DONALD TRUMP’S BUDGET REFORM: TRUMPED
We are living now in Trump AHC, the Trump era after the failed health care effort. There is talk of bringing back an improved Republican alternative to the ACA. That seems exceedingly unlikely to happen. The House and Senate go into recess at the end of this week so that Representatives and Senators will be back in their districts and states for the next two weeks. The thought of reviving the health care struggle will give them something talk about, but that’s all. They will move on.
The moment that the Republican health bill was withdrawn (for lack of support), President Trump made happy sounds about moving on to tax reform and his proposed program of tax cuts. People in Washington, most particularly Republicans, love to talk about tax reform. They have been talking about tax reform since the last effort at tax reform under Ronald Reagan back in 1985. In their minds, tax reform means reducing tax breaks that have been built into the tax laws to help particular interest groups, and then using the money saved to reduce over all tax rates for everybody. When hogs fly and they can look down and can see Hell freezing over, right then this Congress will pass real tax reform! An easy prediction: There is not going to be any real tax reform during this administration! It just is not going to happen!
It isn’t going to happen because tax reform is really difficult to do. Individuals, businesses, and charitable organizations, have fought hard to get tax breaks for themselves (Do you want to stop being able to deduct interest payments on your home?). For businesses, run by good Republicans, those tax breaks may make the difference between profit and loss. They will fight in Washington to save those tax breaks and they, unlike most ordinary citizens, know how to fight in Washington. With tax reform there could be winners (ordinary tax payers), and there could be losers. The truth is that too many of the potential losers are the kinds of people members of Congress care about most.
That leaves tax cuts. Republicans certainly, but all elected politicians really, love tax cuts because in the short run at least everybody is a winner. Republicans in Congress particularly love tax cuts because cutting taxes is almost their entire program. There are some small goals, (they want to kill Planned Parenthood), but really current Republicans are about tax cuts. Some good hearted Republicans might reasonably argue that tax cuts are going to run up the national debt and that is certainly true but the debt numbers are so large that most people in Congress would rather not think about them (How do you cut 20,000 billion dollars?). Republicans, back with the home folks, will argue that cutting tax rates for the top one percent will increase employment. There is no evidence for that. It hasn’t worked any where so far, but it’s comforting.
So, that is it. When the Congress comes back from its two week break, we will hear murmurings about still bringing back a new health care bill. That won’t happen. We will hear about tax reform. That won’t happen either. We probably will have federal tax cuts. There will be a tremendous struggle about them because Democrats will, of course, argue that tax cuts unfairly advantage the very well off and that they will not produce jobs. The Republicans themselves will be divided just as they were about health care. And, the battle will be fought while the Republican majorities are fighting among themselves about reinstating the debt limit (The debt limit was set aside back in 2015 to be dealt with by March 15 of this year. Nothing has so far been done.). Reinstating a debt limit probably would make the Trump tax cuts impossible. Look for the Republican majority to delay putting back the debt limit till later so that their tax cuts can happen.
So, there will be no new Republican health care bill! There will be no tax reform! There will be no reinstating of the debt limit! There will be tax cuts which will mostly help your friendly neighborhood billionaire. Wait for it!!