The Washington PostDemocracy Dies in Darkness

Opinion Is the GOP making the worst possible tax bill?

House Speaker Paul Ryan (R-Wis.) talks to reporters after a House Republican Conference meeting at the Capitol in October. (Chip Somodevilla/Getty Images)
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The Post reports:

Senior Republican negotiators were close to reaching a deal Tuesday to reduce the tax rate for high-income households from 39.6 percent to 37 percent, blowing past political concerns about aiding the rich in order to ease passage of a $1.5 trillion tax package.
The movewhich would still need to gain the support of enough Republican lawmakers in both the House and Senate, follows complaints from wealthy taxpayers in New York and elsewhere that their taxes could go up under the legislation because of other changes it makes to the code. It also follows pressure from conservative House Republicans who complained the tax plan did not do enough to bring down top rates.
Importantly, the changes would go far beyond addressing the complaints of wealthy New Yorkers and Californians and would lower taxes for top-earners across the country.

If lawmakers were trying to make a budget-busting bill, a grotesque giveaway to the rich, they could hardly be doing a “better” job. They seem bound and determined to shut out criticism, even from the voters themselves:

A senior White House official disputed there would be any political price for the tax plan, criticizing polls show[ing] it is deeply unpopular.
These polls are “not a reflection of what the American people think about what we are doing,” the official said. “Does anyone on the planet actually believe that hard-working Americans don’t want lower taxes and a simple, easy-to-understand tax code?”

Perhaps the Trump brain trust should consider that voters have figured out that this particular bill isn’t going to help them but is instead a reward for donors and a big fat Christmas president to Trump and others who’d enjoy a 25 percent pass-through rate, repeal of the estate tax and a new, lower top marginal rate. According to polls — I know, who needs facts?! — that’s exactly what voters are saying. (By the way, it’s amusing how Republicans’ self-delusion sounds so much like the Democrats’ in 2009, when they were trying to convince themselves that Obamacare would be great politics.)

The Marist poll finds:

Americans who earn less than $50,000 annually (60%) say the legislation will mostly harm them. Fewer residents who earn more annually (46%) think the bill will hurt their family financially.
Six in ten Americans (60%) also think the tax bill will mostly help the wealthy. More than one in five (21%) say it will aid the middle class, and 4% believe it will mostly assist the poor. 15% are unsure. . .
In general, residents perceive the president’s policies to be directed more toward helping the wealthy. 61% of residents have this view while 27% say Trump’s agenda benefits the middle class. Only 2% report his policies are for the poor, and 10% are unsure. These findings are similar to those reported in November.
While more than six in ten Republicans (63%) perceive President Trump’s policies to target the middle class, there has been a decline in that proportion since last month (69%). Most Democrats (91%) and many independents (62%) perceive the president’s policies to boost those who are already better off. This is little changed from previous Marist Poll survey findings.

It’s a mystery why Republicans don’t try to improve the bill, make it more politically palatable, align it with their own rhetoric and improve it substantively. Cynics would say that Republicans wanted a big, fat tax break for themselves and their donors. That’s precisely what they came up with. So, case closed. However, two other factors may also be at work.

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First, senators are running scared and moving fast, barely understanding what they are doing and unwilling to seriously question leadership. If a conscientious lawmaker like Sen. Susan Collins (R-Maine) paused to really study the numbers, she wouldn’t make glaring misstatements of fact. Her statement that two health-care measures would make up for repeal of the individual mandate was once again debunked by an outside group, which found that her assertion “fails to acknowledge that the CBO analysis (finding that mandate repeal would increase premiums by 10 percent and decrease coverage by 13 million) assumes the continuation of CSR payments that would be restored under Murray-Alexander.” The report continued:

Moreover, the CBO’s analysis of the impact of withdrawing CSR payments showed that “Gross premiums for silver plans offered through the marketplaces would be 20 percent higher in 2018 and 25 percent higher by 2020.” The 10 percent premium increase estimate for individual mandate repeal in the CBO is therefore over and above the premium increase already underway from the Trump Administration’s decision to stop CSR payments. Similarly, neither the CBO nor Avalere has examined the ability of the Collins-Nelson reinsurance funding to mitigate or offset the damage to premiums and coverage that would result from individual mandate repeal.

Understandably, Collins is under huge pressure to toe the partisan line, but one cannot help think that a methodical pace with open hearings would expose some of these pitfalls and result in better legislation. Republican leaders, however, don’t trust their own members and therefore feel compelled to race through a half-baked, badly understood plan.

Second, they’re making a bet that the economy is improving on its own, people’s incomes will rise and their handiwork will be associated with good economic times, not a massive transfer of wealth to the very rich. The Committee for a Responsible Federal Budget reiterates:

The Joint Committee on Taxation (JCT) released its dynamic analysis of the House’s version of the Tax Cuts and Jobs Act (TCJA) yesterday. JCT’s analysis suggests the House bill would increase economic growth by roughly 0.1 percentage points per year over the next decade, which is similar to their estimate of the Senate bill. Even after accounting for this growth, JCT finds the tax bill would still cost over $1 trillion over a decade. These estimates are in line with those from outside organizations and in stark contrast to the 0.7 percentage point growth boost claimed by the Treasury Department.
But these lawmakers figure, maybe they’ll get lucky and ride the wave of a booming economy; if not they’ll be other factors to blame. In short, the temptation not to care about the merits and the details in search of a quick political win is overwhelming.

In short, the bill doesn’t deliver on the growth. It produces lots of debt, with the very rich as the primary beneficiaries.

The GOP’s legislative “process,” if one can call it that, should highlight the truism that when the process is bad (e. secretive, rushed and haphazard) you’re going to get bad results. Republicans are betting that this will go unnoticed — and they may be right. Just because they are cynical, dishonest and irresponsible doesn’t mean they haven’t figured out the politics. It will be up to Democrats to explain just how bad the GOP’s work product really is.

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