Influential Democrat Sees Cooperation With GOP on Tax, Regulations

With a unified Republican government on its way into Washington, Rep. Jim Himes will play a key role in crafting how moderate Democrats deal with the next administration. On some major economic issues, they share common ground with President-elect Donald Trump.

Himes, who represents a wealthy district in southern Connecticut and previously worked in the financial services industry, became the chairman of the economically moderate New Democrat Coalition at the beginning of this Congress. In a Tuesday interview, he said the coalition will continue its focus on tax, trade and regulatory issues that his predecessor, Rep. Ron Kind (D-Wis.) championed.

Investing in infrastructure and rewriting the tax code are the top two items where the New Democrats are hoping to work with the new GOP government, Himes said. “The idea of a more competitive and simplified tax code … is something that we could get really excited about.”

But Himes made it clear that, like Kind, he will continue to pressure Republicans to talk about how to realistically pay for a reduction in tax rates that is expected as part of tax reform. He called the House GOP tax blueprint “incredibly fiscally irresponsible.”

“My head spins when I think of the 24/7 focus on debt and deficits in the last eight years. And now all of a sudden debt and deficits are priority Number 372 for the Republican caucus,” Himes said.

The blueprint’s focus on border adjustability, which would favor exports over imports in the tax code, also has Himes and other members of the New Democrat Coalition worried. Himes thinks it could lead to challenges by other countries in the World Trade Organization.

The New Democrat Coalition is also prepared to swat away attempts to weaken the 2010 Dodd-Frank Act. Himes is one of 11 members from the coalition serving on the House Financial Services Committee.

Still, the coalition could find room to work with the GOP on fixes to the law’s designation of too-big-to-fail institutions and providing some regulatory relief based on capital and liquidity.

Himes said the Financial CHOICE Act, which Financial Services Committee Chairman Jeb Hensarling (R-Texas) has put forward as his alternative to Dodd-Frank, has some strong ideas, but it also contains non-starters such as the repeal of the restrictions on proprietary trading.

“We would love to engage in the project of asking whether our regulatory apparatus is well calibrated,” Himes said. “But you can’t do that when you’ve got a good idea sandwiched between Republican fever dreams.”

One of those “fever dreams” would change the structure of the Consumer Financial Protection Bureau. Himes is worried that the effort to convert the CFPB from a single-director-led agency to a nonpartisan commission could neutralize the bureau’s mission pursuit. He compared that scenario to the current Federal Election Commission, which has come under criticism for not effectively enforcing campaign finance laws.

Still, Himes signaled that Democrats probably won’t like what Trump has in store for the CFPB even if the governance structure remains intact.

“I suspect that some of my Democratic colleagues, when they get a whiff of Donald Trump’s first appointment as director of CFPB, they may scratch their heads on this issue,” he said.

 

Correction: A previous version of this story misstated the number of lawmakers from the New Democrat Coalition serving on the House Financial Services Committee.

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