Republicans are struggling to make headway on their plan for an ambitious rewrite of the American tax code for the same reason they struggled with their plan for an ambitious overhaul of the American health care system — major, enduring legislative change is hard and Republicans mostly don’t care that much about it.
They ought to consider admitting to themselves that they don’t really want to do huge, difficult pieces of legislation. And they ought to further consider the possibility that that’s fine.
There’s no need to pass a giant tax reform package, and there’s also no need to run around Washington with a hangdog look or vague sense of shame about it. With the federal government under GOP control, the judiciary is filling up with GOP appointees. Regulatory agencies are in the hands of people who share the party’s mostly pro-business orientation. Appropriations bills are pouring money into the military and domestic security forces. Partisan control of the government is a big deal with or without major legislation.
But Republicans are mostly a party of cultural grievance-mongers, not ambitious legislators. That’s why Donald Trump is their president. That’s why they don’t seem to notice or care that Paul Ryan is a total fraud. They’d be a lot happier if they just owned it.
At the end of the day, mostly adhering the policy status quo while catering to the symbolic and social recognition demands of the ethno-sectarian majority is a perfectly plausible approach to the problems of party politics. One could even call it conservatism.
Republicans are totally out to sea on taxes
A year ago, the world was introduced to the Destination Based Cash Flow Tax (DBCFT) by Rep. Kevin Brady (R-TX) who, unlike a normal Republican, really is a policy wonk with big ambitions and strongly held views.
This proposal was so poorly understood in GOP circles that Republicans rapidly started calling it a “border tax” and then they dropped the idea once they realized that under Brady’s plan some people would pay more taxes than they do now. That’s a fine reason to oppose a change, but it’s also a feature of any conceivable tax reform plan. If you enact big cuts to tax rates then you either need to blow up the deficit — which means you can’t pass a permanent bill under budget reconciliation rules — or else you need to offset the lost revenue by making changes elsewhere. Some people pay less but others pay more.
Republicans didn’t like the DBCFT because they fundamentally didn’t want to do tax reform. But instead of admitting it, they kept flailing forward.
At times they manage to converge on a policy concept on the basis of pure identity politics and resentment. So they convinced themselves that scrapping the State and Local Tax Deduction is something they can get behind on the theory that it screws over New York and California. It turns out to also screw Utah, and more importantly a few House members in key swing districts in New Jersey and Virginia. But also they needed votes from House members from New York. So then they hit upon maybe modifying SALT so you can deduct property taxes but not income taxes, which more properly narrowcasts the plan as an effort to screw California.
But of course you can’t make conservative tax policy on this basis at all. California-based multinational companies will be huge winners under the GOP tax plan. And a program to raise taxes on the rich and use the proceeds to finance a universal preschool system would be a bonanza for red states. The doomed effort to turn tax policy into a venue for culture war politics just shows that Republicans should stick to what they care about — culture war politics.
Republicans should unburden themselves of dumb promises
One of the most pernicious things to happen to the GOP caucus today is that the party’s leaders seem to have convinced the rank-and-file that future electoral success hinges on delivering on the promise of major legislation. Actual Republicans running actual campaigns like Ed Gillespie know that the winning ticket is identity politics for white people and nothing to do with policy.
As far as policy goes, passing unpopular bills is not a great way to be popular. More to the point, every single House Republicans knows perfectly well that they didn’t campaign in 2016 on the promise of some wonky tax reform plan. The campaign was about how Hillary Clinton was a she-devil whose email server was going to get us all killed by Barack Obama’s buddies from ISIS. The chant at the rallies was “lock her up!” not “allow multinational companies to repatriate foreign profits tax free!”
Trump’s there in the West Wing, day after day, talking about how troops and cops are good and Black Lives Don’t Matter and immigrants are terrible (except the good ones) and we’re gonna say Merry Christmas and not be such sensitive snowflakes and celebrate our Confederate generals like all good patriots do. That’s what the party’s all about.
Democrats stopped caring about George W. Bush’s lawless perpetual war machine once Obama took over the drones, and Republicans have done the same for domestic policy since Trump took over. They should just own it and not bother trying. Their approach to their longstanding promise to repeal Dodd-Frank is a model in this regard.
The Dodd-Frank model
Republicans spent five or six years swearing up and down to anyone who listened that the post-crisis financial regulation law Democrats passed was strangling the economy. And they promised over and over again to repeal it. But not just to sweep away the new rules and bring back to the old system, but to usher in some unspecified new utopia in which bailouts would never happen and the grand awesomeness of the free market would fix everything.
After the election, there were even a couple of months’ worth of talking about maybe trying to find a way to actually do that stuff — or as much of it as possible — through the reconciliation process.
But then something funny happened. They just quietly gave up. All the key regulatory posts are now in the hands of bank-friendly Republicans, which is 90 percent of what the bank lobbyists wanted anyway. The economy is not, in fact, being strangled by Dodd-Frank, so Republicans have stopped pretending that it’s being strangled by Dodd-Frank. On a policy level, banks are probably now not being regulated as stringently as they should be, but that would be true under any legislative solution they could come up with. And of course with the Dodd-Frank framework in place, Republicans haven’t found a magic free market purist solution to the problem of how to handle a cascading wave of bank failures but they were never going to find one anyway.
The key thing is that rather than repeatedly beating their heads against the wall over this problem, they just quietly let it drop. No new bank regulations are in place, but the old ones are being gently eased rather than scrapped. And the GOP has worked itself into a similarly happy place on Medicare, abandoning Paul Ryan’s fanatical vision of privatizing the program while eschewing liberal plans for expanding it. For a party whose electoral base is now cranky old white people who are mad about the kids these days, it’s a perfectly reasonable solution. And the sooner Republicans own up to it, the happier everyone will be.