The move would give greater power to one of President Donald Trump’s favorite Cabinet members: budget director Mick Mulvaney. | Evan Vucci/AP Photo Mulvaney nears victory in struggle with Mnuchin on tax rules

The White House is poised to give its budget office greater control over some of the Treasury Department’s regulations, handing budget director Mick Mulvaney a victory in a months-long power struggle with Treasury Secretary Steven Mnuchin, according to three sources familiar with the discussions.

The move, which could come in the next few weeks, would end the autonomy the Treasury Department has enjoyed since the 1980s when it comes to issuing tax rules, while giving greater power to one of Trump’s favorite Cabinet members at the expense of another.


The highly sensitive debate has consumed the attention of top officials at both agencies. At stake is the final say over IRS regulations — and the implementation of the Republicans’ tax law.

In recent weeks, the White House’s top attorney, Don McGahn, became involved in mediating this tussle — and at one point, Mnuchin even considered personally appealing to the president, according to one Republican close to the White House. Among some regulatory and budget experts, there is a sense that tax laws need more input from agencies outside of Treasury since they often affect billions of dollars.

A final and formal decision is expected in the next few weeks. A senior official at the OMB said the office does not “discuss ongoing and pre-decisional processes.”

A Treasury spokesperson said: “Treasury and OMB are working constructively together to reexamine the existing review process for tax rules.”

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Meanwhile, downtown lobbyists have been keenly tracking the debate as they seek to influence the outcome of the new tax law. The move raises the possibility that key regulations surrounding the law — especially on the nuances of the international rules and the taxation of certain types of businesses — could be delayed if they must pass through both Treasury and OMB's Office of Information and Regulatory Affairs.

“This is more than just adding a player to the team roster. This is putting an extra person on the court. People will need new playbooks — offensive and defensive — as the tax game is changing,” said Sage Eastman, a lobbyist for Mehlman Castagnetti Rosen & Thomas and former senior counselor to the House Ways & Means Committee under former Chairman Dave Camp.

The change is also likely to spark a strong reaction on Capitol Hill, where different Republican factions are pushing for either the OMB or Treasury to have dominance on tax rules.

House Ways & Means Chairman Kevin Brady (R-Texas) has been Treasury’s most vocal, public advocate on the Hill, arguing that the agency should keep its exemption on regulation and guidance coming out of the IRS. But a handful of Republican senators and right-leaning regulatory experts have argued that OMB should have more say over these types of regulations and guidance.

Brady has declined to answer when asked for his concerns over potential delays, and his counterpart on the other side of the Capitol, Senate Finance Chairman Orrin Hatch (R-Utah), has also been measured when asked about the changing dynamic.

“Chairman Hatch is closely watching the development of IRS rules on the new tax law, and is confident that OMB and Treasury will strike the right balance to ensure a transparent regulatory process,” said an email from his committee’s communications director, Julia Lawless.

But other Republicans in Congress have privately grumbled about it, with more than a couple of them questioning the lack of tax experts at OIRA which would be directly involved in the extra layer of regulatory analysis. Staffers there could be biting off more than they can chew, according to GOP lawmakers who agreed to discuss the issue confidentially to avoid picking a more public fight.

The head of OIRA, Neomi Rao, has publicly said the extra scrutiny by her team would add time to the regulatory process — even if, behind closed doors, the OMB has fought to have more control over the process. And in contrast to Treasury rule-writers, OIRA isn’t known for openly inviting third-party input from the lobbying community and other outsiders.

“The OMB is good at doing cost benefit, but they are not good at doing tax. They have no experience whatsoever in tax law,” said Mark Mazur, former assistant secretary for tax policy at Treasury and director of the nonpartisan Urban-Brookings Tax Policy Center. “In order to do a good job, they would have to hire 20 tax attorneys, which is what Treasury already does. You are duplicating the assets that you already have.”