Washington closed out the pre-Christmas week with by far the biggest policy news of the Trump era — the passage of a mammoth $1.5 trillion tax cut, mostly for corporations and owners of pass-through businesses but with a smattering of other benefits besides.
Trump delivering a major priority of traditional business conservatives was paired with congressional Republicans stepping up their service to him in the form of new and more pointed attacks on Robert Mueller and the leadership of the FBI. Meanwhile, Congress passed a bipartisan measure to keep the lights on until mid-January, and the Affordable Care Act stubbornly refused to die despite the Trump administration’s best efforts.
Congress passed a major tax cut
Despite a handful of speed bumps, congressional Republicans worked out the differences between competing House and Senate tax bills (complete with some brand new provisions) in record time, with both chambers passing the resulting bill before heading home for the holidays.
- Who wins: The centerpiece of the bill is a big corporate income tax, so the biggest winners are highly profitable companies and their shareholders. Owners of pass-through businesses and heirs to estates worth more than $11 million also score big wins, with smaller (and potentially temporary) tax cuts for others.
- Who loses: Affluent residents of high-tax states who don’t benefit from the pass-through cut could end up paying more taxes due to a major curb in the deductibility of state and local tax payments. For similar reasons, blue-state governments may feel their revenue squeezed. People who buy insurance on Affordable Care Act marketplaces will likely face higher premiums, and millions may be priced out of the market.
- “Tax reform” sort of didn’t happen: In its earlier iterations, this legislation was often touted as “tax reform,” and the House’s bill really did contain a lot of reform in the form of eliminating deductions. But a lot of that (taking away teachers’ deductions for school supplies, taking away a tax break for parents who adopt kids, implementing a new tax on graduate students’ tuition waivers) proved to be deeply unpopular, so the final bill is mostly tax cuts and gimmicks rather than a reform, with a lot of clear losers.
The government won’t shut down for Christmas
The continuing resolution that funds the government was set to expire on December 22, but Congress passed a new short-term CR on Thursday that kicks the can forward to January 19.
- House Republicans got their act together: A key development was that House GOP leadership was able to count on a unified caucus for once, and had enough own-party votes to pass a CR. That meant blocking the legislation, if it were to be blocked, would need to be done by a filibuster of Senate Democrats, many of whom come from red states.
- No help for DREAMers: Immigration advocates pushed Democrats to refuse to vote for a CR that lacked protections for DACA recipients, and most party members answered the call. But more than a dozen Senate Democrats were willing to vote for a bill that did nothing for DREAMers — so now they have to hope something comes to their rescue in January.
- What’s next? It’s far from clear how or why the fundamental calculus would shift over the next four weeks. Democrats don’t want to force a shutdown over the DREAMers, and Trump doesn’t want to force a shutdown over the wall, but neither side wants to admit it’s giving up. The endless rounds of short-term CRs are annoying the military and other government agencies that need to plan for next year.
Affordable Care Act signups remained robust
The Trump administration did just about everything in its power to not encourage people to sign up for Affordable Care Act coverage through the federally run marketplace, but 8.8 million people signed up anyway — nearly as many as signed up a year ago. We’ll need to wait for state-run marketplaces to report their figures to get a total signup list, but it’s possible Obamacare enrollment will be higher this year than next.
- Why it matters: Trump and other Republicans have consistently argued that the ACA is failing or “imploding,” in order to build momentum for repeal efforts; this is yet another sign that they are mistaken.
- Why it may not matter: The tax bill repeals the ACA’s individual mandate, and that act of sabotage really may be enough to cause the marketplaces to implode next year. Experts disagree on exactly how much it matters, but it’s clear that the administration is not really interested in trying to make the law work.
- What’s next: The fate of a couple of bipartisan marketplace stabilization measures remains uncertain in Congress, but their passage — if it happens — could make a real difference.
Republicans turned on Robert Mueller
The White House has always been hostile to Robert Mueller’s Russia investigation — they fired James Comey to try to make it go away — but December 2017 was the month that congressional Republicans really hopped on the Mueller-bashing bandwagon.
- A multi-pronged assault: House Republicans have quietly launched an investigation into anti-Trump bias at the FBI, the Justice Department is undertaking a fresh review of charges against Hillary Clinton, and Rand Paul became the latest senator to argue that the real scandal is the Obama administration’s handling of the charges and not anything Trump did. Fox News is even suggesting the Mueller investigation is a form of coup.
- Huge backlash potential: Attacking Mueller is clearly a route to the president’s heart, but actually firing him could easily blow up in Trump’s face, by exposing him to both political peril — Mueller is much more trusted than Trump is — and various leaks from the former investigators.
- What’s next? Washington is full of people prognosticating on Trump’s strategy, but unlike Trump, none of those people know exactly how much real legal jeopardy he’s exposed to. The truth is nobody has any idea how this is going to play out.