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The Republican tax bill is an American betrayal

The American people voted for populism. They got plutocracy.

Jim Lo Scalzo/AFP/Getty Images

According to a poll from Public Policy Polling, 57 percent of Americans now approve of the Affordable Care Act. Only 29 percent approve of the GOP’s tax cuts.

Reflect on those numbers for a moment. Republicans have managed to make tax cuts less popular than Obamacare. It’s impressive.

And yet last week, given an opportunity to tweak their bill before final passage, to make it something the American people might like a little better, the main change Republicans made was to lower the top tax rate — the rate paid by the richest Americans — even more.

There is something wrong with a political system where the presidency is won on a populist message and the resulting policy is pure plutocracy, where #DrainTheSwamp becomes tax breaks for hedge funds, the well-connected, and the president’s family.

But there is also something confusing about it. This is not how politicians are supposed to act. Politicians are meant to have an instinct for self-preservation, a sense of the public will, a fear of electoral consequences. This is why we have terms like “conviction politician” — because elected officials who vote their conscience rather than vote their careers are believed to be so rare.

Republicans were wiped out in the Virginia, New Jersey, and Alabama elections. Overall, they’re running 9 points behind their 2016 performance this year. Generic ballot polling shows Democrats with a staggering 11-point lead in 2018 — more than enough to take back the House. Congressional Republicans are facing annihilation in the midterms, and they know it.

And yet Republicans are governing with an almost merry disregard for public opinion — and not just on taxes. As Jacob Hacker and Paul Pierson wrote for Vox:

Nor are the tax cuts the only recent Republican legislation that has garnered terrible poll numbers. So did the effort to repeal and replace the Affordable Care Act. Indeed, the GOP health care drive had even less popular support.

Massively unpopular bills used to be unicorns. You didn’t see them. And for an obvious reason: They could cost politicians their jobs. But now we’ve seen two unicorns in the first year of our all-Republican government. What gives?

To give a sense of scale here, though Obamacare was not popular when it passed, it was polling in the 40s, not the 20s or teens, as has often been true for the GOP bills. Moreover, Republicans made massive gains running against Obamacare. Many current Republican members of Congress were elected in the 2010 Obamacare backlash, so they would be particularly sensitive to the consequences of defying public opinion on a vote of this magnitude.

Additionally, many of the Republican members of Congress who served during the passage of the Affordable Care Act claimed they were offended to see such major legislation pass with so little public support, and vowed to act differently if they were returned to power. Here, for instance, is Senate Majority Leader Mitch McConnell, speaking in 2014:

The chaos [the Affordable Care Act] has visited on our country isn’t just deeply tragic, it was entirely predictable. And that will always be the case if you approach legislation without regard for the views of the other side. Without some meaningful buy-in, you guarantee a food fight. You guarantee instability and strife. It may very well have been the case that on Obamacare, the will of the country was not to pass the bill at all. That’s what I would have concluded if Republicans couldn’t get a single Democrat vote for legislation of this magnitude. I’d have thought, maybe this isn’t such a great idea.

Perhaps McConnell never believed a word of that paragraph. But it is remarkable that he feels so little need to pretend that he did.

Over the past week, I’ve asked an array of political scientists what they see watching the tax bill lurch toward passage. What does it say about American politics that policy outcomes seem so divorced from electoral sentiments, messages, and even the rhetoric of the winning candidate? What does it say about American politics that members of Congress seem so unafraid of passing such an unpopular bill?

Their answers are not comforting.

“Public opinion doesn’t matter”

One common response was that popular opinion matters less than traditional theories of American politics suggest. Andrea Campbell, an MIT political scientist who has studied tax policy, emailed:

Overall public opinion doesn’t matter. Instead, members of the House and Senate have to think about two groups when considering how to vote on legislation such as the Tax Cut and Jobs Act: their donors and their reelection constituency. To win reelection they need money and they need votes. But they only need votes from a subset of individuals in their districts or states; other voters’ preferences can safely be ignored. So how do donors and GOP reelection constituencies feel about the tax bill?

