This is proving to be a monumental week in the 163-year history of the Republican Party. And so far, it isn’t going very well.
The GOP has once again failed in perhaps its climatic effort to kill the Affordable Care Act. Sure, there may be other attempts in coming years. But this was the biggie. Every year that passes, ObamaCare becomes more entrenched. And Republican control of the White House and Congress is a rarity. Maybe someday Republicans will finally repeal the ACA and replace it with a far more market-based system. More likely, they will find themselves defending the status quo against Democratic attempts to move to single payer. No wonder some top GOP donors have threatened to penalize failure by withholding contributions. It’s now or never. Or was.
This week also marks the start of a serious effort by Republican leaders to push a long-awaited plan to cut taxes. An actual plan. Not some general principles or vague bullet points on one sheet. Rather, the “Big Six” negotiators from the White House, the House, and the Senate are releasing a fairly detailed, unified blueprint that they hope will guide the massive tax overhaul through Congress. President Trump will lay out the details in a speech today in Indianapolis.
Now sure, GOPers had once hoped the plan would be ready for the president’s signature last month. But the true deadline is getting it done before the 2018 midterms. After all, there’s no economic crisis compelling action, only a political one. With little concrete to show so far from unitary control of Washington, flubbing the party’s core existential issue would be a catastrophic own goal.
Doing big things in Washington is never easy, as the Republicans are currently demonstrating. But doing them is much harder when the plans themselves are so flawed. And make no mistake: Both the GOP health and tax plans are troubled policy at best. That’s the main reason Republicans are struggling — it’s the policy, stupid.
The Graham-Cassidy health-care bill would have rolled back key ACA provisions and pushed funding down to the states to design their own ways of subsidizing and regulating health insurance in the individual market. The plan would have momentarily solved two political problems. First, it would have allowed Washington Republicans to say it kept its repeal and replace promise. And the plan would have shifted blame for any future problems to state governors and legislatures. Federalism in action!
But as a matter of policy, Graham-Cassidy was a trainwreck. States would have struggled with the regulatory and financing challenges of quickly building their new systems. As my AEI colleague Joseph Antos and James Capretta note in a recent analysis, several state-based health exchanges established by the ACA suffered “spectacular failures” despite three years and plenty of federal help — both of which they likely wouldn’t have this time. Graham-Cassidy was a hastily conceived and poorly thought out bill — at best.
You would think Republicans would be on safer ground with tax cuts. But their plan should be a non-starter given that it apparently would reduce federal revenue by $500 billion a year. And the only specific “pay for” so far — eliminating the state and local tax deduction — would cover maybe a third of that amount.
Republicans should be uncomfortable with any tax plan that reduces federal revenue. The national debt as a share of the economy has tripled over the past decade to a historically high level. Meanwhile, the country faces a tidal wave of increased spending on retirees. So whatever the benefits of some individual pieces of this tax plan, it is fiscally and intellectually incoherent in its totality. It also makes a joke of the GOP’s supposed deficit worries during the Obama years.
Both the GOP’s health-care and tax efforts show, if not an intellectually fatigued party, then one unwilling to speak truth to its voters: Tax cuts almost never pay for themselves. Universal health insurance coverage is a proper societal goal. ObamaCare isn’t to blame for slow economic growth. The future U.S. tax burden is far more likely to rise than fall. Trying to maintain policy fictions — whether to appease Fox News, talk radio, or voters with misplaced expectations — gets you a week like this one, a week full of bad politics and bad policy. And with little sign that GOPers are ready to acknowledge these hard truths, this bad week is unlikely to be the last one.