The Tax-Reform Challenge

by Fred Bauer

Response To...

It’s All Fun and ...

As Rich Lowry notes, the relationship between Donald Trump and the Republican Congress has grown more cantankerous. The personal feuds — with Mitch McConnell, with Jeff Flake, with John McCain — pile up.

In terms of policy, though, there are signs that the Trump White House is continuing to defer to Republicans in Congress. This Axios story suggests that the administration is going to let the House Ways and Means Committee take the lead in drafting the details of tax reform. Now, this is an anonymously sourced report, and Ivanka Trump has met with Marco Rubio and other Republican lawmakers to discuss ways to make the tax code more family friendly. So there’s a chance that the administration will try to have more of an input on tax legislation.

However, this could also be a sign that, as with health care, the administration is going to outsource tax-reform policy to Congress. If that’s the case, we could have the scenario of an administration devoting its first year to enacting a legislative agenda almost entirely driven by Congress — even as the president rails against members of his own party.

It’s not clear that this helps the president (or his fellow Republicans). Indeed, one could argue that it might be more effective to invert that strategy and have the president push Congress to adopt more Trumpian policies while affecting more personal comity. For instance, it seems very likely that the president’s approval rating would be higher if, early in his administration, he had pushed for a big, bipartisan infrastructure bill rather than capital-gains tax cuts and Medicaid reform (i.e., the GOP’s first effort at health-care reform).

The health-care stalemate has another lesson for Republicans contemplating tax reform. On health care, all the showmanship in the world could not mask real policy dynamics. A similar point applies to taxes. Failing to prioritize relief for families and middle-class voters would only increase Republicans’ political vulnerabilities on tax reform and make such reform less likely to be passed into law.

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