Treasury Secretary Steve Mnuchin says the initial goal of completing tax reform before the August congressional recess is no longer feasible because of the delay in getting health-care reform completed. But that’s an excuse, not an explanation. The truth is that the administration is spending significant time during its first months in office figuring out what its real agenda is, including how to get that agenda through Congress, instead of trying to actually pass something. The risk is now very real that the first year of this presidency will come and go with little to show for it in terms of significant legislative changes.
The seeds for this problem were planted in the campaign. Trump correctly understood that most voters aren’t interested in detailed policy proposals; he wasn’t interested in them, either. He preferred to criticize his predecessors and competitors and to promise broad improvement around populist themes. Trump and everyone around him seemed to think they could figure out “the what and the how” of governance once he got into office.
The Trump campaign’s indifference to developing a ready-to-go first-year agenda, along with a realistic legislative strategy, is now hindering the administration. Top White House and agency officials are spending significant time and energy deciding what they want to accomplish rather than trying to accomplish it. The new team is also finding out how hard it is to get something done in the first year of a presidency without the benefit of a running start provided by the campaign.
To be fair, every new administration has a steep learning curve, and many policies are fully developed only after a new president is able to harness the expertise gained from presiding over the executive branch. But no recent administration has come into office with its plans as uncertain as this one’s.
Taxes were something of an exception during the campaign, in that Trump associates put some effort into policy development. The campaign released two different tax-reform plans — one in 2015, aimed at influencing the GOP primaries, and the other in 2016, aimed more at a general-election audience. But even with these plans, it was always clear that the candidate wasn’t really invested in them. Trump never fully embraced their details or described them to voters. He spoke in general terms about wanting to cut taxes, and that was it. He purposely left the impression that he might pursue something entirely different after the election.
Which is what he is now doing — five months after he won the presidency. News reports indicate that he has directed his staff to start over on a reform plan because he is unsatisfied with the options they brought to him. Producing a completely revised approach on taxes is extremely complex, requiring sophisticated modeling and analytical work. Consequently, a new plan is now likely to be weeks, if not months, away from being ready.
As the administration considers its options on taxes, Trump says he wants Congress to take up health care again. But if, as the president suggested, tax reform is better taken up after a health-care plan passes (a dubious contention), the administration has presented no clear game plan for getting a viable health-care plan all the way through Congress and onto the president’s desk anytime soon either.
The New York Times reported that the plan put together in the House — the American Health Care Act, or AHCA — was short ten to 15 votes when GOP leaders decided to pull it back from consideration on the House floor. It is possible, therefore, that in the coming days and weeks, a compromise between the Freedom Caucus and more-moderate members of the Republican conference would swing enough votes to allow for passage of the bill in the House. But even if that were to occur, the bill would face a daunting path to passage in the Senate.
The AHCA’s fundamental problem is that it is widely viewed by rank-and-file House and Senate members — even among those who were prepared to vote for it — as flawed, substantively and politically, because it would make insurance less secure for many millions of people. The bill has the core structure of a sound plan, but, in its details, it would further destabilize the individual insurance market and lead to a large increase in the number of people with low incomes who would go without health insurance.
The discussion between the Freedom Caucus and more-moderate Republicans in the House is focused on how to provide secure and affordable insurance options to people with preexisting conditions. That is an important consideration, but the AHCA’s problems go well beyond that. Moving the bill through to enactment will probably require a more fundamental reassessment as well as a political strategy that will increase the chance of passage. If the AHCA wins only Republican votes, it will probably fail: It will be almost impossible to get near-unanimous GOP support for something with so much political baggage. The administration, and Congress, should pivot to a more viable strategy that could attract some bipartisan support.
On the budget, the Trump administration released a partial plan in March to increase defense spending for fiscal year 2018 while cutting most domestic agencies by a comparable amount. The cuts in domestic programs — totaling $54 billion, or around 10 percent of the total — were never mentioned during the campaign and generally lack a strong policy rationale beyond saving money. Congress is unlikely to go along with them, which means that the most likely scenario for 2018 will be an increase for defense (which is needed) and status quo for everything else.
It will be harder to pass significant reforms next year, as opposed to this year, because all House members and many Senators will be looking ahead to the midterm election.
The full budget, covering taxes and entitlement spending as well as appropriated spending, is slated to be released next month. At this point, we don’t know whether this full budget plan will include significant reforms that Trump would like to see enacted this year. He avoided getting specific on cuts or reforms during the campaign, and nothing has been mentioned in the early months of the administration beyond endorsing the Medicaid reforms in the House health-care bill. Because Trump was never clear about his intentions on fiscal policy during the campaign, it is unclear if his budget plan will be embraced or rejected by different factions of the GOP. Indeed, it is possible, and perhaps likely, that the same ideological divisions that are making it tough to pass the AHCA would also make it impossible to pass a budget in Congress.
This month, the administration set in motion an ambitious effort to reorganize the federal government, but the president won’t submit anything concrete to Congress until February 2018, so any reforms that Congress might agree to wouldn’t take effect until 2019, at the earliest. Needless to say, it will be harder to pass significant reforms, including elimination of government agencies and programs, next year as opposed to this year, because all House members and many Senators will be looking ahead to the midterm election when the calendar turns to 2018.
Presidents are elected for four years, so there is still plenty of time for the Trump administration to make progress and pass important legislation in Congress. But the first year is often important to the overall success of new presidents, and, after three months, it looks as though this administration is still getting itself organized and deciding on a game plan.
Not all of what the Trump administration is now doing could have been handled during the campaign, but some of it could have been done then. If it had been, the administration would be better positioned than it is to capitalize on the limited political momentum that helps push initiatives along in year one. By year two, the momentum is generally gone.
— James C. Capretta is a resident fellow at the American Enterprise Institute, where he holds the Milton Friedman chair.