Does anyone in the GOP know how to write and pass a bill?
Maybe the dog ate the GOP's homework
Last week, the Republicans' umpteenth attempt to kill ObamaCare ended in yet another embarrassing failure. One of the bill's co-authors, Sen. Lindsey Graham (R-S.C.), admitted that he'd spent all of a month working on health-care policy. When asked why the GOP keeps tripping over itself even after seven years of promises to repeal and replace the dreaded Affordable Care Act, the senator was remarkably candid: "I thought everybody else knew what the hell they were talking about, but apparently not."
Now Republicans are moving on to tackle tax reform. And if you're expecting them to bring any more policy or political literacy to that challenge, well, I have bad news for you.
As Dylan Matthews explains at Vox, the core of the GOP's tax overhaul plan is a cut in the federal tax rate that corporations pay on their profits. There's at least a coherent rationale here: The desire for higher profits is supposed to drive investment, which in turn drives job creation and wage growth. So if you tax profits, you discourage investment, and that hurts the economy. And indeed, businesses investment has collapsed in the last few decades.
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Unfortunately, there's also a big problem with this logic: You could certainly imagine economic conditions where slashing the corporate tax rate would boost investment the way Republicans think it would. But it's pretty obvious those aren't the conditions we're in now. The corporate profits tax has already fallen over the last few decades, at the same time that investment fell. And meanwhile, corporate profit margins soared!
Republicans also want to reduce the seven tax brackets in the individual income tax code to three, and lower the rate paid at the high end. And they want to get rid of the estate tax entirely. These proposals don't really have any relevance to the Republicans' grand theory about boosting investment to help the economy — they're just about letting rich people keep more of their money.
Big tax cuts for rich people are extremely unpopular with voters. President Trump clearly realizes this, and is running around claiming his tax plan is "not good for me, believe me." That's nonsense. While we don't know the plan's full details yet, it's really hard to see how someone in Trump's economic position wouldn't make out like a bandit under this tax reform. Meanwhile, Trump's own chief economic adviser is already admitting the White House cannot guarantee this tax plan won't actually hike liabilities for some middle-class families.
The arguments the GOP does make in favor of these cuts are transparently silly. Reducing the number of tax brackets does nothing to simplify the tax code — the complexities lie elsewhere. And the claim that income tax cuts themselves boost growth was tested by President Reagan's famous 1981 tax cut, which lowered top marginal rates by a far greater degree than the GOP is planning now. Yet the 1970s still produced more overall economic growth than the 1980s, despite the stagflation Reagan's tax cut was ostensibly meant to correct.
Slashing taxes as the GOP proposes will lose Uncle Sam a bunch of revenue. The plan isn't detailed enough yet to project its effects on the federal government's finances with real precision. But it looks like it could lose $2.2 trillion in revenue just over its first decade, even when you account for the offsets and closed loopholes the Republicans are talking about.
This is not a smart and coherent policy. And the politics make no sense, too.
The Republicans only have 52 seats out of the Senate's 100 seats. Thanks to the filibuster, passing most things through that chamber requires 60 votes, which would mean bringing eight Democrats on board for a tax reform bill. But the GOP really doesn't want to negotiate with the other party. So they're using a procedural tool called reconciliation, which allows you to skip the filibuster and pass bills on a simple majority vote. Except all bills passed by reconciliation can't add to the deficit passed the initial 10-year window.
You begin to see the compounding problems here.
It is becoming increasingly clear that the GOP has no real expertise, both at the detail level of legislative design, and at the big macro level of understanding economic policy. They have a few just-so stories about taxes and government spending and supply-side rules-of-thumb. And they've repeated those beliefs to themselves endlessly, until they're drained of all nuance, and all context for what conditions justify them are forgotten.
So when the Republicans find themselves in a position where they actually have to govern, they're lost. They don't know how to translate their ideological talking points into concrete legislation. And they don't know how to negotiate between all the competing interests in their own party, never mind in the country as a whole.
So we get endless promises for plans that always turn out to be little more than glorified bullet-point memos. And we get major legislation slapped together in a month or two, when previous successful reforms of a similar scope took a year or more of legislative work to design.
It's what happened with health care. And now it's happening with tax reform, too.
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Jeff Spross was the economics and business correspondent at TheWeek.com. He was previously a reporter at ThinkProgress.
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