The Republican plan to pass tax legislation by Christmas was considered laughable
The GOP overhaul of the US tax system is slated to be signed by Trump this week
Get the members off of Capitol Hill.
That was the pitch from John Leganski, House Majority Leader Kevin McCarthy’s 26-year-old floor director, to the more than two dozen Republican leadership staffers assembled around the long rectangular conference table at the back of Speaker Paul Ryan’s office.
It was less than two weeks until the rollout of the Republican tax framework, and anxiety about a redux of the failed health care effort was palpable across GOP offices on the Hill. At its core was a question that would become central to the tax bill’s success: How do we do the exact opposite of everything we did on health care?
That’s where Leganski’s idea took hold, several aides inside the meeting told CNN. When it came to the introduction of the Republican tax framework, Leganski reasoned, keep the members away from the press to limit their ability to attack the proposal right out of the gate. Perhaps more importantly, lock them into a conference room until everyone has had every question addressed – and every major concern mollified.
“You never get a second chance to make that first impression,” one GOP aide said. “And our first impression on health care was Republicans nuking their own bill the day it came out.”
The day the House GOP repeal-and-replace effort was unveiled, it was a matter of minutes before the circular firing squad unloaded.
For taxes, Republican staffers quickly moved to set up an unofficial retreat – they kicked around Annapolis or Baltimore, before eventually settling on the National Defense University, a campus in Southwest Washington on the grounds of Fort McNair – where members of Congress always have access to facilities.
The retreat would go off without a hitch 11 days later. And by the time it was over, even the conservative House Freedom Caucus was ready to endorse the proposal. If the first impression mattered, this was a rousing success – one that laid the groundwork for the passage of the landmark legislation just short of three months later.
The story of how Republicans achieved something that just three months ago seemed as laughable as it was impossible – a sweeping overhaul of the US tax code before Christmas – is one defined by unexpected speed, tens of millions of dollars in outside spending and a series of lobbying and House-Senate parochial skirmishes.
“Did you believe we’d ever be at this day, with this bill, on this floor, with the outcome that we know is going to happen?” McCarthy asked reporters before the House vote Tuesday; Ryan quipped, “Let’s see a show of hands.”
By Wednesday afternoon, the Republican tax bill had cleared Congress – a half-day later than expected due to procedural snags in the Senate, but no less of a major legislative accomplishment, which the White House plans on celebrating with a ceremony shortly after the House passed it for a second, and final, time just before 1 p.m. ET.
Alfredo Ortiz, the president and CEO of the Job Creators Network said candidly, “many thought that this would be something that would be taken care of in the spring of next year,” even as he had advocated to do it by Christmas.
But most of all, the passage of the bill is rooted as much in the GOP’s health care failure as it is in devotion to a particular policy agenda. This recounting comes from interviews with more than two dozen lawmakers, senior aides, administration officials and lobbyists deeply involved in the process.
It’s a plan that leans heavily on dramatic changes for businesses, first among them a sharp 14 percentage point cut to the corporate rate. On the individual side, the benefits are less robust, but shown to provide a tax cut, on average, for every income class in the near term. The standard deduction is doubled, as is the child tax credit. In the plan’s first year, 80% of households would get a tax cut, according to the Joint Committee on Taxation. But the plan has been pilloried by Democrats and panned in public opinion polls for its perceived shortcomings – the individual cuts expire after eight years.
“Let me be clear, this tax bill will be an anchor around the ankles of every Republican,” Sen. Chuck Schumer, the Democratic leader in the chamber, told reporters Tuesday. “If they haven’t learned it yet, they’re going to learn it next November. Republicans will rue the day they pass this bill and the American people will never let them forget it.”
The percentage of total cuts lean toward the wealthy. Even accounting for growth, it potentially adds $1 trillion to the deficit. And the corporate overhaul underscores a key split in economic ideology of the two parties: The permanent benefits are designed to bolster economic growth, and along with it, wages. It’s a result that relies heavily on outside economic factors simply out of Republican control.
Yet Republicans – spurred by legislative failure and electoral uncertainty, united behind a central belief in the efficacy of tax cuts and bolstered by a White House that, unlike with its health care push, served as a unifying, as opposed to divisive, force – pushed through the $1.5 trillion proposal.
