Tax Reform Doomed If Republicans Use Obamacare Repeal Model

COMMENTARY Taxes

Tax Reform Doomed If Republicans Use Obamacare Repeal Model

Sep 19th, 2017 2 min read
COMMENTARY BY
Tommy Binion

Director, Congressional and Executive Branch Relations

Thomas is responsible for Heritage's many programs on Capitol Hill and its engagement with the administration.
Republicans fumbled Obamacare repeal. iStock

Key Takeaways

With the 2018 midterm elections on the horizon, the political implications of Congress’ ability to execute can’t be overstated.

The correct answer to this question is: Cut taxes overall and avoid ballooning the deficit by cutting spending and entitlements.

One sure way for tax reform to fail is for Republicans to repeat the model they tried with Obamacare.

There is universal agreement that the tax code is a disaster, and a general consensus among Republicans about what needs to be done. Tax reform could unleash the American economy, sparking the growth that has been lacking for a decade. Can it actually get done?

Many believe it can. Of course, many were optimistic that Obamacare would be repealed by now, but after eight months of effort — and seven years of promises — Republicans have failed to deliver.

The question of whether Republicans can achieve tax reform now looms larger than ever. With the 2018 midterm elections on the horizon, the political implications of Congress’ ability to execute can’t be overstated.

To make tax reform a reality, Republican leadership must not fall into the same traps that frustrated their attempt to repeal Obamacare. If they learn the lessons to be drawn from that debacle, then they can take tax reform from a possibility to a probability.

Some of the reasons Obamacare repeal has eluded Republicans are obvious, and those same conditions are cropping up in tax reform.

The first lesson is that fundamental questions cannot be ignored. The Republican conference must establish the four corners of what they are trying to accomplish and seek buy-in from each stakeholder. The fundamental question that plagued and delayed the repeal debate was whether to pursue a repeal-only bill first or whether repeal-and-replace must be passed simultaneously.

Believe it or not, the original deadline established by Republican leadership for repeal was President’s Day. The reason for the delay? They pivoted from repeal-only — a proposal that passed Congress and landed on President Obama’s desk in 2015. Instead, they pivoted to repeal-and-replace, which had never been tried or even written.

A fundamental question about tax reform remains unanswered. Are Republicans pursuing a tax cut overall or merely shifting taxes from one portion of the tax base to another? In other words, will tax reform be revenue-neutral or will Americans actually pay less in taxes overall.

The correct answer to this question is: Cut taxes overall and avoid ballooning the deficit by cutting spending and entitlements. But Republicans have not made that decision.

The second lesson is that the leadership should use House and Senate rules to their advantage, not to constrain their own efforts. For example, reconciliation has tremendous upside, but it comes with complicated rules. Republicans spent the better part of spring arguing over what the Byrd Rule does and does not allow, as the scope of the health care reform bill narrowed more and more.

As the bill worked its way through the lower chamber, House leaders repeatedly cited the Byrd rule, which applies only in the Senate, as the rationale behind every retreat they made. In the context of tax reform, Republicans must take full advantage of the Senate’s rules instead of using them as a scapegoat to justify taking pro-growth amendments off the table.

The third lesson is that backroom deal-making won’t fly. Rank-and-file Republicans will not vote for major legislation that was cooked up without their input.

One sure way for tax reform to fail is for Republicans to repeat the model they tried with Obamacare. It played out like this: Just days before a milestone deadline (like an upcoming recess or holiday), release the details of an extraordinarily complex proposal and ask members to support it — while denying them any chance to debate its merits or amend it.

Republicans fumbled Obamacare repeal. The leadership made enacting a simple, concrete promise much more difficult than needed. An honest assessment of what went wrong and a correction of course are required.

That will require humility, discipline and restraint, which are not often in fashion in Washington. But if Republicans can pull it off, Americans will get the tax relief and economic growth they deserve and Republicans will likely stay in the majority.

This piece originally appeared in The Washington Times