The Washington Post -Opinion
Democracy Dies in Darkness
A Republican ‘win’ on the tax bill will actually be a loss
By Jennifer Rubin November 20, 2017
President Trump, flanked by Office of Management and Budget Director Mick Mulvaney, left, and Treasury Secretary Steven Mnuchin, sits down with staff members during a federal budget luncheon at the White House in Washington in February. (Melina Mara/The Washington Post)
Democrats are reaching the conclusion that the GOP tax bill — with huge benefits for the rich and elimination or limits on the state and local tax deduction — could be a Pyrrhic victory for Republicans. The Post reports:
A University of New Hampshire poll released Tuesday found the tax bill already underwater, with just 39 percent of voters in support. A majority of New Hampshire voters favored the bill’s expanded child tax credit, but just 35 percent favored its slash to corporate taxes, which Republicans have described for months as a job creator. But the talk of changes to state tax deductions overwhelmed all.
“A lot of people here work in Massachusetts and pay some of those taxes,” said Chris Pappas, a member of the state’s Executive Council who’s now running for the Manchester-based 1st Congressional District. “They’re going to get whacked if they cut the state and local tax deduction.”
Democratic confidence about fighting the tax cuts has also been bolstered [by] experience in recent years. In 2009, the party passed a stimulus package with little Republican support, and waited for voters to appreciate its payroll tax and alternative minimum tax cuts. In a sluggish 2010 economy, Democrats were blown away, with voters largely unaware of minor changes to their taxes.
Democrats are already polishing their campaign themes, arguing that the middle class will get hit twice — once by the tax bill and again by the cuts in federal spending that will be needed to pay for it. (“At the New Hampshire dinner, Rep. Tim Ryan (D-Ohio), who just months earlier had warned his party not to rule out a tax plan, described a Republican Party that would put suburban and working-class taxpayers in hock.”)
Republicans face two additional issues — the real cost of the bill and the meager economic results it is likely to generate.
Mulvaney: White House may drop the individual mandate repeal to pass a tax bill. White House budget director Mick Mulvaney said on Nov. 19 that they would remove the repeal of Obamacare’s individual mandate if “a good tax bill can pass.”
As to cost, Mick Mulvaney, director of the Office of Budget and Management, has no real answer to the argument that the tax bill is using a phony sunset provision to disguise its actual cost. On “Meet the Press,” there was this exchange:
MULVANEY: We’re using reconciliation so that we only need 50 votes in the Senate instead of 60. In order to do that the certain proposals can only have certain economic impact. And one of the ways to game the system is to make things expire. The Bush tax cuts back in early 2000 did the same thing. They supposedly would expire after nine years. What we tell folks is this is if it’s good policy it will become permanent. If it’s bad policy it will become temporary. That’s just the way that it is. So this is done more to force, to shoehorn the bill into the rules than because we think it’s good policy.
ANDREA MITCHELL: Isn’t that an admission though that it’s a gimmick. You’re saying it’s a $1.5 trillion tax cut. The impact on the deficit. But in fact, it’s, according to most analyses, $2.2 trillion.
MULVANEY: Well, not most analyses …
MITCHELL: Well, a non-partisan analysis. And the fact is that you’re squeezing it into these rules. But you really do intend for it to be extended down the road which will explode the deficit even farther … We’re not taking a political point of view here. We are actually going by nonpartisan groups like the Committee for a Responsible Federal Budget, all the impact on the exploding deficit which will impact future generations.
In addition, the $1.5 trillion limit on debt expansion in the budget assumes billions of cuts in entitlements — something President Trump said he would never do and something moderates such as Sen. Susan Collins (R-Maine) have said they won’t allow. The explosion of debt that Republicans will unleash will not only be a drag on growth but also exert pressure to make cuts in both defense and domestic spending.
Moreover, the premise of the bill — we need to jump-start the economy to create jobs — is flawed. We are already at “full employment,” and the bill’s incentives to reinvest in the U.S. economy make little sense. For one thing, U.S. businesses already are sitting on mounds of cash; for another, U.S. businesses — as senior economic adviser Gary Cohn learned — are not keen on using any tax savings to hire more workers or pay them more.
David Frum sums up the consequences of the GOP’s legislative recklessness:
By refusing to hold hearings and forestalling Congressional Budget Office scoring, Republicans have moved fast. But they have not convinced the public mind to recycle an antique but still meaningful phrase. They may win a vote. They have not won the argument. What they are doing will not last, and will therefore not deliver any of the promised benefits. It’s the equivalent of a 1980s-style corporate raid, which will yield a hasty and morally dubious windfall for a few insiders while damaging the longer-term economic health of the larger enterprise.
In sum, it’s quite likely that by the midterms and certainly by the 2020 election, the only real results of the tax bill will be bigger debt and greater income inequality. Sure, Democrats would like to defeat a bill that they consider to be rotten policy. They’d be delighted to see Trump humiliated by another legislative defeat and watch as the GOP’s circular firing squad forms. Nevertheless, watching vulnerable Republicans cast votes for a very unpopular bill that will likely have little benefit for all but the super-rich would be a fine consolation prize.
Jennifer Rubin writes the Right Turn blog for The Post, offering reported opinion from a conservative perspective. Follow @JRubinBlogger