Memo to GOP: Pass the Tax Bill

December 1, 2017

For a host of reasons, it is extremely important that Republicans pass the most pro-growth tax reform bill that can squeak by both houses of Congress.

Though President Trump’s tweets and manners upset a lot of people, what seems to be lost in the mix is that his administration is making progress along many fronts. It’s not just his judicial appointments, though it is difficult to overstate how excellent these have been.

He has also quietly made improvements in a number of other areas, scaling back oppressive administrative regulations on the environment, immigration and health care. The administrative state is a galloping cancer on our liberties that Congress rarely reins in, so Trump deserves credit for lawfully rescinding some of Barack Obama’s unlawful orders.

Trump has also helped restore pride in America by promoting the American idea and expressing pride in and supporting the military and our national defense. He has not yet been the trade protectionist I feared, and he has been more circumspect in foreign policy than some anticipated.

But unless Trump is able to advance his legislative agenda, Republicans will be handicapped in 2018, not to mention 2020. Aware of this, Democrats will conspire to thwart any GOP tax bill, even one they would support if they were in charge.

Though the mouth-foaming left can’t seem to discern this, Trump is not strongly ideological. Liberals see any Republican president as a right-wing extremist who must be stopped at all costs. Trump’s idiosyncratic behavior makes him all the more contemptible to them, but they would oppose his agenda just as fervently if he had pristine manners like, say, George W. Bush or Mitt Romney.

And though Trump’s non-ideological bent may work to his advantage in some cases, it is clearly a detriment to advancing a legislative agenda. This is one place where governance is markedly different from running a business.

Though a handful of recalcitrant Republican senators can rightfully be blamed for the GOP’s failure thus far to repeal Obamacare, Trump might very well have been able to overcome this obstacle had he presented a clearer vision. The problem is that he didn’t have one and was too malleable, by which he forfeited his ability to build a coalition and lead on the issue. He just wanted a victory, and that is never enough.

The deeper problem was that he was of two minds on the issue. He was trying to reconcile conflicting goals — to reinstitute market forces in health care without removing the underlying socialistic structure of Obamacare.

We are seeing a bit of the same with the tax bill. The current bill is partially pro-growth, especially on the corporate side, but is schizophrenic because it incorporates the Democrats’ class-warfare assumptions. I believe that Trump erred in allowing the Democrats to frame the debate in their terms when he said the rich don’t need a tax cut — as if their money belongs to the government and they can only keep what the government, in its beneficence, allows.

Another major problem is that Republicans have tacitly conceded that every bill has to be “revenue-neutral” based on static scoring. That is, for every dollar in taxes they cut, they have to raise taxes somewhere else, totally factoring out the growth-generating aspects of reduced marginal rates. Republicans throw in part of the towel before negotiations begin.

Even if you believe that reducing tax rates won’t expand the revenue pie, why is their default position to raise taxes elsewhere to pay for cuts instead of reducing spending?

I doubt that I will be ecstatic with whatever version finally emerges from Congress, but based on current proposals, I am optimistic that it will be a significant improvement over the status quo in substantially reducing corporate rates and individual rates on most of the middle class (the poor don’t pay) and in simplifying the code.

I pray that the Republicans pass the best version they can so that they can fulfill one promise and then move on to spending issues and revisit health care reform — from a stronger position.

When they turn to spending, they will have to face the unpleasant reality that it is numerically impossible to curb the federal leviathan without once and for all tackling so-called entitlements. The Democrats will never do it, and they’ll force Republicans to walk over hot coals in hell to make any progress here, but that’s better than bequeathing our children fiscal hell.

I was encouraged to read recently that Paul Ryan and others in the GOP leadership fully intend to work on these issues next. If we think health care and taxes are a tough sell, just wait for entitlements.

So let’s not allow, once again, the perfect to be the enemy of the good but encourage Congress to pass tax reform. The market is up based on positive signals, but those signals, as soon as possible, must be reinforced by real legislation. The clock is ticking.