Republican tax reform strategy: Pass and pray
This week will be a crucial test for President Donald Trump and the Republican majority in Congress. Specifically, this is the week that a taxreform bill should pass the Senate. The Democrats are taking their predictable position of attacking Republican taxreform plans as tax cuts for the rich, and the media is pointing to various polls citing the unpopularity of Trump's tax proposals. Again, all of this is predictable. And it was probably destined to be.
The decision in the Senate is down to a few Republicans. I'm not sure a broader, better communications effort on behalf of the administration would have changed this seemingly inevitable predicament. No central message about the benefits of tax reform ever gained any real traction. With that said, Republicans appear ready to pass a bill and are hopeful they will reap the economic and political benefits before next year's election. The strategy of pass and pray may have been born out of necessity, but it is a wise decision.
Waiting for a popular tax measure with Trump's name attached to it would be a long wait. Let's face it, Trump's approval rating is just 39 percent. Anything with his name linked to it right now has a serious political head- wind. This should come as no surprise. When NBC News and the Wall Street Journal asked last month, "Do you think that President Trump's tax plan is a good idea or a bad idea?," only 25 percent responded it was a good idea. And yet, the economic and political benefits of tax reform — or at least the negative impact on Republicans for failure to pass a major tax bill — cannot be overstated.
Over the weekend, the Wall Street Journal published a letter to Treasury Secretary Steven Mnuchin from nine distinguished economists who all agree that the Republican Party's tax proposals will produce substantial economic growth if signed into law. The letter — from Stanford University's Michael Boskin and others — states the GOP tax plan will "enhance prospects for increased economic growth and household incomes ... [and] lead to greater taxable income and federal tax revenues." In other words, these notable experts are convinced the GOP tax bills will produce economic growth and increase revenue. Most Americans may disapprove of Trump's performance so far, but no rational individual — not even a Democrat — has ever opposed economic growth and higher household incomes.
As I have said all along, it is tax reform or die for Republicans. Because in politics, what is supposed to happen tends to happen. And that means heavy losses for the incumbent party in midterm elections. The only way Republicans can disrupt the growing potential for a Democratic wave next year is through broad economic growth above 3 percent and sustained optimism about the country's short-term economic future.
The good news for Republicans is that from tax reform to immigration enforcement to major regulatory rollbacks and maybe even a surprise blow to Obamacare's individual mandate, it appears that the sausage in Washington is finally being made. It is discouraging, however, to see that instead of promoting this message, Trump let the media off the hook by again returning to his favorite subject, tweeting in the last 24 hours about Russia being "the phony Democrat excuse for losing the election."
Message discipline has never been Trump's strong suit, so the Republican Party's best chance for survival is to pass a real tax-reform bill, pray that voters notice and hope they don't feel the need to protest by voting for an alternative in 2018.