The Washington PostDemocracy Dies in Darkness

As the Senate nears a vote, it’s worth remembering how far from the norm this tax-reform push has been

Senate Majority Leader Mitch McConnell (R- Ky.) talks with the media Tuesday after Senate Republicans met with President Trump on Capitol Hill. (Alex Brandon/AP)

At some point soon, something unusual may happen on Capitol Hill: The Senate may pass a bill that has been a significant priority for President Trump, joining colleagues on the House side in doing so. This would be a first in the Trump era. After the House passed an overhaul to the Affordable Care Act earlier this year, Senate Republicans failed to do the same thanks to a split between moderates and conservatives over what it should include. The tax bill, then, takes another step toward something Trump’s been angling to accomplish since his inauguration: passing major legislation — regardless, it seems, of what it contains.

That’s the story that will dominate if the bill passes. There are other stories to tell, too, like the story of what the bill would actually do, a story which often gets sidelined. (Here’s The Washington Post’s rundown.)

Another story is this one: the odd, often stunning steps that led to the bill’s passage.

As the debate over reforming America’s tax system kicked off earlier this year, Fox News released the results of a poll showing that Americans generally thought reforming the tax system was unimportant. Fox’s headline — “Tax reform important to voters” — wasn’t really backed up by the results of the poll, which found that a plurality of Americans (49 percent) thought passing tax reform was “extremely” or “very” important, while 46 percent thought it was “somewhat” or “not at all” important. Among Trump voters, there was more enthusiasm. But overall, Americans could take it or leave it.

More recently, the Kaiser Family Foundation asked the question in a different way, comparing it with a number of other possible priorities for Congress.

Tax reform was the second-least important thing Americans thought Congress should be doing.

Mind you, both of these polls asked about tax reform in the abstract. Asked about the specific legislation last month, legislation that’s been revised scores of times since — legislation that’s been revised scores of times since Monday, in all honesty — only a quarter of Americans approved.

Congress does a lot of things that Americans don’t care much about and/or don’t like, but rarely at this scale. If not from the American public, where’s the pressure to pass this legislation — whatever it eventually contains! — actually coming from?

We got one hint toward an answer last month from Rep. Chris Collins (R-N.Y.). Asked how donors felt about the tax-reform proposal, Collins replied, “My donors are basically saying, ‘Get it done or don’t ever call me again.’”

Collins wasn’t the first to hint at a powerful force driving the legislative process. In June, the Associated Press reported that, in the absence of Obamacare repeal and tax reform, big donors had shut down fundraisers. That failed repeal effort, Sen. Cory Gardner (R-Colo.) reportedly told his peers, had made donors “furious.” The same attitude applies to the tax bill, as Mother Jones wrote this week.

“I don’t know why donors should give to the [National Republican Senatorial Committee] until tax reform is passed,” a major Republican donor told the magazine. “Thanks for Gorsuch, but you haven’t otherwise used the majority.”

The Fox News poll didn’t break out major Republican donors as a subgroup in its question of how important passing a tax bill was, but it seems clear they’d have leaned toward the “extremely” end of the question.

Why? The poll showing that only a quarter of Americans supported the bill came from Quinnipiac University. The same poll found that most felt that it was targeted at helping business, not them, and that it would help the wealthy at the expense of the middle class. Analysis of the bill from the independent Congressional Budget Office and Joint Committee on Taxation suggests that America’s understanding of the bill isn’t really wrong: It’s weighted to the wealthy. Two staples of the bill are permanent corporate tax cuts and a long-term benefit for the rich that extends past benefits for poor and middle-income Americans.

Republicans are forging ahead with their promise to overhaul the tax code, even with very little public support for their proposal. (Video: Jenny Starrs/The Washington Post, Photo: Jabin Botsford/The Washington Post)

The argument from the White House has been that this is a good thing, that it’s intentional. Cutting corporate taxes will mean that businesses expand, hiring more workers, creating competition in the job market which will drive up wages. That expansion, the White House claims, will boost the economy so much that it will offset the decrease in government revenue that the tax cuts generate — a decrease that the CBO figures will add $1.4 trillion to the national debt. What’s more, the Treasury Department was working on analysis to prove it.

