WASHINGTON — The furor over President Donald Trump’s response to the Charlottesville unrest has raised serious concerns over the ability of Republicans to marshal through an ambitious legislative agenda this fall, including a key priority for the entertainment industry: tax reform.
A turning point came on Wednesday, when Trump disbanded two business councils after it became clear that there would be a mass exodus of CEOs from the groups. On Thursday, the White House announced that another council, a panel on infrastructure that was just being formed, also would not move forward.
The fear now is that Trump will continue to stoke divisions, and that the distraction will drown out efforts to win public support for tax reform. House Speaker Paul Ryan has been appearing at events during the summer recess to try to sell the plan, but his speeches and statements have been obscured by Trump’s stream of Twitter remarks and, on Tuesday, his press Q&A in which he reaffirmed that “both sides” were to blame for the violence at the white supremacist rally.
“To the extent that the White House continues to be mired in these self-inflicted wounds, it will be very hard to prosecute a legislative agenda. Things slow down,” said one industry representative, who added, “To get things done, you need to have a very closely aligned executive and legislative branch, but, at the moment, they are on separate islands.”
On Thursday, the Dow Jones Industrial Average was down 1.24% on investor worries that the White House’s pro-business legislative agenda would stall. There was a drop-off in the morning when rumors spread that Gary Cohn, Trump’s chief economic adviser, was about to resign. A White House official said that the report was false, but it speaks to Wall Street’s concern that a key player on pushing tax reform would exit out of protest to Trump’s remarks.
Trump continued to push his defense of Confederate statues on Thursday, when he tweeted, “Sad to see the history and culture of our great country being ripped apart with the removal of our beautiful statues and monuments.”
Trump’s remark, said another industry representative, “doesn’t make it any easier.”
Yet even before Trump’s Tuesday press conference, there had been concerns that the friction between the Trump and Capitol Hill Republican leadership would hobble tax reform efforts. That was certainly the case when Trump went after Senate Majority Leader Mitch McConnell for failing to secure the votes to repeal and replace the Affordable Care Act, but also as the president has attacked other members, including Sen. Jeff Flake (R-Ariz) and Sen. Lindsey Graham (R-S.C.).
Right now, it looks as if tax reform would likely be done through the budget reconciliation process, which would require 51 votes, a simple majority, rather than the 60 to overcome a filibuster. That’s still a thin margin.
Corporate America has lined up in favor of reducing the top effective tax rate, but media companies are especially fixated on the idea, given that they traditionally have paid close to the top 35% effective rate. That is in contrast to other companies, like GE and Apple, which have escaped those rates by keeping their profits offshore.
A sense earlier in the year that the stars had aligned on tax reform, in which the legislative branch could lead the way, has given way to a sense of trepidation over what other flare ups will come from the White House next.
According to CBS News, one research analyst, Jaret Seiberg, wrote in a note that “at risk is the President’s ability to fill out his own team, to push tax reform, to enact an infrastructure bill and to continue to attract business leaders to fill key government posts.”
The sole entertainment industry member of Trump’s advisory councils, Walt Disney Co. CEO Bob Iger, actually called it quits months ago, in protest of the president’s decision to pull out of the Paris climate accords. Another frustration among trade and business associations has been that so many positions still remain unfilled in the executive branch, making it difficult to even know where to turn on key issues.
The solace is Republicans also are driven to have something to show for the year, and will still be driven even if Trump’s approval continues to sink and the president becomes ever more isolated. The worry in the industry isn’t so much about Republicans’ will to get it done, but of even further delays.