After President Donald Trump and Speaker of the House Paul Ryan (R-WI) failed to garner enough support to pass legislation that would repeal and replace the Affordable Care Act (ACA), Trump declared he had moved on to refocus his legislative priorities on tax reform. In light of Trump’s inability to get the Republican-led Congress to vote with him on health care changes, which had been a major campaign promise of virtually every elected GOP official, journalists and experts are beginning to question if Trump is capable of wrangling his caucus to tackle substantive conservative tax reform proposals that have been stagnant for decades.
Trump Pivots To Tax Reform After Health Care Defeat
NY Times: Trump And GOP Move To Tax Reform “After The Bruising Collapse Of Their Health Care Plan.” On March 26, The New York Times reported that President Donald Trump and Republicans in Congress had set their sights on “the already daunting challenge of tax reform,” which had been made “even more difficult” by the president’s failure to enact major changes to the ACA. The Times noted that due to Trump’s inability to move on health care, his “grand plans” on tax reform “may have to be scaled back” in a way that could provide the White House with “an easy win.” The Times also reported that some supposedly fiscally conservative Republicans might abandon positions they maintained throughout the Obama administration and support tax cuts that significantly increase annual budget deficits:
The grand plans of lower rates, fewer loopholes and a tax on imports may have to be scaled back to a big corporate tax cut and possibly an individual tax cut.
A lot of people think Mr. Trump might go for this to get an easy win.
“They have to have a victory here,” said Stephen Moore, a Heritage Foundation economist who advised Mr. Trump during the presidential campaign. “But it is going to have to be a bit less ambitious rather than going for the big bang.”
Under pressure to get something done, some Republican deficit hawks appear ready to abandon the fiscal rectitude that they embraced during the Obama administration to help salvage Mr. Trump’s agenda.
In a rare shift, Representative Mark Meadows of North Carolina, whose House Freedom Caucus effectively torpedoed the health legislation, said Sunday on ABC’s “This Week” that he would not protest if tax cuts were not offset by new spending cuts or new streams of revenue, such as an import tax. [The New York Times, 3/26/17]
Journalist And Experts Argue Tax Reform Faces An Uphill Battle
Economist Austan Goolsbee: “We Set A Low Bar For The President And He Rammed His Head On It.” On the March 27 edition of CNN’s CNN Newsroom, University of Chicago economist Austan Goolsbee, a former chairman of the Council of Economic Advisers under President Barack Obama, skewered Trump for his health care reform failure, noting that the bar for success was lower for the new president and he nonetheless “rammed his head on it.” Goolsbee continued that as “somebody who campaigned without specifics” and without any expressed “trade-offs” he might make in exchange for lower taxes, Trump had “not set the stage for a sober discussion” on tax reform. From CNN’s CNN Newsroom:
[CNN, CNN Newsroom, 3/27/17]
WSJ’s Richard Rubin: Trump Tax Reform “Fraught With Squabbles, Procedural Hurdles And Difficult Trade-offs.” On March 26, Wall Street Journal tax policy reporter Richard Rubin found that Trump and the Republican Party had been “bruised and beaten” from the health care repeal failure and that Trump had turned to tax reform because he mistakenly believed it was “easier.” Rubin argued that “the GOP quest for a full overhaul of the tax code is fraught with squabbles, procedural hurdles and difficult trade-offs” as the party attempts to balance tax cuts against deficit increases -- while prioritizing which income groups should benefit from new tax rates -- and tackles Speaker Ryan’s proposal to tax imported goods. From the March 26 article:
None of those divisions inside the GOP have been resolved yet, and dozens more are lurking, including debates over tax breaks for renewable energy, credits that aid low-income households, and the treatment of carried interest income for private-equity managers.
