After months of political warfare, GOP and Dems try something new — working together | McClatchy Washington Bureau

There’s one big difference between the push to repeal Obamacare and Congress’s new tax-reform effort: Republicans and Democrats are talking to each other.

And that could make all the difference in the world.

After seven months of almost no legislative accomplishments, the GOP is turning to its next agenda item – an overhaul of the nation’s tax code. But unlike the effort to repeal and replace the Affordable Care Act — a process hidden from public view and absent of Democratic input — rewriting the tax code is already showing signs of joint effort.

"In my book it has to be bipartisan," said Sen. Orrin Hatch, R-Utah, who had a successful working relationship with the late Sen. Ted Kennedy, D-Mass., and more recently has worked closely with the committee’s top Democrat, Sen. Ron Wyden, D-Ore.

Wyden returned the love. "Taxes have historically been an opportunity for finding common ground," he said. "Democrats believe that special interests have hijacked the tax code. Republicans believe the system is broken, that there’s no certainty and predictability and I think that’s a valid point as well."

There’s even a recent model for cooperation, Wyden said, citing a tax deal that he, Hatch and House Ways and Means Committee chairman Rep. Kevin Brady, R-Texas, forged in 2015.

"We’ve written important bills together," Wyden said. "The question is: Will the leadership, including the White House, see that unless you find some common ground here you’re going down the same route you did on health care?"

The last overhaul in 1986 was signed into law by Republican President Ronald Reagan, as Republicans and Democrats surrounded him.

Tax legislation is complicated, and the changes affect virtually everyone. In addition, special interests tend to cross party lines. Oil state lawmakers, regardless of party, want breaks for that industry. High-tax states want deductions for state and local taxes. And so on.

"It’s complicated and important to every single American in a way that even the health care bill was not," said former Rep. Barbara Kennelly, a Democrat who as a member of the tax-writing House Ways and Means Committee worked with Republicans to write the 1986 legislation.

"I have no idea how you would do it in a strictly partisan way,” she said. “This is everybody’s opportunity to say, ‘Let’s be grown-ups.’ Otherwise, it will be like health care and they won’t get it done."

There is a hurdle or two that could tear the two sides apart. It’s unclear how much of a legislative victory the party would want to give to President Donald Trump on his next major initiative.

Wyden said that Republican ideas he’s heard are little more than seeking "crumbs for the middle class and big tasty cakes for the fortunate few.”

Democrats are staking out their position. Forty-three Democrats and the two independents that caucus with them wrote a letter this week to Trump and Senate Republican leadership, saying they wanted to work together but could not stomach tax cuts for the wealthiest 1 percent, nor legislation that increases the debt or deficit.

That gave Senate Majority Leader Mitch McConnell, R-Ky., an opening. He accused Democrats of being uninterested in "most of the principles that would get the country growing again."

He told reporters, "I don’t think this is going to be 1986, when you had a bipartisan effort to scrub the code.” McConnell said he’d try to use a procedural maneuver to allow debate on the overhaul to be cut off with 51 votes instead of the traditional 60.

Yet at the same time, Republicans said they would hold hearings on tax proposals. And several Democrats besides Wyden have signaled they’re open to talking. They include three who did not sign the Senate Democrats’ letter and are up for re-election in states that voted for Trump: Sens. Joe Donnelly of Indiana, Joe Manchin of West Virginia and Heidi Heitkamp of North Dakota.

Senior Republicans are also hinting strongly they’re ready to deal.

Sen. Chuck Grassley, R-Iowa, a veteran Senate Finance Committee member, said he’s heard a number of Democrats on the committee are interested in working in a bipartisan manner.

"What it’s going to amount to is for (Senate Minority Leader Chuck) Schumer not to tell his people like (Democratic leaders) did on health care, ‘Don’t work with the Republicans’ because that just poisons the well,’" Grassley said.

"We traditionally work together in finance," said Sen. Debbie Stabenow, D-Mich., a committee member. "It would be very unfortunate if the Republicans decide to go down the same road they did on health care."

Schumer said Thursday that McConnell’s rejection of the Democratic overture suggests that Republicans are pursuing tax cuts for the rich, noting that McConnell has agreed with Democrats that tax reform should be revenue neutral.

“If our Republican colleagues’ whole basis for doing tax reform is cutting taxes on the top 1 percent, we’re going to send that message from one end of America to the other,” Schumer said, adding, “their ideas will certainly fail, as they did with healthcare.”

James Pinkerton, a former White House domestic policy adviser to Reagan and President George H.W. Bush, and co-chair of the RATE coalition, a bipartisan group that champions corporate tax simplification and rate reduction, said he sees a bipartisan route.

Republicans are motivated to land a major deal, Pinkerton said:

"What makes me optimistic is there is an intense desire for success, accelerated by the loss on health care, to push this one across the finish line," he said. "Every Republican I’ve talked to is intent on tax reform as a, if not the, signature issue for this Congress."