Failure to Pass the GOP Health Care Bill Could Doom Tax Reform This Year
Policy + Politics

Failure to Pass the GOP Health Care Bill Could Doom Tax Reform This Year


During the congressional Republicans’ retreat in Philadelphia in late January, House Speaker Paul Ryan (R-WI) outlined a highly ambitious legislative agenda for the year.

Delivering an electronic chalk talk for members behind closed doors, Ryan predicted that the GOP would repeal and replace Obamacare by April, fund President Trump’s border wall shortly after that, and then enact a sweeping and historic package of corporate and individual tax cuts by August – just in time for members to depart for a summer vacation.

Related: The GOP’s Charge of the Obamacare-Lite Brigade

Ryan, the quintessential policy wonk on Capitol Hill, outlined a legislative scheme to use obscure budget reconciliation rules to fast track passage of the health care and tax legislation and circumvent any threat of Democratic filibusters. By the time he was finished with his presentation, Ryan reportedly received a standing ovation and cheers from the lawmakers who attended the session.

Yet two months later, Ryan’s flow chart of legislative action is being threatened by his own party in the House and Senate, and everything is riding on the leadership somehow prevailing in the two chambers.

That’s because the health care replacement legislation is the lynchpin of the Trump-GOP agenda for the coming months. If that legislation goes down – despite Republican majorities in the House and Senate and a Republican sitting in the White House for the first time in eight years – that could set off a ripple effect that sets back the rest of the agenda, beginning with trillions of dollars of new tax cuts long advocated by Trump and Ryan.

Trump and Ryan have both devised detailed descriptions of what they want to achieve. And while they are not identical, both approaches would provide massive tax cuts for individuals and businesses – especially for the wealthiest Americans -- and contribute substantially to the long-term debt absent real offsetting cuts and savings.

Related: A Politically Damaged Trump Will Try to Rally GOP Behind AHCA

“This is so basic to what we’ve promised over the last few elections,” Senator John Cornyn (R-TX), the majority whip, said of the health-care legislation in an interview with Bloomberg. “I think if we fail to keep this promise then I think it makes the rest of our work much, much more difficult to accomplish.”

Stan Collender, a Washington budget expert, said in in an interview yesterday, “It would be much better for Trump and congressional Republicans to win first on ACA repeal and replace and create some seeming political inevitability to tax reform.”

“All those who hope for tax reform shouldn’t abandon ship,” he added. “But just know that there will be some opponents of the leadership and the Trump White House that are going to feel that if they beat them once, they can beat them a second time.”

Ryan and President Trump have been frantically engaged in a series of behind the scenes negotiations with Republican conservatives and moderates to salvage the House GOP’s American Health Care Act before the first big scheduled vote on the House floor on Thursday.

Trump sought to rally House Republicans during a Tuesday morning appearance on Capitol Hill. He warned the lawmakers that they could lose their seats and the Republican majority in the 2018 mid-term election if they fail to deliver on their pledge to dismantle and replace the Affordable Care Act.

Related: Trump’s Big Cuts to Medical Research May Not Get Past Congress

Trump singled out Rep. Mark Meadows (R-NC), chair of the arch conservative House Freedom Caucus, for a special warning. The blustery, hard-charging Trump suggested that he might even campaign against him if the Republicans fail to pass new health care legislation in the House and Senate.

Yet Meadows, one of the sharpest critics of the House GOP health plan, was unfazed by the threat – one that White House Press Secretary Sean Spicer later dismissed as a joke by the president. Meadows was asked by reporters whether there were at least 21 Freedom Caucus members opposed to the legislation – or just one less than the number of Republicans it would take to stop the bill, assuming all Democrats vote against it. He replied “yes,” according to The Hill.

Even if Trump and Ryan manage to squeeze out a bare majority for the bill by knocking heads and offering last-minute concessions, the political terrain in the Senate is far more hostile to the legislation.  Critics on both sides of the aisle are worried about rising premium costs, inadequate subsidies, the loss of coverage for millions of their constituents and uncertainty over the fate of Medicaid for the poor.

An unholy alliance of conservatives including Sens. Ted Cruz of Texas, Rand Paul of Kentucky and Mike Lee of Utah and more moderate senators including Susan Collins of Maine and Lisa Murkowski of Alaska may all stand in the way of the bill even making it to the floor for a vote next month.

Related: With Medicaid Costs Soaring, Republicans Plan Dramatic Eligibility Changes

The GOP fiscal and budget agenda has been so closely intertwined this year that something like the defeat of the AHCA would have a falling dominoes effect on everything else. For example, the Republican health care replacement plan includes the repeal of more than $800 billion of Obamacare tax hikes, with the lost revenue offset by corresponding cuts in Medicaid spending.

Those long-term revenue reductions will be needed by the Republicans later this year in devising a “revenue neutral” tax cut plan that meets the special budget reconciliation rules that bar actions that result in a net increase in the deficit. Those special rules will be essential to the Republicans in passing the tax package with a simple 51 vote margin in the Senate, instead of the usual 60-vote super majority needed to get just about anything done in the Upper Chamber.

Ryan recently raised the possibility that the tax cut package would also be used as the vehicle for raising the debt ceiling to avoid a first-ever default on the U.S. debt this fall If the tax cut is delayed – or even put off until next year – the GOP leadership would have to find some other legislative vehicle to carry the unpopular debt ceiling increase.

There are other highly important fiscal and budgetary chores to be dealt with this year that could be temporarily sidetracked or adversely impacted because of lost momentum. For one thing, Congress has yet to finish work on this year’s fiscal 2017 spending package that runs through Sept. 30. That process has been complicated by Trump’s new budget plan unveiled last week, that seeks additional military spending this year above the existing cap.

Related: Budget Group Says Changes to AHCA Negate Half of Deficit Savings

And there is likely to be a big fight over Trump’s call for construction of a $25 billion security wall along the U.S. border with Mexico.

Trump was expected to show extraordinary mojo and clout in pushing through GOP programs this year. Ryan and Senate Majority Leader Mitch McConnell (R-KY) both feared and applauded Trump’s political clout and communications skills coming off the 2016 campaign. They sought to harness that power in pushing through their agenda.

But Trump may be losing his influence just when he and his party need it most. Trump’s erratic behavior with lawmakers and foreign leaders alike have raised concerns about his governing style and frequent self-inflicted political wounds. Now he is facing arguably the biggest crisis of his young presidency.

The FBI and Justice Department this week revealed an ongoing federal investigation into whether Trump’s campaign advisers colluded with the Russians who hacked into Democratic National Committee emails as part of an effort to influence the outcome of the 2016 election and help Trump defeat Democrat Hillary Clinton.

Moreover, FBI director James Comey and other top intelligence officials have now confirmed that Trump lied two weeks ago in claiming on his Twitter account that former President Obama wire tapped Trump Tower during the campaign.