There was just one problem: Businesses weren’t actually planning on doing that.

Last month, Trump’s chief economic aide, Gary Cohn, was in the room when a group of chief executives were asked if they planned to reinvest in their businesses after the tax cut. Only a smattering of people said they were.

“Why aren’t the other hands up?” Cohn asked, apparently half-joking and half-befuddled.

The reason not many hands went up is that not many businesses plan to do the sort of investment the White House promised. Instead, they plan to buy back stock from shareholders, meaning a boon for those who own that stock — which those people seem to know, given the recent spike in stock indexes.

How do we know that? The informal poll in front of Cohn was one thing. But as Bloomberg News reported this week, conversations with other business leaders and research by Merrill Lynch makes it clear. The financial firm surveyed 300 companies about what they planned to do with the influx of cash after the tax cut: Only 35 percent said they planned to use it to expand their businesses.

Outside analysis does suggest that the tax plan would boost the economy. The Joint Committee on Taxation released its assessment of that effect on Thursday, finding a boon of more than $400 billion to the federal government. But that is offset by the loss of $1.4 trillion from reduced tax revenue.

What about that Treasury Department report proving that economic growth would offset the revenue cuts? It doesn’t exist, it seems, or has not been released. In fact, the inspector general for the Treasury Department is investigating if Treasury Secretary Steven Mnuchin blocked release of a study because it showed politically inconvenient information.

So far, we’ve largely set aside one of the other undercurrents at play here: how quickly the Senate bill is moving forward. But that’s remarkable, too. The JCT analysis is meant to inform debate, not to largely follow it. The committee is, after all, an arm of Congress! But, as with the health-care bill, Senate leadership is pushing forward far more quickly than is normal, clearly in part to avoid negative public response.

That health-care bill failed in the Senate thanks to a last-minute vote from Sen. John McCain (R-Ariz.) who went to great pains to demonstrate that his objection stemmed in part from how the process had moved forward. He even wrote an essay for The Post about how he yearned for the Senate to return to “regular order” — the process under which major legislation winds its way through committees and encourages input to reach consensus before a vote.

“We might not like the compromises regular order requires, but we can and must live with them if we are to find real and lasting solutions,” McCain wrote. “And all of us in Congress have the duty, in this sharply polarized atmosphere, to defend the necessity of compromise before the American public.”

Earlier this week, McCain announced that he backs the tax-reform bill.

All of this is worth it, the White House has argued, because it means tax relief for the middle class. As noted above, though, that’s a bit misleading. Tax cuts for the middle class are smaller than those for the wealthy and, unlike corporate tax cuts, expire in a decade. After that, those making less than $75,000 a year will probably see a tax increase.

The White House insists, though, that the corporate tax cut will also lead to more income for Americans. Why? Because they have one study from the White House Council of Economic Advisers arguing that since incomes drop a certain amount when corporate taxes are raised, it stands to reason that incomes will go up if corporate taxes are lowered. Merrill Lynch’s survey suggests that’s not necessarily true — but that’s the argument.

That argument was addressed by former treasury secretary Lawrence Summers in October.

“During my years in government, I served with 7 CEA chairs — Martin Feldstein, Laura Tyson, Joe Stiglitz, Janet L. Yellen, Martin Baily, Christy Romer and Austan Goolsbee. I observed all of them fighting with political figures in their Administrations as they insisted that CEA analysis had to be of a kind that would be respected and validated by outside economists,” Summers wrote. “. . . I cannot imagine any of them releasing an estimate as far from the professional mainstream as $4000 to $9000 wage increase from a corporate rate cut claim.”

In a legislative effort as choked with unusual impulses and incentives as this one, such a comment doesn’t even make it into the top half of the story.