Archive for March 2017

What Next?

March 25, 2017

imagesBy mid-week it was becoming clear that the repeal/replace bill was going down. Mark Meadows and his Freedom Caucus were digging in their heels, and it had been on their square that Ryan and Trump had placed all their political chips. So, I began to contemplate what would happen in Washington in the wake of the debacle called AHCA, the plan not called Trumpcare. Last night we heard some pretty clear signals.

It could have gone one of three ways, each closely tied to the selection of the next priority for the administration.

  1. Healthcare- The President and the Speaker could decide to retrench and take another run at this thing with a new strategy to win more votes.
  2. Infrastructure- Trump could have brought to the top of the list his only campaign promise that Democrats might get behind.
  3. Tax Reform- He could bank on one of the most appealing long term rallying cries of the Republican party.

If the choice had been healthcare, it is unlikely they would look to the Democrats for votes, so the move would have had to have been to supplicate to the Freedom Caucus. That would have signaled a shift to the right in the Republican power center and, in the longer term, a complete turnover in the congressional leadership of the party.

The infrastructure plan would have led down the opposite political path. Trump would have retreated to the populist high ground from which he campaigned, angling to piss off both parties equally, and might have been able to come up with a plan that some Dems could get behind because it struck a comfortable chord: Federal spending to create jobs. Moderate republicans might have held their nose on the first half of that in order to get the second…jobs jobs jobs. The Freedom Caucus would have gone crazy and maybe flamed out. And the country would have ended up with some better maintained bridges and tunnels. (Although, a trillion dollars, while it sounds like a lot, would have been spread pretty thin.)

But, in a short speech, the tone of which uncharacteristically measured, the President made the path forward clear. (And, as of 9am EDT, not a single tweet from readDonaldTrump, let alone any to indicate an about face.) What did he tell us?:

  • It was the Democrats fault.
  • Paul Ryan is a great guy.
  • “We’re going to go for tax reform, which I’ve always liked.”

There were some mixed signals. He espoused bipartisanship, but in the end, I can’t imagine how taxes can be any less divisive than healthcare. It looks like the President is going all in with his party and banking on Ryan to this time pull off pulling the gang together. In “what the hell do I know?” category, I thought he’d throw Paul Ryan under the bus, distance himself from the Republican rightright, and focus on some getting some bipartisan wins including a major infrastructure bill.

But no, he picked the one issue that might be more complex than healthcare. Future quote prediction: “Who knew how complex tax reform could be?” You heard it here first folks.

My crystal ball runs low trying to predict how this will play out. One prediction: Zero Democratic votes, whatever the details of the bill. A strategy to unify Republicans has to be based on the classic notion of cutting taxes and depending on trickle down to increase the wealth of lower income Americans. No Democrat will buy that. And, with even the most optimistic assumptions about the economic lift, how do you get anywhere near a balanced budget? With even deeper spending cuts than those floated recently? That would further drive a wedge between the parties and would be likely to alienate the lower income Republican faithful who depend on many of the services likely to be cut. This future bill could equal the healthcare bill’s 17% popularity.

The other approach might be to focus on simplicity—there’s a lot of appeal to a flat business tax—and by removing deductions offset loss of income for the budget. But this will create multiple factions of winners and losers and will likely more splinter than rally the party. And then there’s border taxes, also more likely to divide than unite.

I’ve got to study this one a little more, gang, but, boy, I don’t see how tax reform can go any smoother than healthcare. The high wire act continues.