In Prelude To Fall, US Senate Leaders Clash Over Tax Reform

--Senate Majority Leader McConnell Vows'Historic Effort' To Overhaul Tax Code

--Senate Minority Leader Schumer Says GOP Appears Poised To Replicate Mistakes

of Health Bill Debacle

By John Shaw

     WASHINGTON (MNI) - Looking ahead to Congress's fall legislation agenda,

Senate Majority Leader Mitch McConnell vowed Wednesday to lead a "historic

effort" to overhaul the U.S. tax code, adding he hopes Democrats will join an

effort that could transform the American economy.

     But Senate Minority Leader Chuck Schumer quickly responded by saying that

Republicans appear poised to take a partisan approach to tax reform legislation,

adding that such an approach would fail.

     The sharp exchanges on the Senate floor between McConnell and Schumer

suggest the political positioning that is already underway for one of the fall's

signature economic debates.

     Speaking first, McConnell said comprehensive tax reform is the most

important action policymakers can take to boost the economy and help middle

class Americans.

     "It's no secret that the current tax code is overly complex, highly

punitive, and makes it harder for individuals and small businesses to succeed,"

he said. 

     "Fortunately, we now have a once-in-a-generation opportunity to

fundamentally rethink it. It's been over three decades since that last

happened," McConnell said. 

     He said the failure to modernize the tax code has hurt American firms

trying to compete internationally.

     "There is a great deal of bipartisan consensus about what ails our tax

code, and my hope is that our friends on the other side of the aisle will join

with us in a serous way to address it," he said. 

     McConnell said tax reform will be developed in the Senate Finance Committee

and the House Ways and Means Committee--and the process will be open to ideas

from both parties.

     "This won't be an easy process, but the people we represent are depending

on us for help," he said. 

     He said Congress should be able to approve tax reform this year.

     Speaking after McConnell, Schumer said Republicans have indicated they will

push tax reform through Congress through a special budget reconciliation process

that requires 50 votes in the Senate, the traditional tax writing process that

is in effect requires 60 votes--and a bipartisan coalition.

     Republicans have a 52 to 48 majority in the Senate.  

     Schumer said McConnell's use of reconciliation threatens to "close the door

on Democrats" to the tax writing effort.

     Schumer said McConnell has "drawn down the curtain before the play has even

begun."

     Schumer likened the GOP approach on taxes to the one Republicans employed

on health care. He called it "another dead end road for Republicans."

     He said Republicans "haven't yet learned the lessons of health care" which

is that broad bipartisan coalitions are needed when tackling major issues.

--MNI Washington Bureau; tel: +1 202-371-2121; email: john.shaw@marketnews.com

[TOPICS: M$U$$$,MC$$$$,MFU$$$,MGU$$$]