“The notion that tax is easier than health is not borne out by the facts,” said a Senate GOP aide. “Having discussed health care for seven years, Republicans were 75% in agreement on the policy. On tax, none of the foundational questions have been answered.” [The Wall Street Journal, 3/26/17]
Wash. Post: Health Care Repeal’s “Stunning Collapse ... Imperils The Rest Of President Trump’s Ambitious Congressional Agenda.” On March 25, The Washington Post reported that Trump’s entire agenda was in peril after the health care defeat. The Post noted that tax reform was especially in danger because it is predicated on no longer providing federally funded assistance to help low-income people access to health care. With those ACA programs still intact, it will be harder for Trump to find the money to pay for tax cuts to corporations. From the March 25 article:
While Republicans broadly share the goal of Trump’s promised “big tax cuts,” the president will have to bridge many of the same divides within his own party that sank the attempted overhaul of the Affordable Care Act. And without savings anticipated from the health-care bill, paying for the “massive” cuts Trump has promised for corporations and middle-class families becomes considerably more complicated. [The Washington Post, 3/25/17]
Economist Paul Krugman: “Markets Don’t Seem To Think Tax Reform Will Happen.” On March 27, New York Times contributor and Nobel Prize-winning economist Paul Krugman tweeted that the stock markets appeared to indicate investors were not expecting tax reform to happen:
— Paul Krugman (@paulkrugman) March 27, 2017
CAP’s Scott Lilly: Those “Pressed To The Edge Financially” Bear The Cost Of A Tax Reform Plan “Targeted To Helping Those Far More Comfortable.” In a March 26 op-ed, Center for American Progress senior fellow Scott Lilly argued that while the collapse of Trump’s health care repeal plan had ignited a “firestorm” among Republicans, Trump still plans to move forward with a disastrous tax reform agenda that’s overwhelmingly favorable to the rich. Lilly noted that Trump’s tax reform would be a win for those at the upper end of the income spectrum while those at the bottom -- many of whom had supported Trump -- would bear the brunt of such reforms. From the March 26 op-ed:
There is one additional irony to the unpleasant policy outcomes of the House attempt at tax reform. Remarkably similar to the American Health Care Act the group that is in the cross hairs to pay the biggest price under the proposal are those who voted in the largest numbers for this President and the party in Congress expected to provide the votes to enact it. Struggling families pushed to rural areas and the exurbs of major cities by high rents and housing prices, families forced to drive greater distances each week than the rest of America will be pay a disproportionate share of the tax. Despite the fact that they are pressed to the edge financially they are slated to become the biggest contributors to a “tax reform” bill that is heavily targeted to helping those far more comfortable. [The Huffington Post, 3/26/17]
Wash. Post’s Greg Sargent: Republicans Go From “Cutting Taxes For The Rich … To Cutting Taxes For The Rich.” On March 27, Washington Post reporter Greg Sargent mocked Trump and congressional Republicans for pivoting from health care to tax reform when both agendas amount to “cutting taxes for the rich”:
Republicans set to pivot from cutting taxes for the rich (AHCA) to cutting taxes for the rich (tax reform).
— Greg Sargent (@ThePlumLineGS) March 27, 2017
CNBC’s John Harwood: Tax Reform Adds To “Trouble” On “Trump’s Legislative Horizon.” CNBC correspondent and New York Times contributor John Harwood noted that tax reform was just part of the “trouble” looming on “Trump’s legislative horizon” for the rest of the year:
Trump's legislative horizon
--keeping government open: trouble
--2018 budget: trouble
--tax reform: trouble
--debt limit: trouble
— John Harwood (@JohnJHarwood) March 27, 2017
Alec MacGillis Mocks Trump Team For Pretending Tax Reform Is “Simpler” Than Health Care. ProPublica reporter Alec MacGillis mocked Treasury Secretary Steve Mnuchin for claiming that Trump’s health care reform was abandoned partly because it is “a very, very complicated issue” while tax reform would be “a lot simpler”:
Steve Mnuchin: “Health care is a very, very complicated issue. [Tax reform's] a lot simpler.”
Last health law: 2010
Last tax reform: 1986
— Alec MacGillis (@AlecMacGillis) March 26, 2017