PHILADELPHIA – Congressional Republican leaders said Thursday that they plan to move forward with legislation to provide $12 to $15 billion to pay for a wall along the U.S.-Mexico border.
But it is still unclear who will end up footing the bill for the gigantic construction along the 2,000-mile border – U.S. taxpayers or in some form, Mexico.
Trump and his aides insisted throughout a confusing day that Mexico would ultimately pay for the wall through, they said, reforms to the U.S. tax code. But Republicans were confused about whether such a change would be considered a tariff or a tax, the former of which many do not support. Lawmakers are also concerned that without such changes, there is currently no way to offset, or make up the costs elsewhere, of the enormous structure.
“Border security yes, tariffs no. Mexico is 3rd largest trading partner. Any tariff we can levy they can levy. Huge barrier to econ growth,” Sen. Lindsey Graham, R-S.C., wrote on Twitter late Thursday.
He added: “Simply put, any policy proposal which drives up costs of Corona, tequila, or margaritas is a big-time bad idea. Mucho Sad.”
In an address to lawmakers here, Trump said that his administration was “working on a tax reform bill” that would “generate revenue from Mexico” aimed at paying for the wall.
His spokesman, Sean Spicer, later told reporters that the wall could be paid for with a 20 percent tax on imports from Mexico, a line that some Republicans initially read as a reference to an existing House GOP proposal to tax imports known as a “border adjustment.”
By the end of the day, Spicer clarified that he was indeed talking about an idea House GOP leaders have floated – but that no final decisions had been made.
“By doing it that way we can do $10 billion a year and easily pay for the wall just through that mechanism alone. That’s really going to provide the funding,” said Spicer.
Later in the day, Spicer said, “One idea through comprehensive tax reform is that there could be this idea that Speaker Ryan and others have floated that through tax reform you could actually look at imports with countries that we have a trade deficit for, that can generate revenue.”
“What he’s referring to is border adjustment,”said Rep. Devin Nunes, R-Calif., a senior member of the House Ways and Means Committee, of Spicer’s initial remarks.
Nunes was referring to a proposal to tax all imports at a rate of 20 percent and exempt exports from tax entirely. Trump seemed to dismiss that plan earlier this month when he told the Wall Street Journal that the idea was “too complicated.”
A system of taxing all imports is often confused with a tariff because both systems effectively drive up the price of imports. The difference is in howthe two ideas are executed. A tariff is a punitive fee on specific goods and a border tax is a tax exclusion for exports. Republicans say their idea acts as an incentive for companies to buy U.S.-made goods.
Without some mechanism to pay for the wall – either through additional revenue generated in the United States or a plan, as the administration insists, Mexico – Republican concerns about building it could grow.
Asked at a news conference here Thursday morning whether spending on the wall would be offset, Ryan punted.
“As far as the offset, we’re going to wait and see from the administration what their supplemental [spending plan] looks like,” Ryan said. “I’m not going to get ahead of a policy and a bill that has not been written yet. But the point is we are going to finance the Secure Fence Act, which is the construction of the physical barrier on the border.”
Pressed on whether he could guarantee if the broader Republican agenda would not add to the deficit, Ryan did not respond directly.
“We’re fiscal conservatives,” he said. “What that means is we believe government should not live beyond its means.”
Asked about Spicer’s comments, Rep. Mark Meadows, R-N.C., who chairs the hardline Freedom Caucus, didn’t endorse the idea but didn’t fully reject it either.
“We have to explore a number of options on how to pay for that. You know, generally speaking, I’m against tariffs,” said Meadows. “You know, I look at it from an economic standpoint. At the same time, I don’t want to hamstring the administration in things they are willing to explore.”
Meadows said he was confident lawmakers could find immediate offsets of some kind to cover the costs of the border wall through the appropriations process. But he also sounded open to doing that after the fact.
“I’ll stay true to my commitment that we’re going to give the president the tools necessary – whether it is a non-offset spending on this on a short-term basis, that we find the offsets at a later date.”
For other Republicans, paying for the costs of the wall upfront is paramount.
“I generally don’t vote for anything that’s not offset,” said Sen. Jim Risch, R-Idaho, who added for emphasis, “everything needs to be offset.”
Aides to House Minority Leader Nancy Pelosi, D-Calif., argued congressional Republicans were being hypocritical.
“The same Republicans who howled ‘fiscal responsibility’ when it comes to investments to help working families are apparently willing to light billions of taxpayer dollars on fire and add to the federal deficit in order to build Trump’s useless border wall,” said Pelosi spokesman Drew Hammill in a statement.
Sen. John McCain, R-Ariz., told reporters here Thursday that lawmakers and officials need to be more precise when they talk about building a wall and that a single physical barrier likely will not suffice.
“When you say, quote, ‘build a wall,’ what does that exactly mean?” McCain said. “It means to me drones, technology, surveillance, all that. If you’re talking about just building a wall, history shows that you can tunnel under them, you can breach them and you can climb over them.”
McCain predicted that there will a “downpayment to begin construction” of border security, but it will not be anywhere near $15 billion.
Kelsey Snell in Washington and Paul Kane and Mike DeBonis in Philadelphia contributed to this report.