Republicans scored a major success by passing their tax bill. Just ask them. Victory appears to have come as such a surprise to them that they do not have a plan for what to do next.
At the White House, infrastructure is the big idea. What form a bill would take is, however, unclear. The president has reportedly poured cold water on the public–private partnerships that Gary Cohn, his top economic adviser, wants to make central to any plan. Speaker of the House Paul Ryan keeps talking up welfare reform: He has long wanted to devolve authority over many anti-poverty programs to the states. He also says that reform of Medicare and Social Security is on his wish list, although he does not see it happening this year. Senate majority leader Mitch McConnell, meanwhile, says action on welfare is unlikely but suggests that bipartisan legislation on immigration and financial regulation might be possible.
The prospect of a political hanging in a few months is not concentrating Republican minds on an agenda. More and more Republicans in Washington expect their party to lose control of the House in the November elections. You would think that Republicans would be scrambling to get as much done as possible, then, before they lose the power that comes with party control of the White House and both chambers of the legislature. But you would be wrong.
Should Republicans decide to try to pass legislation, there is no shortage of useful reforms they could make.
Health care. A lot of congressional Republicans, especially in the House, don’t want to take up health care again. They feel that last year they wasted months trying and failing to pass a bill making major changes to Obamacare. The passage of the tax bill, which included the abolition of the fines on people who go without health insurance, should change their thinking on the issue.
The end of those fines should raise insurance premiums, and Democrats are planning to blame Republicans for it. Thus Republicans have an additional reason to seek to relax Obamacare’s regulations. If they do, they will be able to focus attention on Obamacare as a more fundamental reason than their own actions for higher premiums. They will also be able to say that they are working to address the problem.
The end of the fines was the main reason that the Congressional Budget Office projected that last year’s health-care bills would result in 15 to 23 million fewer people having insurance. Because they already got rid of the fines, the estimated impact of any future bill on coverage should be significantly lower. Republicans should push for as much extra state authority to relax Obamacare’s regulations and reconfigure its spending as they can get 51 Senate votes for.
Immigration. President Obama granted temporary legal status to people who came to this country illegally as minors, even though he had no statutory authority to take this step. President Trump said he would bring this treatment to an end unless Congress acted, as he says it should.
Republicans and Democrats are wrangling over the shape of legislation to grant legal status to the affected population. Should it cover only those who took advantage of the Obama policy, or also those who were eligible for it? Should the covered group be able to apply for citizenship, or is legal status enough? What reforms of the immigration system should accompany legalization?
It would make sense to combine an amnesty for most people who came here illegally as minors and reforms that reduce the downside of this amnesty. Enforcement should be stepped up, particularly at the workplace, so that the amnesty does not cause further illegal immigration. The newly legalized should not be able to sponsor relatives as immigrants, either, with an illegal act being the first link in a chain of migration. A limited deal might pave the way for action on the broader illegal-immigrant population.
Taxes. Many Republicans want to devote a large chunk of the year to publicizing the benefits of the just-enacted tax bill. A good way to do that would be to advance legislation to make the middle-class tax cuts included in the bill permanent. Senator Ted Cruz already has a bill to keep the new tax rates from expiring. But another major piece of middle-class tax relief in the bill — the expansion of the tax credit for children — should also be kept from expiring, and protected from inflation. Democrats have complained that the bill allows middle-class tax cuts to expire and should be pressed to make it clear whether this complaint was made in good faith.
Infrastructure. A lot of conservatives in Congress worry that any infrastructure legislation will quickly degenerate into a race to spend money as wastefully as possible, with the projects funded based on their political appeal rather than the country’s economic needs. They are probably right. If Congress takes up infrastructure, though, conservatives should do what they can to improve the legislation. They can make the process of getting federal permits for projects less arduous, for example, and do what they can to give states more policymaking authority. One way to pursue the latter objective is to cut the federal gas tax and at the same time slash federal spending on infrastructure projects that are of purely local interest. Let states raise their own gas taxes to maintain their own roads.
Higher education. Over the last few years a number of Republicans have advanced serious proposals to reform higher education while expanding opportunity. Senator Mike Lee (R., Utah) wants to break up the federal monopoly on accrediting institutions of higher education. Senator Marco Rubio (R., Fla.) wants to make it easier for people to make contracts that let them borrow money for college and pay it back with a share of their income post-graduation. With Senator Ron Wyden (D., Ore.), Rubio also has a bill to let families see how well particular college departments prepare students for employment.
Welfare. Republicans’ two main ideas on reforming anti-poverty programs are to make their able-bodied recipients work and to give states more flexibility. Both are good ideas that can easily be taken too far. The Trump administration has endorsed imposing work requirements on Medicaid. That’s not likely to be administratively practical given how rapidly people enter and leave the program. And state governments have not shown themselves to be champing at the bit to reform their programs — most of them just want to keep the federal dollars coming their way. Welfare reform is also likely to be caricatured, even if it is well designed, as a way for Republicans to take money from the poor right after the party cut corporate-tax rates. One last reason for caution: This seems like an issue with a high probability of drawing forth Trump comments that other Republicans would find hard to defend.
Entitlements. Ryan has wanted to reform Social Security and Medicare throughout his career, and for good reason. They are the primary reason the government is growing, the primary reason for looming increases in the federal debt, and thus the primary reason to worry that taxes will have to rise in the future. President Trump, during the presidential campaign, claimed that he differed from all the other Republican candidates in being unwilling to cut Social Security, Medicare, or Medicaid.
But the definition of “cut” is malleable. During the debate over the health-care legislation last year, Trump promoted legislation that would have reduced the future growth of Medicaid. Fewer people would have been eligible for Medicaid in the future if the legislation had passed than if it had not. Some people might even have been kicked off the program.
Whatever Trump imagined when he was campaigning, almost all Republican plans for Medicare and Social Security involve reductions in future growth rather than outright cuts. Many of them also exempt current retirees from reform. Social Security could be brought to long-term solvency, for example, merely by making benefits rise no faster than inflation. (Under current law, they rise faster than that, so that the average retiree of 2028 enjoys a higher real benefit level than the average retiree of 2018.) For that matter, solvency could be assured by merely making benefits for middle-class and affluent retirees rise at that relatively restrained rate.
But Republicans have not laid the groundwork for a controversial change to the popular programs, many Republicans would be leery of taking on the issue even under the best of circumstances, and Trump may feel that he cannot appear to break his campaign promises. So action on entitlements is extremely unlikely.
If Republicans in D.C. asked for my advice, I’d tell them that health care, immigration, middle-class taxes, and higher education are their most promising legislative issues for the year. (Come to think of it, I’m giving them that advice right now without their asking.) They might be able to do some good on these issues. Trying might also help them cut their election losses a little. Especially given that the less they are talking about legislation, the more they will be talking about Trump’s tweets.