Republicans have a huge choice to make, an unusually binding decision on the next steps for their legislative agenda. It will determine the campaign promises they will be able to keep, and more importantly, the lived experience of millions of Americans. And it all comes down to one simple bill.
That bill is the Congressional budget resolution for 2018. It doesn’t make specific policy, just sets the course for the federal budget for the next year. But because of the unusual procedures Republicans have used to cut Democrats out of governing and avoid the Senate filibuster, they can either pass the budget resolution, and give up on repealing the Affordable Care Act until at least 2019, or put this bill aside, and commit to a far more moderate tax cut policy than currently envisioned.
Republicans used the 2017 budget resolution to set instructions for a health care overhaul through reconciliation, which requires only a majority vote in each chamber of Congress. The idea was to use the 2017 reconciliation bill for health care, and the 2018 bill for taxes (and potentially infrastructure investment).
But last week’s failure of the health care reconciliation bill in the Senate creates a dilemma. If there’s no 2018 budget resolution, Republicans can return to the health care reconciliation bill at any time before the end of next year. Circumstances could change, votes could flip and, not to be ghoulish, but John McCain could no longer be a U.S. senator. Republicans can wait out that process. But if they pass a 2018 budget resolution with reconciliation instructions, it would nullify the 2017 resolution. That would mean the health care bill is dead.
Now, the GOP could simply write health care instructions into the 2018 resolution, keeping the process alive. But they really want to move to cutting taxes, the one thing practically every elected Republican agrees on. And conservatives want the option of passing those tax cuts with a majority vote, without requiring Democratic input in the Senate.
The party leadership wants to move on from health care’s wreckage and show they can get things done efficiently. And the big money behind the scenes is pouring millions of dollars into advertising and public events supporting tax cuts, air cover that didn’t exist on health care.
But there’s a huge split among the Republican faithful. While polling shows the general public wants Congress to move on from health care, conservatives don’t. They are threatening retribution in next year’s primaries for members of Congress who fail to finish the job on health care. And Republicans generally fear their conservative base tossing them out as much as, if not more than, losing gerrymandered, safe seats to Democrats.
The Trump administration has sent mixed messages. Trump has tweeted that senators shouldn’t be “total quitters” on the health care bill; he’s even threatened to revoke subsidies for members of Congress and their staffs if there’s no action. Over the weekend, White House budget director Mick Mulvaney restated Trump’s position: The Senate shouldn’t vote on anything else until it moves on health care. And Sen. Lindsey Graham has entered discussions with the White House over a new bill, which would simply deliver all health care funding to the states and let them figure it out. Graham believes it can garner 50 votes in the Senate and advance the process.
At the same time, Trump has events planned this week promoting a tax overhaul, and a proposed schedule of speeches across the Rust Belt in August. And the business community, which has only tepidly sold the Trump agenda, stands ready to spend massive resources to get their tax cuts.
So that would appear to be the choice: health care or taxes. But there’s a third option: If Republicans could strike a tax deal with broad bipartisan support, they wouldn’t need a budget resolution to enable a 50-vote threshold in the Senate. They could build a big-tent tax policy while keeping the 2017 reconciliation bill on ice and waiting for the winds to shift on health care.
What would a bipartisan tax deal look like? There are plenty of pieces floating around that Congressional Democrats have supported in the past, even if I don’t. Minority Leader Chuck Schumer co-authored a repatriation tax proposal with Republican Rob Portman in 2015, which would tax one-time revenues from a small tax on overseas profits and put the money toward infrastructure investment. In that deal, Republicans would get a permanent tax rate cut on overseas earnings. A middle-class tax cut would probably sway some Democrats, and if Steve Bannon’s desire for a 44 percent tax bracket for multi-millionaires is legitimate, that would attract liberals, too.
Billionaires funding ads on tax reform are not interested in higher tax rates on the rich, and ideologues in the House Freedom Caucus balk at increases in any part of the tax code. But a bipartisan bill might be the only path to deficit-neutral tax reform, which House GOP leaders claim to want. Last week, Republicans issued a joint statement on tax reform in which they killed the main revenue-raiser in their proposal, a so-called “border adjustment tax” that would have favored exports over imports. Without anywhere else to turn, raising money by taxing the super-wealthy could serve as the price for big business tax cuts, as Jeff Spross argued on Monday.
This kind of compromise would keep health care in the mix. Plus, the joint statement on taxes was surprisingly weak on details, revealing how ideological constraints could paralyze the effort and further expose the GOP as unable to govern. Republicans might need a bipartisan deal to succeed at getting anything passed.
This kind of deal would cut against the totality of Republican actions since the Trump inauguration: scornful of compromise, neglectful of Democratic input, determined to go it alone. There are bipartisan solutions staring Republicans in the face on several issues and they haven’t taken the plunge, whether out of stubbornness or fear of reprisal from their base.
That has put them in this quandary. If they want a Republican-only tax bill, they’ll have to give up on seven years of dreams to repeal Obamacare. If they want to keep repeal on the back burner, they’ll have to work with Democrats on taxes. Because Republicans don’t want to do either of these things, they may end up with nothing.
P.S. This is my last column for The Fiscal Times before I head off to other opportunities. I want to thank everyone at the operation for great encouragement and support the past three years.