“I look forward to working with [Paul Ryan] so we can get this bill passed in some form,” President Trump said of the Republican healthcare bill, “so we can pass massive tax reform, which we can’t do until this happens.”
Trump repeated that argument: “We’ve got to get this done before we can do the other.”
Republican leaders are leaning more on more on this crutch—this assertion that Republicans need to pass the American Health Care Act before moving on to conservative reforms—because the American Health Care Act is a bad bill that many Republicans would never back in its own right.
But here’s the thing: Every conservative in Washington has heard this same promise a thousand times. Going way back, ever since Donald Trump was a pro-choice Democrat, GOP leadership has been telling the base, vote with us on this, and we’ll get to your issue next.
Republican leaders are playing this game in at least two ways on the healthcare bill. First is the promise that tax reform has to come after the healthcare bill. Second is the promise that actually repealing Obamacare has to come after passing this bill that kind-of-sort-of repeals Obamacare and creates a brand-new entitlement.
This latter approach is known as the “three prongs,” and it is used to justify a common sub-genre of the “be a team player and you’ll get your chance later” schtick — the “donors first, conservatives later” ploy.
The AHCA only partially repeals Obamacare. The bill would kill all of Obamcare’s tax hikes but keep in place Obamacare’s regulations. This has pleased the folks who value tax cuts above all else as well as those folks whose taxes Obamacare hiked. Johnson & Johnson and General Electric, for instance, are the two largest medical device makers in the country. Obamacare taxed medical devices for no good reason. Now Republicans are repealing that tax for no good reason.
If Republicans want to cut taxes in the AHCA, but they’re not actually repealing all of Obamacare, why not craft some more sensible tax cuts than a medical-device tax cut and a tax cut for highly paid employees of health insurance companies? Sure, the Obamacare taxes being repealed are capricious and bad, but many other tax cuts could do a lot more good.
Republicans could lower the payroll tax rate, or exempt a worker’s first dollars from it. Republicans could eliminate the single-income penalty in IRAs (couples with one income can only save half as much in these tax-deferred accounts as dual-income couples). Republicans could lower rates, or expand HSAs.
But instead, Republicans are lowering capital-gains rates and abolishing the tanning tax. Well those are the tax hikes in Obamacare, they will argue, and we’re repealing the bill.
No, you’re not repealing the bill. You’re repealing part of it, and partially replacing it. The regulations preserved by the bill reduce consumers’ choice in insurance, they force people to buy more comprehensive plans than they might like. Also, Obamacare regs reduce competition in the industry, thus protecting the big insurers, further boosting prices and limiting choice.
Repeal of the regulations, you see, is in prong two of this three-prong plan, the White House and House leadership explain. So first you cut taxes for GE and wealthy investors, and then we’ll get to your conservative reforms.
The official explanation is a parliamentary one: You can cut taxes and spending under the budget reconciliation process, which is filibuster-proof; it will take either a 60-vote supermajority or executive action to roll back the regulations. But this is a flawed argument.
Many healthcare reformers on the Right have argued, convincingly, that because the regulations drive up premiums, they also drive up the cost to taxpayers who subsidize premiums, both under Obamacare and under its replacement. So repeal the regulations that boost premiums in order to reduce strain on taxpayers, and that should fit in a budget reconciliation bill.
At least try to do this first, and see what the Senate parliamentarian does, rather than tell conservative reformers to get in line behind the medical-device makers.
And if executive action can undo Obamacare regulations, why not show good faith, and make that prong one?
Donald Trump is new to Republican politics. He may think it’s a smart argument to tell conservatives, do what we want first, and we’ll give you what you want later. Conservatives have heard that line before, and they may want Trump to pay up first.
Timothy P. Carney, the Washington Examiner’s senior political columnist, can be contacted at [email protected]. His column appears Tuesday and Thursday nights on washingtonexaminer.com.
