Washington Republicans thought they had it all worked out.
Reconciliation, that was their answer. That relatively obscure budget process, requiring a mere Senate majority, and thus no Democratic votes, would be their secret passageway leading to destruction of the Obama Administration’s signature—if imperfect—American Health Care Act.
It turned out to be a long, politically self-destructive road to nowhere.
Lesson learned? Hardly. Get ready for the sequel—with, arguably, much more at stake.
Even as their seven-month quest to “repeal and replace” ObamaCare through budget reconciliation ran aground like the Hindenburg, Republican leaders in Washington launched their self-described “tax reform” plan—which looks more and more like massive tax cuts for corporations and the wealthy—down the same path.
During the health care process, commentators frequently expressed shock at the shady way Republicans were trying to pass legislation affecting one-sixth of the U.S. economy. That’s small potatoes compared with the potential impact of these tax cuts.
To get the lowdown on the Republican leaders’ newly announced tax bill plans, I spoke with Congressman Richard Neal of Springfield, Massachusetts—the ranking Democrat on the House Ways & Means Committee, which will write the House version of the bill. He, as much as any Democrat in Washington, is an insider to the process, meeting regularly about it with top White House officials as well as House leaders since January.
“I think you’ve seen the failure of reconciliation with the aftermath of the health care process,” Neal says.
Neal argues that there is a path to tax reform if Republicans abandon the reconciliation process. Many, if not most, Democrats want to update tax laws that have not been significantly changed since 1986—a lifetime ago in how business works, Neal notes. He sees recent economic growth, of just under 2%, as “steady if not exciting,” and would like to unleash more growth, with particular focus on wage growth.
It appears that the White House is softening to that message. RealClearPolitics reports that White House Director of Legislative Affairs Marc Short is considering abandoning the reconciliation process, in favor of building a bipartisan bill under regular process. “We’re not necessarily locked into that direction,” Short told the online publication about reconciliation.
That’s not the way congressional Republicans are acting, or talking.
Nor was there any suggestion of seeking Democratic votes Thursday, when the so-called “Big 6” of tax policy—House Speaker Paul Ryan, Senate Majority Leader Mitch McConnell, Treasury Secretary Steven Mnuchin, National Economic Council Director Gary Cohn, Senate Finance Committee Chairman Orrin Hatch, and House Ways and Means Committee Chairman Kevin Brady—declared their intent to get a tax reform bill signed by the end of the year. That was just hours before the health care reconciliation bill collapsed with a single thumbs-down motion from Arizona Senator John McCain.
Those six Republicans included nothing in their press conference or prepared statement that suggested even the appearance of appealing to congressional Democrats for votes.
Nor was there any mention of bipartisan outreach when Ryan and Brady discussed the plan on Maria Bartiromo’s Sunday Morning Futures.
Instead, they made clear that they intend to use the budget reconciliation process for tax reform—allowing passage in the Senate with just 51 votes, rather than the 60 needed to proceed with a normal bill—despite growing evidence that they cannot meet revenue requirements for reconciliation, or reach the level of unanimity within the party to succeed without Democrats’ help.
That leaves the GOP with the same problem they have faced with health care: very few votes to spare, but substantial differences among Republicans of different ideological stripes and from different parts of the country.
That’s reflected in the vagueness of the “Big 6” announcement on Thursday, and subsequent media appearances by Ryan and Brady. “It was big-picture without any specifics,” Neal says. That’s the only way the Republicans can maintain the illusion of unity, he suggests: “the more general the conversation, the more agreement there is.”
It’s not even clear that Republicans can even pass a budget resolution, in which to include the vehicle for a reconciliation bill later on. “I’m not sure they’re going to get a budget,” Neal says.
Neal’s not the only one saying that. Despite multiple promises and false starts, the House failed to finalize a budget before leaving for August recess. They don’t return until after Labor Day, at which point they have to deal with avoiding a government shutdown at the end of September, increasing the debt ceiling by roughly the same deadline, and reauthorization of several programs including Medicare and CHIP. Oh, and the White House is demanding that Congress try again to pass Obamacare repeal-and-replace before doing any of that.
Some reporting suggests that the only thing that might force divided Republicans to agree on a budget is the knowledge that they must in order to do tax reform via reconciliation. But, that’s also one of the sticking points: the budget language will set parameters for what the tax reform bill can include, including whether it needs to be revenue-neutral under static or dynamic scoring—that is, whether they can assume that the tax cuts will spur growth that helps erase the deficits they cause.
That internal budget argument is a big part of what led to Thursday’s one specific detail: the abandonment of Ryan’s Border Adjustment Tax (BAT). The Washington publication Roll Call reported earlier that House Freedom Caucus conservatives were refusing to agree to a budget if the BAT was still on the table.
That blows a trillion-dollar hole in the plan to make tax reform revenue-neutral, and to meet reconciliation rules. Both Ryan and Brady conceded that to Bartiromo on Sunday, but gave no clue, despite her repeated questions, of how they might make up that difference.
There are possibilities, such as dropping tax rates less than planned, closing some corporate tax breaks, or adding new revenue streams. Any of those would risk losing the support of some bloc of Republicans, or of Trump and the White House. Pull a different direction to get them back, and risk losing a different bloc.
Sounds a lot like the health care reconciliation effort all over again.
So far, as Neal suggests, Republican leadership who once vowed to pass the bill by May remains mute on all of these details.
That minimizes the bad reactions, but makes it hard do the public sales job they’re trying to peddle.
The idea was clearly to get tax reform into the conversation heading into the recess, but the Thursday announcement received minimal coverage. The topic didn’t even make it onto the major Sunday political talk shows. Brady got himself onto MSNBC’s Morning Joe Monday to talk about the tax bill, but the hosts barely let that topic even come up in the interview.
To be fair, trying to get anybody to pay attention to tax policy in the midst of all the health care and White House drama is like showing off the new carpet inside a burning house. But, given those fiascos, it’s not surprising Republican leaders are trying to change the topic to something new.
The surprise may be that they are insisting upon following the same playbook they’ve been watching fail all year.