“I was worried about tax reform. I was very worried that we’d come back and do the same thing we did on health care,” said Sen. John Kennedy, a Republican from Louisiana. “But it didn’t happen, and about 25% of the way through, I said, ‘Ya know, we’re going to put this one together. I can tell.’ It just felt completely different.”
The biggest hurdle
Across the Capitol, Republicans were also licking their wounds from the stinging health care defeat – one in which the blame fell squarely at the feet of the 52 members of the GOP Senate. Fierce outside opposition – and a unified Democratic caucus – succeeded in splitting the party on health care. Democrats would once again be on the sidelines in both the House and Senate as Republicans pursued a partisan process always designed to allow passage by a simple majority vote in the chamber. They would need to fend off another concerted effort to sink the legislation by a unified Democratic caucus deeply opposed to the bill.
But aides involved in the process recognized something immediately upon their return from the August recess, having been hammered by their constituents during their weeks at home: They had returned desperate to do something – anything.
One Republican lobbyist recounted going to several fundraisers and asking members who was getting the blame for the health care failure back home.
Contrary to the prevailing wisdom inside the Beltway that President Donald Trump had fumbled on health care with his lack of policy acumen and inconsistent positions, this lobbyist said: “Donald Trump was not being blamed for being bad at his job. They were.”
Members were also hearing from donors.
“Oh mercy, yes,” Sen. Roger Wicker, R-Mississippi, said when asked whether he had heard from angry voters and donors back home. “Donors want to think they are contributing to a winning campaign strategy and secondly that policy changes are going to result.”
It was a combination that sparked action that for 31 years, despite the efforts of both parties, had been blunted by an array of sacred cows and outside interests that for many, seemed likely to win the day this time around as well. It turned out the threat of doing nothing – and the unprecedented speed of the process – prevailed.
“Before anyone could get too organized, the process was too far along,” one lobbyist acknowledged.
Yet the Senate had long been viewed as the biggest hurdle to the overhaul – a chamber with members that held disparate interests and constituencies to go along with their high regard for themselves and their own power. It’s not a new dynamic – but it is one that aides acknowledge historically creates difficulties.
“There is some ego. It’s not secret in the Senate there are a couple of jerks and there are a few people who think they are the founding fathers,” Kennedy said of his colleagues.
It was with that in mind that McConnell and Senate Finance Committee Chairman Orrin Hatch crafted a strategy to put the onus on the members to get the bill across the finish line. Hatch deputized four colleagues on the committee right after the election, from across the range of the conference – Sen. Pat Toomey to marshal conservative support, Sen. Rob Portman for his bona fides with the more moderate members, Sen. Tim Scott for his relationship with the freshman class, and Sen. John Thune, a member of leadership.
The four would play a crucial negotiating role – and serve as de facto point men for Hatch and his team, led by staff director Jay Khosla, as they attempted to navigate the different asks and concerns raised by members in the weeks that followed.
But it went further than that – as September moved along daily staff meetings and twice-a-week member meetings turned into specific assignments for the senior staffers of each Finance Committee member. Each would take ownership of a specific piece of the tax proposal – then present to the entire group.
It was night and day from health care, aides recounted, noting that that process was largely sequestered inside a small group of senators and smaller group of staffers – leaving senators without buy-in, or in some cases, the policy know-how to handle the rapid fire opposition that followed that bill’s release. In health care – where a working group had been appointed – there had been circular discussions that went on without any resolution and no one at the end of the day to make the call.
The week before the committee was scheduled to take up the tax bill, Hatch and McConnell expanded the group – bringing in rank-and-file Republican senators in groups of six or eight for presentations with Hatch, Sen. John Cornyn, the second-ranking Republican, and staff.
Just before the final markup, McConnell came to a meeting of Hatch and committee members and stressed the need for unity – without explicitly saying they should stick together and punt away any Democratic amendments that could endanger the bill; the message was clear and it worked.
While Trump may not have been receiving the lion’s share of the blame back home in the states and districts of various Republican members, on Capitol Hill there was no shortage of pointed – if generally anonymous – criticism directed his way for his health care efforts.
To diminish Trump’s role, particularly in its marked departure from health care, where he at one point called the House bill “mean” and continued to claim it contained provisions that it simply did not, would be to shortchange efforts that, unorthodox as they may have been in a traditional sense, were enough to help the bill across the finish line.