loopholes and that would not be creating new tax law. The Obama administration responded by saying the president was seriously considering the idea as then-White House Press Secretary Josh Earnest said at a news conference in March 2015:

Well, the President has asked his team to examine the array of executive authorities that are available to him to try to make progress on his goal. So I'm not in a position to talk about any of those in any detail at this point, but the President is very interested in this avenue generally.

Had President Obama followed Sanders' advice, the move would surely have been met with Republican outrage and court challenges. But the bottom line is that for at least some temporary period, those tax changes could very easily have gone into effect. There they would have stayed until overturned by the courts or reversed by the administration itself as part of a larger deal with Congress.

Lest you think the Obama team was only being urged to move unilaterally to raise taxes, there were also liberal supporters of the president who wanted him to dare Congress to stand in the way of an extended payroll tax holiday for middle class workers.

In 2010, Yale constitutional law Professor Jack Balkin mapped out a plan calling for President Obama to cut payroll taxes, instruct the Treasury Department to issue new regulations justifying the cuts, and then dare the Republicans in Congress to fight him in court, for years if necessary. Balkin also laid out the following defiant argument President Obama could use if challenged on his call not to prosecute employers who didn't collect payroll taxes at the old rates:

Argue that the President, as chief executive officer, has the discretion to refuse to prosecute individuals in the interests of public policy. To interfere with the President's (non)prosecution power violates the Unitary Executive.

Again, that was a constitutional law expert making that argument. Balkin and others used similar arguments to justify their call for the non-Congressional approval. They said the economy needed a boost and the president was compelled to take action to help improve it.

That's the same kind of justification President Trump has used for months to promote his tax reform plan. He has continued to make that argument even as the GDP is on the rise and the stock market rally rolls on. But that's the thing about economic booms, there's always someone who's left out or feels left out. And presidents will never have to worry about too much pushback from anyone when they say the economy could always be better.

Using Balkin's reasoning on presidential prosecutorial discretion, President Trump could conceivably use it as a justification to not collect all kinds of taxes. He already did something very similar with his executive order back in February making it okay for tax filers not to disclose their health insurance coverage status and thus making the non-coverage tax penalty part of Obamacare virtually unenforceable.

Okay, but will President Trump try this gambit on payroll taxes, corporate taxes, etc.?

Before Thursday's flurry of unilateral and controversial moves, the chances seemed a bit remote. Not so much now, especially if support for the tax reform plan continues to struggle to get to 50 votes in the Senate. President Trump has already taken matters into his own hands on Obamacare rules after that exact failed vote scenario happened in the Senate this summer. What's to stop him on taxes?

This is where a more sane and productive Congress and White House would realize what's at stake and start seriously negotiating with one another on taxes. In such an environment, President Trump's moves would be a clarifying moment of resolve proving to the Democrats and wary Republicans that he means business. But in this environment, it's hard to believe Democrats will do anything other than put their full efforts behind a heavy legal challenge.

The irony in all of this is that during the many years of Republican congressional opposition to President Obama, the Democrats worked hard to justify a "go it alone" approach for the White House. Now those same arguments are already being used against them.

And this could just be the beginning.

Commentary by Jake Novak, senior columnist. Follow him on Twitter @jakejakeny.

For more insight from CNBC contributors, follow @CNBCopinion on Twitter.