WASHINGTON — After the failure of the American Health Care Act in the House last week, President Donald Trump and his administration said that they’d drop the subject of health care and move on to their next policy priority: tax reform.
But one observer says that won’t really be any easier, in part because of the Republicans’ “brilliantly conceived” plan to repeal the Affordable Care Act.
Stan Collender, author of “The Guide to the Federal Budget” and a contributor to Forbes who worked for both the House and Senate Budget Committees, told WTOP that the administration and Speaker of the House Paul Ryan — a Republican who also represents Wisconsin’s 1st District — made the mistake of rushing a plan to repeal “Obamacare.”
“Number one, you’ve got to develop the support on Capitol Hill, but you’ve [also] got to develop the support off the Hill … outside the Beltway, so people can let their representatives know that they’re behind them one way or another.” The time between the unveiling of the American Health Care Act and its scheduled vote last Friday was 18 days, “and it showed,” Collender said.
The split between moderate Republicans, especially in the Senate, and the hard-core conservatives in the house Freedom Caucus was also foreseeable, Collender said. “You can’t just [pass a major policy initiative] with one party, because that one party, whether it’s Democrats or Republicans, is going to be split,” he said.
A brilliant plan
The administration and the party tackled repeal of the ACA first because of the way Senate rules are written. The plan would have worked brilliantly, Collender said, if the House had gone along.
Republicans hold a 52-48 majority in the Senate — a majority, but well short of the 60 votes they’d need to pass anything over an attempted filibuster by Democrats. The process called reconciliation is a way to bypass the filibuster and pass legislation with only 51 votes. But there are a couple of catches: The bill involved must be related to the budget and can’t permanently increase the deficit, and the tactic can only be used once per fiscal year.
The stratagem was set in motion when the Republicans didn’t pass a fiscal 2017 budget until Jan. 12, more than three months after the fiscal year had begun on Oct. 1, 2016. It allowed for the AHCA to be passed using reconciliation — once it passed the House.
The key, he explained, is that repeal of the Affordable Care Act would eliminate both the taxes that supported it and the spending that it mandated — the next effect would be to bring down the deficit, giving the Republicans more room to play with regarding tax reform, which they could pass in the fiscal 2018 budget — also using reconciliation.
Collender wrote in Fortune in November that the tactic would “slam dunk [the] Trump agenda.” And it would have — except the AHCA didn’t pass.
“Now that repeal-and-replace has essentially gone down the tubes, they’re going to have a much more difficult time doing the second piece of it,” Collender told WTOP. “The projected deficit will be higher when they start tax reform, and therefore to keep the bill revenue-neutral, which is one of [their] goals … so far, they’ll have to raise more revenue or cut more spending.”
What about the deficit?
He added, “Here’s the big question: Will it be revenue-neutral? Will Congress agree to do what they did in the 1980s, by raising the same amount of revenue but raising it differently, so there’s no impact on the budget?”
That’s the stated goal, but conservatives such as Rep. Mark Meadows, a Republican representing North Carolina’s 11th District, are starting to show signs that adding to the deficit might not be a deal-breaker.
“Right now, there’s a growing movement that maybe it shouldn’t be revenue-neutral,” he said. “Maybe it should be actually a tax cut — not paid for. And that would mean the deficit would explode.”
A tax cut that grows the deficit, that isn’t made up for in other areas of the budget, would either be subject to a filibuster, or it would have to “sunset” after 10 years. An example of this is the George W. Bush administration’s 2003 tax cut, which was passed using the reconciliation process.
But such a tax cut may well turn permanent, Collender said. Only part of the Bush tax cut expired in 2013, and “chances are that in 10 years, it’ll be just as difficult politically to take back a tax cut as it would be to take it back this year.”
There’s been some discussion of ways to make up for tax reform and cuts, including a border adjustment tax, but no ideas have gotten very far yet. Collender thinks that deficit concerns will fall by the wayside: “They’re going to go for the tax cut every time, and the deficit’s going to lose out every time. … The deficit is always a subterfuge — it’s an excuse to oppose what the other side is doing.”
A tax cut that increases the deficit, Collender said, would leave Democrats complaining about a lack of fiscal rectitude —“and sound[ing] like the Republicans of the past 10 years.”
