It’s gut check time for Republicans.
For years, they’ve claimed the Affordable Care Act has been choking the economy, thanks in large part to the new taxes the law levied on investors. And for decades, they’ve railed against the evils of taxation, arguing it feeds a bloated government while choking the nation’s economy and infringing on individual freedom.
Now that they have the power to actually do something about those loathed tax levies, however, they’re looking a bit wobbly.
On Thursday, Sen. Bob Corker (R-Tenn.) said the party is considering scrapping some of the proposed tax cuts so that the bill is not just a tax cut for the wealthy. In particular, lawmakers have proposed keeping Obamacare’s tax on wealthy individuals’ investments — the “net investment tax,” which imposes a 3.8 percent on certain investments by those making over $250,000 a year. More money could then be reallocated to help low-income Americans pay for health insurance.
It’s a political calculation on the Republicans’ part. The caucus’ moderates have balked at a measure that — according to the Congressional Budget Office — would provide massive tax relief to the wealthy while leaving 22 million fewer people with insurance. And as the party can’t afford to lose support from more than two of its 52 senators and still pass the measure, proponents of reinstating the taxes are hoping they can shore up their centrist flank, even if that means more opposition from an already disgruntled right wing.
But the GOP tax decision is bigger than that. On broad grounds, it’s a test of whether the party’s commitment to a conservative approach to taxes can withstand a collision with political reality — as well as with a conservative economic populism that found new footing with the candidacy of President Trump.
“Cutting taxes” is a perpetually appealing prospect for voters, but taking away the things those taxes pay for is far more fraught. And as Republicans consider whether their health-care bill puts their anti-tax philosophy into practice, the route they take will say a lot about who’s really in control of their party.
Some of the conservative voices that pulled the party to the right on taxes are speaking out against the possibility of a move toward the middle.
Heritage Action, the political affiliate of the influential Heritage Foundation, does not support the proposed tax change.
“The message is that they're trying to find more money to throw at the problem,” says Dan Holler, Heritage Action’s vice president. “The moderates in the conference think more federal spending is the solution to every policy problem that comes up. This reinforces bad behavior — that somehow spending more federal money is a solution, which isn't the case.”
The tax change would be another frustration for conservatives who wanted to scrap the Affordable Care Act entirely, as they already felt it left too much of the Democrats’ measure in place. (Sen. Rand Paul (R-Ky.) called a House version of the measure “Obamacare Light.”)
Grover Norquist, an anti-tax absolutist with broad influence in the GOP, decried the proposal as well — both on its policy merits and on its political efficacy.
“If you're going to make a change in the outline to repeal Obamacare, maintaining a job-killing tax hike like capital gains is exactly the wrong way to do it,” he said. “It's counterproductive to economic growth, to getting people jobs and the health care that goes with those jobs.”
Norquist said it’s healthy for the GOP to be exploring ways to find a bill that can pass the Senate, but he said he doubts enough Republicans will ultimately support this proposal.
Typically, a party in full control of government would look to the president for guidance in settling its internal divisions, but on health care, Republicans are unlikely to get a clear signal from Trump.
During the campaign, he vowed to protect Medicaid, refrain from giving the wealthy more tax cuts and even to provide care for “everyone” — promises that neither the House nor Senate health care bills would keep.
After the House bill passed, he held something akin to a conservative pep rally on the White House lawn, only to later call the measure “mean” as it hit the Senate. And on Friday, with the bill struggling, he flipped again, tweeting: “If Republican Senators are unable to pass what they are working on now, they should immediately REPEAL, and then REPLACE at a later date!”
Now, Republicans have to figure out if there’s a version of Obamacare repeal that can find 50 supportive senators — a balancing act between moderates looking to keep more of the social safety net in place and conservatives looking to reduce the role of government in health care.
It’s an odd reversal for a party that used Obamacare repeal as its unifying standard for years, but there's a gap between campaigning and governance. “Getting government out of people’s lives” is a popular piece of rhetoric, but “getting government benefits out of people’s hands” is far harder.
Republicans have been talking about repealing Obamacare’s taxes since before the bill be became law. Now they — and the country — are about to find out how many of them really meant it.