With their congressional majorities on the line, the Republicans on Thursday launched an urgent bid to overhaul the federal tax code by year’s end, a difficult feat met with repeated failure since last accomplished 31 years ago.
The collapse of legislation to repeal and replace Obamacare, a stain on the Republican Congress after 10 months commanding all levers of government, has escalated the political pressure on the party to deliver on tax reform.
Another setback, and Republicans could see political support for their 2018 campaigns evaporate, as donors and grassroots voters decide to sit on their hands out of frustration with another broken promise.
“It’s important, both for the economy and for us — for the evaluation people are going to have of this Senate and this Congress,” Sen. Roy Blunt, R-Mo., told the Washington Examiner. “We need to get it done this year.”
Tax reform was last accomplished in 1986, under President Ronald Reagan and a divided Congress.
Challenging under the best of circumstances, success in 2017 relies on risky policy choices, the leadership of President Trump, a mercurial and unpopular politician, zero help from the Democrats and, perhaps most crucially, Republicans’ will to compromise amongst themselves.
House Speaker Paul Ryan, introducing the initial Republican tax reform blueprint during a late morning news conference on Capitol Hill, insisted that his party was prepared and in sync.
The Wisconsin Republican shrugged off suggestions that infighting could derail the effort, as it did the health care overhaul, even as disagreements festered. Among the sticking points: whether to repeal the popular deduction for state and local taxes.
“The political will among the members here, in the House, as shown by members of the Ways and Means Committee, is ironclad to get this done,” Ryan said.
The party that holds the White House historically loses seats in Congress in the midterm.
In control of the House and Senate, and with Trump’s approval ratings hovering around 40 percent and the generic ballot showing a preference for Democrats, the Republicans are primed to suffer from this trend, as former President Barack Obama did twice.
But Republican insiders closely monitoring the electoral environment for 2018 say the party’s pressing danger is apathy by its own voters, who tend to show up in midterms in higher rates than those who support Democratic candidates.
With polls showing Republican voters are angry with the GOP Congress (but not Trump) after efforts to repeal Obama’s Affordable Care Act stalled over the summer, approving tax reform legislation, even a watered-down tax cut bill, is imperative.
“So far, we have been mostly a failure and we are getting kicked in the teeth in our districts,” said senior Republican House aide, on condition of anonymity in order to speak candidly. “People are super pissed, anything that shows positive movement is huge.”
“If Republicans don’t pass tax reform or any other major legislation, it’s going to be awfully hard to motivate the base in the midterms. What’s our rationale for governing if we’re incapable of passing any policy?” a GOP consultant added.
To get there, Republicans are jettisoning decades of cherished dogma.
They have long maintained that all Americans who paid taxes deserved relief. When Democrats would accuse Republicans of providing tax cuts to the rich at the expense of the middle class, they harangued their opponents for instigating divisive class warfare.
No more. The Republicans’ pitch is now similar to the approach by Obama and the Democrats that they opposed during his two terms, and previously.
Per a directive from Trump, and possibly in a nod to an evolving political base more dominated by working-class voters, the House Republican plan focused tax relief on the middle and lower classes, with minimal to zero reductions for upper middle class and wealthier earners.
The package caps the deduction for mortgage interest at $500,000, eliminates the break for college debt, and excludes certain white-collar professions from the proposed lower rate for small businesses. Asked to explain the shift, Republicans conceded that they had lost the debate.
“It’s not worth the criticism you get and frankly, people demagogue those issues,” said Sen. Orrin Hatch, R-Utah, chairman of the Finance Committee, the Senate’s tax writing panel.
Added Sen. Richard Shelby, R-Ala.: “The middle class, overall, have not had the tax breaks that a lot of other people have had over the years, and we’re trying to rectify that.”
