UPDATE: Trump to propose massive tax cuts for businesses

President Donald Trump is proposing "the biggest tax cut" ever, even as the government struggles with mounting debt, in an effort to fulfill his promises to stimulate job creation and middle class prosperity.

White House officials on Wednesday were to release broad outlines of a tax overhaul that would provide massive tax cuts to businesses big and small. The top tax rate for individuals would drop by a few percentage points, from 39.6 percent to the "mid-30s," according to an official with knowledge of the plan.

Small businesses would see their top tax rate go from 39.6 percent to the proposed corporate tax rate of 15 percent, said Treasury Secretary Steven Mnuchin in a Wednesday morning speech.

Mnuchin said the proposed overhaul would amount to "the biggest tax cut" and the "largest tax reform" in U.S. history. He said the lower tax rate for small business owners—a category that under current legal definitions could include doctors, lawyers and even companies such the Trump Organization—would not be used as a loophole for the rich to reduce their tax burden.

But the Treasury secretary declined to say there would be no absolute tax cut for the wealthy, a promise he made last year during a TV interview. "Our objective is simplifying personal taxes," he said.

The plan will not include provisions to increase spending on infrastructure projects, one possible sweetener that could help gain congressional support.

The proposal faces a massive hurdle in that lower rates would blow a hole in the budget, possibly causing the national debt to soar by more than a trillion dollars over a decade.

Without additional revenue sources to offset the tax cuts, the broad proposal would need Democratic support to clear the required 60 votes in the Senate. Congressional Republicans could pass changes on their own with a simple Senate majority, but that would only be temporary under Senate rules.

Mnuchin said he would like the tax overhaul to be permanent, but "if we have them for 10 years, that's better than nothing."

Trump sent his team to Capitol Hill Tuesday evening to discuss his plan with Republican leaders.

"They went into some suggestions that are mere suggestions and we'll go from there," said GOP Sen. Orrin Hatch of Utah, chairman of the Senate Finance Committee.

The White House's presentation will be "pretty broad in the principles," said Marc Short, Trump's director of legislative affairs.

In the coming weeks, Trump will solicit more ideas on how to improve the plan, Short said. The specifics should start to come this summer.

Short said the administration did not want to set a firm timeline, after demanding a quick House vote on a health care bill and watching it fail.

But, Short added, "I don't see this sliding into 2018."

Republicans who slammed the growing national debt under President Barack Obama have said they are open to Trump's tax plan, even though it could add trillions of dollars to the deficit over the next decade.

Echoing the White House, Republicans argue the cuts would spur economic growth, reducing or even eliminating any drop in tax revenue.

"I'm not convinced that cutting taxes is necessarily going to blow a hole in the deficit," Hatch said.

"I actually believe it could stimulate the economy and get the economy moving," he said. "Now, whether 15 percent is the right figure or not, that's a matter to be determined."

The argument that tax cuts pay for themselves has been disputed by economists from across the political spectrum. On Tuesday, the official scorekeeper for Congress dealt the argument—and Trump's plan—another blow.

The nonpartisan Joint Committee on Taxation said a big cut in corporate taxes, even if temporary, would add to long-term budget deficits. This is a problem for Republicans because it means they would need Democratic support in the Senate to pass a tax overhaul that significantly cuts corporate taxes.

Republicans have been working under a budget maneuver that would allow them to pass a tax bill without Democratic support in the Senate, but only if it doesn't add to long-term deficits.

Senate Majority Leader Mitch McConnell, R-Ky., said the Senate was sticking to that strategy.

"Regretfully we don't expect to have any Democratic involvement in" a tax overhaul, McConnell said. "So we'll have to reach an agreement among ourselves."

Democrats said they smell hypocrisy over the growing national debt, which stands at nearly $20 trillion. For decades, Republican lawmakers railed against saddling future generations with trillions in debt.

But with Republicans controlling Congress and the White House, there is no appetite at either end of Pennsylvania Avenue to tackle the long-term drivers of debt, Social Security and Medicare. Instead, Republicans are pushing for tax cuts and increased defense spending.

"I'm particularly struck by how some of this seems to be turning on its head Republican economic theory," said Sen. Ron Wyden of Oregon, the top Democrat on the Senate Finance Committee.

The assessment from the Joint Committee on Taxation was requested by House Speaker Paul Ryan, R-Wis., who has been pushing a new tax on imports to fund lower overall tax rates. Senate Republicans have panned the idea, and officials in the Trump administration have sent mixed signals about it.

The import tax is not expected to be part of Trump's plan.

Trump dispatched his top lieutenants to Capitol Hill on Tuesday to discuss his plan with Republican leaders. They met for about half an hour. No Democrat was invited.

Afterward, Hatch called it, "a preliminary meeting."

"They went into some suggestions that are mere suggestions, and we'll go from there."

Republicans have been working under a budget maneuver that would allow them to pass a tax bill without Democratic support in the Senate — but only if it didn't add to long-term deficits.

Senate Majority Leader Mitch McConnell, R-Ky., said the Senate was sticking to that strategy.

"Regretfully we don't expect to have any Democratic involvement in" a tax overhaul, McConnell said. "So we'll have to reach an agreement among ourselves."

Democrats said they smell hypocrisy over the growing national debt, which stands at nearly $20 trillion. For decades, Republican lawmakers railed against saddling future generations with trillions in debt.

But with Republicans controlling Congress and the White House, there is no appetite at either end of Pennsylvania Avenue to tackle the long-term drivers of debt—Social Security and Medicare. Instead, Republicans are pushing for tax cuts and increased defense spending.

"I'm particularly struck by how some of this seems to be turning on its head Republican economic theory," said Sen. Ron Wyden of Oregon, the top Democrat on the Senate Finance Committee.

Sen. Bob Casey, D-Pa., said, "On a lot of fronts, both the administration and Republicans have been contradictory, to say the least."

"There's no question we should try to reduce (the corporate tax rate), but I don't see how you pay for getting it down that low," Casey said. "Fifteen percent, that's a huge hole if you can't make the math work."

The Trump administration on Tuesday stuck with its assertion that tax reform could push economic growth above 3 percent. Commerce Secretary Wilbur Ross said that the combination of changes on taxes, trade and regulations being pushed by the administration would accelerate the pace of economic gains.

"There is no reason that we should not be able to hit that—if not beat it," Ross said at the White House news briefing.

Many economists are skeptical that growth could consistently eclipse 3 percent. The flow of workers into the U.S. economy has slowed because of retirements by an aging baby boomer population, while improvements in productivity have been sluggish.

Officials with the Federal Reserve estimate that the economy will grow at a 2.1 percent clip this year and at 1.8 percent in the longer run.