This is both unnerving and persuasive. As Campbell notes, the bill’s “benefits go to corporate shareholders, those with unearned rather than earned income, and those with ‘pass-through’ income from businesses that will now be taxed at the new lower corporate rates rather than at individual tax rates. Most major political donors come from these groups.”

Top Republicans have been oddly honest about the pressure their funders have exerted to pass this bill. "My donors are basically saying, 'Get it done or don’t ever call me again,'" said Rep. Chris Collins, a New York Republican. Sen. Lindsey Graham, a South Carolina Republican, was even more blunt. If Republicans don’t pass the bill, he said, “financial contributions will stop.”

As for Republican voters, Campbell argues that “there’s not much for Republican elected officials to fear there either. Most lower- and middle-income voters in red districts and states will see no difference or a modest decline in their taxes at first. Over time, their taxes will rise, but in a gradual and largely invisible way that will be hard for them to trace back to their lawmakers’ votes in 2017.”

I buy all that, and yet I can easily imagine a Republican Party that understood those dynamics but nevertheless crafted a more popular, decent bill.

For instance: The legislation cuts the corporate tax rate from 35 percent to 21 percent. Would Republican donors have been so unhappy merely cutting the corporate tax rate to 25 percent — which is what Mitt Romney proposed in 2012, and what the Business Roundtable was asking for in 2015? If Republicans had chosen that more achievable target, it would have given them money they could plow into tax cuts for the working poor, or a bill that added far less to the national debt.

Moreover, the upheavals in the individual insurance market that will follow the repeal of Obamacare’s individual mandate will come soon, and all polling suggests Republicans will be blamed for them. Campbell is right that public opinion matters far less than many like to think. But it’s not meaningless, as recent elections show. So why are Republicans acting as if it is?

Profiles in courage

As Vanderbilt’s Larry Bartels emails, one possible answer is that Republicans believe in this bill, and thus they believe it’s worth passing, whatever the consequences:

This is what they got elected to do, and they would do it even if they were convinced that it would cost them their jobs. Certainly there was some of that involved in passing Obamacare, and I’m sure there’s some in this case, too, though I don’t know how much. Of course, anyone who votes for this and loses is at the front of the line for a cushy lobbying or think tank gig, so the “courage” is relative. Nonetheless, I think it’s worth entertaining the notion that politicians often do what they think is good for the country.

Conviction is an underrated force in American politics. And yet Republicans haven’t acted like conviction politicians when defending this bill. They have not sought to make the case for corporate tax cuts, or for cutting taxes on pass-through income. There has been no analogue to President Barack Obama’s impassioned, multi-hour defense of his health care bill at the Blair House.

Rather than argue for the bill on its merits, Republicans have mostly lied about its design, framing it as a middle-class tax cut when it is clearly something very different, pretending it will pay for itself rather than deciding that it is either worth paying for or worth not paying for. There have been few hearings, few speeches, and an extraordinarily rushed process. Democrats legitimately thought the public would like Obamacare if they just knew more about what was in it. Republicans do not seem to hold that confidence in their own legislation.

Perhaps that simply reflects a more extreme strain of conviction politics: Republicans believe in a trickle-down theory of economic growth even though they don’t believe they can persuade the public of its merits, and so they’re going to do what they think is best and worry about the consequences afterward.

We must do something. This is something. We must do this.

When I talk to Republican politicians about this bill, I hear less about its merits than I do about their fears of winning power and ending the year with nothing to show for it. You can see that animating fear of failure, fully divorced from any arguments on substance, reflected in Sen. Graham’s comments:

This is a point Cornell’s Suzanne Mettler made to me as well:

It is not surprising that the Republican-led Congress would like to be able to claim one major victory before the year is out, having failed to repeal the Affordable Care Act or to accomplish any of their legislative goals, and Trump would like to sign something significant besides the sanctions on Russia. Since the Reagan era, moreover, the party has championed tax cuts above every other domestic priority, so it is not surprising that they are the primary goal now.

