Tax Reform Is Starting To Look A Lot Like Healthcare

After campaigning for seven years on the repeal and replacement of Obamacare, the GOP arrived in Congress at the beginning of the year with control of all three branches of government and a vision to swiftly repeal and replace the Affordable Care Act. However, they have since proved themselves to be almost incapable of building a party consensus on both what that means and how they should proceed with health care reform. Several different iterations of ‘Obamacare repeal’ have failed to make it to a vote, or have been voted down, and the Republicans have seemingly moved on; McConnell commented after the latest failed repeal bill that, “Where we go from here is tax reform”.

Whilst it may seem that tax reform would be easier, Republicans in Congress can all agree that they want to cut taxes, but the process is starting to look more and more like their failed healthcare process. The bill, which is being written in secret by Republican leadership, has already had its initial reveal pushed back one day until Thursday amid speculation that there are major internal disagreements. Bloomberg commented that,

“If the bill is released Thursday, one day later than planned, GOP leaders will have just 10 official legislative days before the holiday to do nothing short of rewiring the U.S. economic engine. To succeed, they must gain the support of a caucus that’s grumbling about being left in the dark, avoid lobbyists’ attempts to sidetrack the bill and win House passage on the sort of timetable that’s usually reserved for emergency legislation.”

According to a former House aide, internal strife and frustration have led to the delay, which he believes signals that Republicans could end up simply passing tax cuts, rather than tax reform, in a push to get something through Congress.

So far only a handful of people within the Republican party have seen the bill, prompting ill feelings from the rest of the party, some of whom feel left in the dark. This is eerily similar to the Senate version of the AHCA bill, which was also written in secrecy, completely bypassing the committee process. At the time, Julie Rovner, a Washington Healthcare writer since 1986, condemned the processed commenting that “the extreme secrecy is a situation without precedent, at least in creating health care law”.

However, there are some that seem happy enough with the decision leadership have taken to push the reveal back, “It suggests to me they’re really working on it in good faith,” said Representative Frank LoBiondo of New Jersey. “That’s really what I take out of it.” So perhaps Republicans will find it easier to stomach voting for a rushed tax reform bill than they did a rushed healthcare bill.

Senator John Kennedy, a Louisiana Republican, commented that once the bill is released that,

“All hell’s going to break loose… This is going to have plenty of cheesecake. But it’s going to have plenty of spinach. This is broadening base and lowering rates.”

It is clear that the Republicans expect the legislative process and the surrounding chaos to echo the events we saw as they struggled with healthcare reform, so there is little here to suggest a more successful legislative plan is being prepared. Some of the language being used by Republicans suggests that they are going to attempt to push the legislation through as quickly as possible. Senator John Kennedy commented that,

“If we need to, we’ll work through Thanksgiving. We’re going to get this done… This business of, well we ran out of time? That dog doesn’t hunt anymore. We’ll work nights. We’ll work weekends. We’ll work holidays.”

In stark contrast to the lengthy 15-month process to pass Obamacare, the Republicans attempted to ram through healthcare legislation as quickly as possible, and that seems to be just what they are preparing to do here.

After the healthcare bill that passed the House earlier this year bill was pulled before a vote Trump told CNN “Lots of different groups. Lots of factions and there’s been a long history of liking and disliking within the Republican Party long before I got here”. This hasn’t changed overnight and the delays, according to Politico, are due to disagreements over how to pay for the legislation. They reported that “at the center of the problem were questions about how to pay for the proposed $5.5 trillion in tax cuts.”

Susan Collins, who opposed several iterations of healthcare reform, has already come out against lowering the top rate of tax. She stated today that she doesn’t want the tax rate to be cut for people making over $1 million per year (though a “million dollar bracket” is already being discussed in the House), nor does she want the estate tax repealed – something Bernie Sanders has been very vocal about, but Trump is very supportive of.

Representatives of conservative interest groups left a meeting with House Speaker Paul Ryan on Tuesday afternoon offering conflicting views on how quickly the 20 percent corporate rate would be achieved. Add to this, disagreements over the property tax deduction and whether to alter 401k laws, and it is clear that uniting factions behind a tax reform bill (especially with a slim majority in the Senate) is going to be more difficult than everyone seemed to believe.

The general theory behind the bill, much like their numerous healthcare bills, does not enjoy the support of the public. According to Pew Research Center polling, just 24% of Americans say tax rates on corporations and large businesses should be lowered, while 52% say they should be raised, and 24% say taxes on incomes over $250,000 should be reduced, while 43% say they should be raised. Support for tax cuts for corporations among conservative Republicans (48%) and taxes on households with incomes over $250,000 (41%), is significantly higher than with moderate or liberal Republicans (support for both lies at 28%). Yet these policies are still not popular with the majority of voters, even within the extreme portions of their own party, which again begs the question, why will this be any different to healthcare reform?

Amongst other unpopular ideas pushed in the failed health care reform were massive Medicaid cuts, despite the fact that only 16% of Americans want to see Medicaid cuts and 45% want to see it expanded. At one point after the release of the Better Care Reconciliation Act one survey, by NPR, PBS NewsHour, and Marist, found only 17% of US adults approve of the bill whilst another survey, by USA Today and Suffolk University, found that only 12% supported the bill.

The only difference seems to be that there are no healthcare issues are attached here, since massive tax cuts were written into the numerous healthcare bills that ultimately failed to make their way to Trump’s desk. An analysis released by the Joint Committee on Taxation predicted that one of the House healthcare bill’s would have cut taxes by $662 billion over the next decade, primarily through repealing Obamacare taxes on the wealthy and healthcare industries. So perhaps the party will be easier to unite around simple tax cuts or tax reform, than tax cuts and healthcare reform combined, but it is beginning to look like it may be much more difficult than anticipated.

As was the case during the healthcare process, Republicans have chosen to use budget reconciliation to push through their bill through the Senate. Rather than attempt to build a cross-party consensus through bi-partisan work that would give legislative freedom (at least on budgetary issues), they are constrained by the budget rules associated with this obscure way of legislating as well as a divided party and a slim majority (not to mention a President wracked with scandal surrounding Russian collusion allegations). This will not be an easy battle for Republican leadership to win and if the precedent set by the healthcare process is anything to go by, they may not be able to pass anything at all.

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