Tea party holding nation hostage
Implementing President Donald Trump’s political agenda is not going to get any easier.
If you think the divisions in Congress over replacing the Affordable Care Act were dramatic, that’s just the warm-up to repealing the Dodd-Frank law governing the financial markets and the proposed tax code overhaul. Trump is discovering that politicians in Washington behave very differently from real estate developers in New York.
The group of tea party Republicans who torpedoed the American Health Care Act last week are unlikely to welcome the Border Adjustment Tax on offer from Houston-area U.S. Rep. Kevin Brady. Brady, one of Speaker Paul Ryan’s top lieutenants, is finding no love for the 20 percent levy he wants to put on imports.
“The unprecedented tax would actually erect trade barriers resulting in increased costs on middleclass consumers, economic decline and job losses,” says Freedom Partners, a tea party political action committee. “Comprehensive tax reform would be a major boon to the economy, and we’re glad that Congress is making it a top priority ... but this trillion-dollar tax hike would be punch in the gut to hardworking families everywhere.”
Some right-wing economists insist that the U.S. dollar would go up in value because of the tax and American consumers would therefore not see any change in the cost
of imported goods. That’s not a sure thing, and even if were, these economists always forget to mention that a higher dollar will make U.S. exports much more expensive. That would hurt U.S. manufacturers that sell overseas.
Yet the border tax is critical to the GOP plan because it would generate the $1 trillion over the next 10 years needed to pay for proposed tax cuts. The only other alternative is to cut spending on Medicare and Social Security, something that Trump vowed to never do.
Speaking of vows, Trump has also promised to get rid of the financial regulations introduced after the extremely bad behavior on Wall Street that triggered the Great Recession of 2008. Known as Dodd-Frank Act, it is perhaps the least understood and most despised piece of legislation in the country.
The complexity of Dodd-Frank makes Obamacare look like child’s play. The 2010 law touches on almost every aspect of the nation’s financial system, from savings accounts to collateral debt obligations. And there is a lot that Republicans, Democrats and even banks will want to keep.
With 75 percent of Dodd-Frank already in force, a repeal without a largely similar replacement will cost the financial industry tens of millions in compliance costs. Then there’s the politics around dropping the rules that are intended to ensure taxpayers will never need to bail out banks again.
“Aside from the logistical challenges of repealing portions of the act, Trump’s populist message during the campaign included condemnation of the bankers and financial executives that caused the financial crisis,” wrote Fran Reed, corporate strategy analyst at financial data firm FactSet Insight. “This seems at odds with the repeal of Dodd-Frank, which would seemingly benefit those same bankers.”
Observers often forget that in addition to social and fiscal conservatism, there is a very strong anti-business streak in the tea party. Members lash out at what they see as crony capitalism and corporate welfare.
Based on the last head count before Ryan and Trump stopped Friday’s vote on the Obamacare repeal, there were 36 Republicans opposed to the replacement. Those 36 representatives now feel empowered to dictate other legislation that American businesses need to see passed.
Herein lies an interesting political opportunity for Trump and Ryan. Both have talked about trying to unify our country, so why allow 36 extremists to dictate what passes a 535-member chamber?
Trump has proposed affordable, universal health coverage. That’s long been a primary plank of the Democrats. Ryan has said the GOP needs to show a more human face to win over younger voters and minorities.
Perhaps they should try to negotiate legislation that might win over some of the 193 Democrats in the House. Bipartisan bills would also find a warmer reception in the Senate, where Democratic votes are needed to overcome filibusters.
Focusing on garnering a majority of lawmakers from both parties would require Ryan and Trump to forsake the informal Hastert Rule, named after former Speaker Dennis Hastert, who said he’d never allow a bill to pass unless it had support from the majority of the majority party.
Trump and Ryan have chosen to take on the most vexing and complex legislation in our nation, bills that will determine the economic future of our country. Perhaps they should think outside the partisan box, draft compromise legislation and walk away from the right-wing hostagetakers ready to blow up the nation’s economy.