This analysis has the virtue of explaining away the bill’s shortcomings. The original legislation Republicans considered, and the original theory atop which it was built, was much more defensible. The idea was to pass a permanent, revenue-neutral corporate tax reform that replaced most of the current corporate code with a destination-based cash flow tax. This was a reasonable idea!

But the internal politics of the GOP conference weren’t friendly to a new tax, even if it was being used to lower another, less efficient tax. And so it was eliminated. But Republicans never really replaced it with anything. As Matt Yglesias wrote at the time:

Having dropped the DBCFT idea, Republicans didn’t rethink the rest of their plan. They just copied the number “20” over from one tax plan to another and tried to make the math work based on a 20 percent corporate income tax rate.

But the math doesn’t work. The business tax cuts in the GOP plan add $1 trillion to the deficit over 10 years, accounting for two-thirds of the total net tax cutting. And with plenty of tax cuts for rich people also in the plan, that leaves Republicans raising taxes on many families and increasing the deficit having dropped the DBCFT idea, Republicans didn’t rethink the rest of their plan. They just copied the number “20” over from one tax plan to another and tried to make the math work based on a 20 percent corporate income tax rate.

If we were just dealing with conviction politicians, perhaps Republicans would have gone back to the drawing board and built out a new tax plan, or maybe they would’ve never veered from their initial idea in the first place. But since we’re dealing with politicians desperate to pass something they could call tax reform, there was no time to stop, no time to rethink.

To echo a point Paul Krugman has made, by the end of this process Republicans had tumbled into the Yes, Minister theory of legislating: We must do something. This is something. We must do this.

This isn’t how American politics is supposed to work

It is true that tax cuts for wealthy Americans have long been the fulcrum atop which Republican Party politics rests. But Donald Trump was supposed to be a different kind of Republican. On 60 Minutes, for instance, Trump said he would raise taxes on "the very wealthy,” and warned that the plan would cost him "a fortune" in higher taxes.

“My whole life I’ve been greedy, greedy, greedy,” Trump said in January of 2016. “I’ve grabbed all the money I could get. I’m so greedy. But now I want to be greedy for the United States.”

The whole Trump pitch was that he was a cutthroat businessman who knew the tricks, had paid off the politicians, had made his billions, and now was going to use his accumulated knowledge to unrig the system, to make it benefit you, the little guy. American politics, he said, was corrupted — by special interests, by self-dealing politicians, by weak negotiators. He was going to fix it all. And many believed him.

In Trump’s inaugural address he said, “What truly matters is not which party controls our government, but whether our government is controlled by the people. January 20, 2017, will be remembered as the day the people became the rulers of this nation again. The forgotten men and women of our country will be forgotten no longer.”

This rhetoric continued after the election: Both Trump’s Treasury secretary and the director of his National Economic Council said the plan wouldn’t cut taxes on the rich. As recently as a few weeks ago, Trump told Senate Democrats, “The deal is so bad for rich people, I had to throw in the estate tax just to give them something.”

In reality, by 2027, 62.1 percent of the tax bill’s benefits go to the top 1 percent, and 42.3 percent of the benefits go to the top 0.1 percent.

It is easy to get jaded about all this, to make knowing comments about how anyone who read Trump’s policy papers should’ve known he was lying, or how anyone who has watched the Republican Party in recent decades should’ve known they’d immediately cut taxes on the rich. But American politics isn’t supposed to work this way. Voters are supposed to be able to roughly trust that politicians will do what they say they’re going to do, or what they say they’re doing — and for all our cynicism, that’s traditionally been true.

But it’s not true now, and the abysmal polling on this tax plan shows that plenty of Americans feel duped and are angry about it.

Perhaps congressional Republicans have just become fatalistic about the losses they’re likely to face in 2018, and so they’re passing their tax cut because they believe in it, and they’re larding it full of provisions to make their donors happy, because then at least then they’ll have Super PACs ready to help them campaign and lobbying gigs and sinecures as payback if they lose.

Whatever the true answer, the results are a betrayal of the people who put Republicans in office.

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