I have not hesitated to criticize the Congress for its failures this year, especially for the lack of attention to the nation’s defense, on which everything else depends. That being said, it’s only fair to acknowledge success, and the tax bill certainly is one.
This is what Republicans can accomplish when they plan and execute with determination. From the beginning, the bill’s object was to get the economy moving through targeted tax relief for business and individuals, combined with simplifying the code to reduce the transaction costs of tax compliance.
Republican leaders held firm over the last four months and eventually achieved their objectives. In essence, the Democrats decided to boycott the whole process and make the tax bill one of the major issues in the midterm elections. That was their right, and voters will have the opportunity to judge between the two positions in November.
I liked the way the legislation was handled. Paul Ryan has a lot of experience with tax legislation, and it showed. Mitch McConnell accomplished the Herculean feat of maintaining unity within the Republican conference. There was a sound balance of private deliberation and public debate. The bill moved quickly, but not so quickly that the press and public were unable to absorb the details and participate in the process.
Most of the bill was written in the committees of jurisdiction, which was the right thing, but individual senators and small groups of House members were able to move the needle on aspects of the legislation they cared most about. That was also the right thing.
To be sure, some of the participation bordered on the hysterical. That is not a new thing in Washington. Welfare reform was a major project of mine when I served in the House. When it passed in 1996, many on the left predicted disaster in the most apocalyptic terms.
Yet within five years, the welfare rolls had been cut in half, at the same time as child poverty across all demographics dropped to new lows. Welfare reform soon became accepted as a major accomplishment, with Bill Clinton not hesitating to take his share of the credit.
I suspect that a similar dynamic will be at play here. The tax bill should be good for the economy, and there is a reasonable chance that it will be very good. The corporate tax rate has been far too high for far too long; the tax bill lowers it to a competitive level. Currently businesses must expense equipment purchases over time; now they will be able to take an immediate deduction. Corporations today are taxed twice if they make profits abroad and want to invest them in the United States; the tax bill eliminates that double taxation.
All of that should produce a burst of business investment, which will result in a much stronger job market, and more competition for employees means higher wages. A rising tide really does lift all boats. The bill hasn’t even been signed, but a number of major corporations, such as AT&T, Boeing, and Wells Fargo Bank, have already announced their plans to distribute some of the benefits of this tax relief to their employees.
So while most Americans will experience a tax cut because of the bill, the biggest gainer will be the economy — something America’s major economic competitors are beginning to recognize.
President Trump has done a lot for American workers already, chiefly by enforcing the immigration laws and eliminating the climate of fear that the Obama administration created by overregulating the economy. This tax bill is another important achievement.
It happened because the president and congressional leaders set priorities (favoring economic growth over deficit reduction), advanced a clear policy, maneuvered effectively within political constraints, and executed the plan with purpose. One hopes Republicans will devote the same kind of leadership next year to achieving another of the president’s other top priorities: rebuilding the armed forces.