Republicans ran on a campaign promise of repealing and replacing Obamacare
After marathon markups Wednesday, some may wonder why did the GOP do tax reform first?
There are a bunch of questions circulating now about why Republicans decided to tackle enormous task of repealing and replacing President Barack Obama’s signature health care law, instead of going after the issue of tax reform first.
Even President Donald Trump has said publicly that tax reform would be easier, so why go after Obamacare first? A couple of reasons:
First: This was a GOP campaign promise for the last few election cycles
Republicans on Capitol Hill approached this year with an understanding that this was a – if not the – issue that propelled them to power. Now they have to deliver. We all tend to give a wink and a nod to campaign promises, but this was a major pressure point as to why it came first.
House Speaker Paul Ryan pointedly noted as much Wednesday in remarks to reporters: “Every House Republican, every, I think every Republican in Congress, including the President of the United States, made a promise to the American people.”
Second: Republicans thought they were ready to go on health care
Over the past two years, both the House and Senate passed bills repealing Obamacare, with the vast majority of Republicans voting for them.
The GOP also moved several piecemeal bills (or at least held hearings on them) in the House. Bottom line, they thought the groundwork was already laid on the issue and, believe it or not, there was far more internal consensus on Obamacare than tax reform.
Rep. Kevin Brady, the chairman of the tax-writing House Ways and Means Committee, said Wednesday as his committee took its first action on the repeal proposal: “It follows nearly 200 hearings held in the House since Obamacare’s enactment – over 35 in our Committee alone – as well as numerous Ways and Means bills considered and approved by the House.”
Trump has said as recently as Tuesday, however, that he knows what kind of tax plan he wants after Obamacare’s repeal is finished.
“As you know, after that we work on the tax cut,” Trump said during a meeting Tuesday in the East Room with the GOP House Whip team. “We’re going to be planning a major tax cut. I know exactly what we’re looking at. Most of us know exactly the plan. It’s going to put our country in great shape and we’re going to reduce taxes for companies and for people, and I can use the word again, massively.”
Third: Procedurally, Republicans have left themselves no choice
As soon as Republicans passed a budget resolution in January that included reconciliation instructions related to Obamacare, they were locked into this window.
As it stands, Hill leaders are doing Obamcare repeal-plus under the fiscal year 2017 budget window. So long as they want to pass this proposal only needing 51 votes in the Senate, they must do Obamacare repeal now.
The minute they move onto the next fiscal year’s budget, those January instructions disappear, as does their window to advance repeal with a simple majority.
Along those same lines, they also want to move tax reform via reconciliation for the same simple majority vote reasons. This explains why the window for Obamacare action is so small right now: Republicans move now or they lose the ability to do it all together, or they resubmit reconciliation instructions on Obamacare in fiscal year 2018 and lose the ability to tax reform via that mechanism.
Rock, meet hard place.
On top of all of that, there’s one final, not-so-small issue: the in-the-weeds budgetary mechanism that is reconciliation contains a key restriction. The procedure requires, over the long-term, the bill to reduce the deficit over a period of time. Moving the Obamacare bill would, as designed, reduce taxes while reducing spending. This drop in the overall baseline would allow Republicans to pursue a central element of their tax reform priorities: making it revenue neutral.
If Hill Republicans want to move both these huge items via reconciliation, they have to operate in these separate budget windows. Let one lapse, and down goes one of their key priorities with it.
As Trump noted on tax reform last month: “I can’t do it until we do health care, because we have to know what the health care is going to cost and – statutorily – that’s the way it is. So for those people who say, ‘oh, gee, I wish we could do the tax first,’ it just doesn’t work that way. I would like to do the tax first.”
Fourth: Tax reform is really hard, too
Any Hill veteran would tell you that the idea that tax reform is going to be easy or any less complicated than health care is a fantasy.
There’s a reason this hasn’t happened in 30 years. (Seriously, Google “Tax Reform is hard.” More than 3 million results show up.)
The policy proposals aren’t even remotely fleshed out. The central component of the plan to finance the proposed rate cuts is deeply opposed by even more Republicans than currently have problems with their Obamacare plan.
Most notably, the primary interest groups haven’t even engaged yet. Issues such as the mortgage interest deduction need to be worked out, and mortgage bankers and home builders have yet to flood the Hill in opposition.
That’s just one of many aspects of the law that would need to be hashed out. As Senate Majority Leader Mitch McConnell told the Wall Street Journal: “It’s hard, because every preference has an army behind it that benefits. And every beneficiary of a particular preference would like me to get the rates down by whacking someone else.”