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Cohn: Debt debate won’t derail tax reform

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Cohn: Debt debate won't derail tax reform

White House chief economic adviser Gary Cohn said he doesn’t believe efforts to raise the federal debt limit and fund the government will complicate the Republican tax reform effort, as disputes between GOP leaders over the must-pass legislation rage in public.

Cohn, chairman of the National Economic Council, told the Financial Times in a Friday interview that lawmakers and President Trump will act on the critical legislation in September, while advancing tax reform would start in October.

“At the end of the day Congress has to increase the debt ceiling — that is just the reality. [Treasury] secretary [Steven] Mnuchin and I totally agree that we cannot be put in a position where we default — we cannot default,” Cohn told FT. “We have to pay our obligations. The debt ceiling stuff will be in September, so before [tax legislation].”

Republicans have until September 30 to pass a bill to fund the federal government, and roughly the same time to raise the legal limit on how much debt the Treasury can owe. Failure to fund the government would result in a shutdown, while leaving the debt ceiling intact could cause the United States to default on some of its payments, risking a global financial panic.

Ahead of the crucial deadlines, President Trump spent the past week attacking GOP congressional leaders on Twitter, blaming them for the debt ceiling crunch and promising to veto any government funding bill that doesn’t sufficiently finance a wall along the southern border.

Trump said Senate Majority Leader Mitch McConnell (R-Ky.) and House Speaker Paul Ryan (R-Wis.) ignored his requests to throw the debt-ceiling into popular bipartisan legislation designed to help war veterans.

“I requested that Mitch M & Paul R tie the Debt Ceiling legislation into the popular V.A. Bill (which just passed) for easy approval,” Trump tweeted. “They didn’t do it so now we have a big deal with Dems holding them up (as usual) on Debt Ceiling approval. 

“Could have been so easy — now a mess!”

House Minority Leader Nancy Pelosi (D-Calif.) on Thursday called on Republicans to unify around a plan to raise the federal debt limit after Trump’s attacks.

“With the White House, House and Senate under one party control, the American people expect and deserve a plan from Republicans to avert a catastrophic default and ensure the full faith and credit of the United States,” Pelosi said. “With so much at risk for hard-working families, Republicans need to stop the chaos and sort themselves out in a hurry.”

Both Ryan and McConnell have spent August pitching GOP efforts to cut taxes and promising the nation the Congress would avoid government shutdown or fiscal crisis.

Cohn insisted that the White House was honed in on advancing, despite the severe consequences of failing to keep the government open or the Treasury out of default.

“The key point is this: tax reform is the White House’s number one focus right now,” Cohn said. “We are all working on taxes right now — we are working as hard as we can and trying to push as hard as we can — and if there is a will there is a way.”

Democrat leaders said there have been no talks over the August break between the White House and Democrats. The GOP will need Democratic votes to pass the debt ceiling hike. 

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