Repub­li­cans’ tax-cut MacGuf­fin is about to crum­ble

The Middletown Press (Middletown, CT) - - OPINION - Cour­tesy of The Wash­ing­ton Post

Tax cuts have be­come the GOP’s MacGuf­fin. A MacGuf­fin is de­fined as “an ob­ject, event, or char­ac­ter in a film or story that serves to set and keep the plot in mo­tion de­spite usu­ally lack­ing in­trin­sic im­por­tance.” (Think of the “let­ters of tran­sit” in “Casablanca” or the black sand in the cham­pagne bot­tles in “No­to­ri­ous.”)

Ask Repub­li­cans how to turn things around and they will in­tone, “Tax cuts.” What does the White House ex­pect will turn around Pres­i­dent Don­ald Trump’s for­tunes? Tax cuts. Ask donors or GOP ac­tivists how they can hold the party to­gether in the Trump era and they will know­ingly tell you, “Tax cuts, of course.” It’s not at all clear what would be in the tax cuts, for we have yet to see an ac­tual plan, nor is it clear that the GOP will have the ben­e­fit of a rec­on­cil­i­a­tion process that re­quires only 51 votes in the Se­nate. For that, they’d need a bud­get res­o­lu­tion to at­tach the rec­on­cil­i­a­tion in­struc­tions and meet the so­called Byrd Rule, which among other things pro­hibits any in­crease in the deficit be­yond the 10-year win­dow.

Be­fore Trump’s deal on the debt ceil­ing last week, I didn’t think a sub­stan­tial tax-re­form bill with the big cuts Repub­li­cans like to dream about was go­ing to get done. The numbers are too dif­fi­cult; the health­care fight re­vealed mod­er­ate se­na­tors’ squeamish­ness about tax cuts for the rich; they have a math prob­lem re­gard­ing the Byrd Rule (i.e. deficits be­yond the bud­get win­dow); and frankly, House and Se­nate dys­func­tion is so great that I thought the idea of pro­ceed­ing on some­thing as com­plex as tax re­form was al­ways a stretch.

In the wake of the debt-ceil­ing deal, oth­ers are start­ing to get the idea that tax re­form is not in the cards. CNBC re­ports:

“‘The ex­ten­sion of debt ceil­ing and gov­ern­ment fund­ing de­bates into fourth-quar­ter 2017 may limit Congress’ abil­ity to pass tax re­form,’ wrote Moody’s an­a­lysts Sarah Carlson and Matt Ku­lakovskyi. ‘If the agree­ment goes through, ne­go­ti­a­tions on rais­ing the cur­rently bind­ing debt ceil­ing will start again in only a few months,’ sug­gest­ing that other items on the agenda may have to take a back seat to debt de­bate.

“Moody’s anal­y­sis also said that any fur­ther tax cuts would ‘ex­ac­er­bate’ pro­jected in­creases in gov­ern­ment debt, thereby con­tribut­ing to the al­readytense po­lit­i­cal dis­cus­sion.

“‘The agree­ment has no ef­fect on our as­sess­ment of the gov­ern­ment’s fis­cal dy­nam­ics be­cause it does not include any pro­vi­sions for ad­di­tional rev­enue or off­set­ting ex­pen­di­ture cuts to fund the pro­posed dis­as­ter re­lief spend­ing or, more gen­er­ally, af­fect the bud­get bal­ance,’ added the an­a­lysts.”

So what hap­pens if the GOP’s MacGuf­fin gets writ­ten out of the script?

One op­tion would be to work on some small sub­set of tax re­form, such as a rev­enue-neu­tral cor­po­rate tax re­form (not cut). That would be log­i­cal, but in the “all or noth­ing” men­tal­ity that per­me­ates the GOP, it doesn’t seem likely to at­tract much in­ter­est. The GOP could turn to other things that might be doable — in­fra­struc­ture, a fix for the Oba­macare ex­changes, etc. But those in and of them­selves are di­vi­sive within the GOP (as is a fix for the De­ferred Ac­tion for Child­hood Ar­rivals pro­gram, of course); more­over, th­ese are not the sort of things that an­i­mate the whole party, bring­ing dis­parate strains of the party to­gether and pro­duc­ing a kum­baya mo­ment for a party at war with it­self. You see, given that the GOP has de­voted so much en­ergy to the prospect of tax cuts, fail­ure to at­tain that prize in all like­li­hood will leave the party more di­vided and dispir­ited than ever be­fore.

The idea that House Speaker Paul Ryan, R-Wis., is some­how bet­ter off af­ter the debt-ceil­ing deal or that the debt deal “cleared the decks” so tax re­form could get done strikes me as rather delu­sional. If Repub­li­cans don’t get their save-their-skins-and-the-party tax plan, I sus­pect you’ll see a bunch more con­gres­sional re­tire­ments, a whole lot of al­tright chal­lengers and a re­ally an­gry GOP donor com­mu­nity. At some point they might even be­gin to ask: What good is Trump if he can’t get us any­thing we re­ally want?

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