Washington Republicans continue to rally around the only idea that seems to unite them these days, which is the prospect of major tax cuts. But they have a problem or two to overcome.
First, they still don’t have a bill, and generally speaking, it’s hard to pass a bill unless you have a bill in the first place. They also don’t have a plan on which to base a bill. They don’t even have an agreement among their fellow Republicans on which they might base a plan, on which they would then base a bill, which they would then attempt to pass as law.
Also, it’s the middle of September. As far back as February, President Trump was promising that the tax plan was already “very well finalized.” I know it’s shocking to say, but that appears to have been a lie. Then they promised to have a plan by April. Then they promised to have a bill drafted, passed and signed into law by August.
Like I said, it’s the middle of September.
Like I said, that’s a problem.
The new goal is to go from having no agreement in September to having a major new tax reform law enacted by the end of December. The White House has announced a 13-state campaign-style swing by Trump to build support for this as-yet-non-existent plan, and Trump himself is getting impatient:
The model for this effort — cited by Trump, House Speaker Paul Ryan and other GOP leaders — is of course the historic tax-reform bill signed into law by President Reagan back in 1986. That massive piece of legislation modernized almost all of the U.S. tax code, and is widely considered one of the greatest congressional achievements of that generation.
So if that’s the model, it seems worthwhile to look back in history to see how they pulled it off.
♦ They pulled it off at the end of a careful three-year process, beginning with the drafting of a detailed reform proposal by Reagan’s Treasury Department, followed by extensive economic analysis, input from experts and open debate, followed by revisions, more analysis and more debate. Today’s Republicans are going to attempt that same feat in three months.
♦ They pulled it off because Democrats and Republicans worked together, across party lines, trying to find common ground and in the end succeeding. This time around, Democrats are being totally excluded from any substantive discussion. They have no knowledge of what might be proposed, and certainly no input.
♦ They pulled it off thanks to two years of committee hearings and debates, most of which were open to the public. The House Ways and Means Committee took testimony from more than 450 witnesses; the Senate Finance Committee held another 33 days of hearings in which every provision of the bill was analyzed. Everybody had the chance to voice an opinion and become comfortable with its provisions. More than 30 years later, none of that has yet occurred or is scheduled to occur.
♦ They pulled it off because a popular president fresh off a landslide victory threw his considerable weight and charm behind its passage, and because that president had highly respected professionals on his staff. Reagan lobbied congressmen personally, and at one point even went to Capitol Hill to plead for the legislation. Trump, in contrast, lost the popular vote and according to Gallup hasn’t been above a 40-percent approval rating since June. His relationship with congressional Democrats is abysmal, it may be even worse among GOP leadership, and his staff is a hot mess.
♦ They pulled it off because from the beginning, the Reagan administration agreed that tax reform should not be used as a subterfuge to either increase the deficit or to shift the tax burden away from the wealthy. Taking those controversial goals off the table allowed legislators to focus on the real goal of rationalizing and simplifying the tax code. This time around, while we don’t yet have a bill, plan or even agreement, every indication is that the GOP proposal will add significantly to the debt and benefit largely the wealthy.¹
As the comparison above demonstrates, today’s GOP is taking a very different path than the approach that led to success back in 1986. They’re doing it in secret, on a strictly partisan basis, hoping to spring an incredibly complex and unvetted bill on Congress and then force it into law quickly, before it can be examined too closely. In other words, they’re repeating the strategy they followed in trying to repeal and replace Obamacare.
For the record, the successful 1986 tax reform effort was approved in the House by a bipartisan vote of 292 to 136; in the Senate, it passed by a bipartisan vote of 74 to 23.
And how did that Obamacare vote go again?
¹Last month, Chuck Schumer and 44 other Senate Democrats offered to work with President Trump and Senate Republicans on a bipartisan tax reform bill, including passage of provisions to “promote domestic investment (and) modernize our outdated business and international tax systems.”
In other words, Democrats are willing to support legislation to help repatriate corporate profits stranded overseas and to lower the corporate income tax rate by eliminating corporate deductions and dodges, both of which are important GOP goals. However, the Democrats conditioned their offer on the same ground rules agreed to by Reagan and other Republicans in 1986:
- “… we believe that tax reform should not increase the tax burden on the middle class. In addition, any reform effort should not benefit the wealthiest individuals, who have already seen outsized benefits from recent economic gains while working-class wages have remained stagnant.”
- “Deep cuts to our corporate, individual, and other tax rates are very costly. We will not support any effort to pass deficit-financed tax cuts, which would endanger critical programs like Medicare, Medicaid, Social Security and other public investments in the future.”
There has been no GOP response to that offer.