Cogito Ergo Non Serviam
House Passes Doomed Tax Bill
The House of Representatives passed its tax cut bill yesterday, 227 for and 205 against the measure. No Democrats voted in favor of the bill while 13 Republicans joined them in opposing it. The Senate will be considering its own version of the legislation after the Thanksgiving break. Given the arithmetic of Congress and of budgets, it is more likely than not that this legislation will fail. Certain limitations exist in the Senate that the House doesn’t have and vice versa. This suggests that there just isn’t enough common ground.
Before addressing the issue of arithmetic, it is worth noting that the $1.5 trillion tax cut (over a decade) is not the appropriate economic treatment at this stage of the game. Unemployment is around 4% and interest rates are close to 0%. By those measures, this economy needs someone to tap on the brakes rather than hit the accelerator. A tax cut is appropriate when interest rates signal a shortage of capital (10% not 0%) or when too many are jobless (10% not 4%). The economic troubles are not those that are ameliorated by lower tax rates. Job security, rising wages and the other ills of the day are better addressed by changes to the legal code, increasing education, and programs that enhance social mobility. This economy is far from perfect, but $1.5 trillion in tax cuts does not get the country closer to perfection.
That said, the Senate is going to be the problem for the next couple of weeks. Given the filibuster that the Republicans used at every opportunity in the Obama years, the Democrats will use it as well here unless the legislation can be passed under the reconciliation rules. That limits the cut to $1.5 trillion over the next decade, and if there are features of the bill that go beyond that, the legislation is endangered.
Right now, the Republicans have 52 votes out of 100 and the vice presidency. That means a reconciliation bill needs all but 2 GOP members to pass; no Democrats will back this. Ron Johnson (R-WI) is as conservative as they come, but he has announced his opposition to the bill as it reads now because he says it favors large corporations over small business. Given the Senate bill ends the individual mandate for the Affordable Care Act in order to get some extra funds with which to play, the GOP Senators who voted against repealing the ACA may not be certain affirmative votes. Keeping the hard right, the soft right and the crazy right all in line is not going to be easy.
Moreover, even if the Senate does pass a bill (and this seems a 50-50 proposition at best), that will have to be reconciled with the language the House just passed in a conference committee. There, the horse trading will be even harder. While the House is likely to accept almost anything that cuts taxes, the Senate will have to ensure that what comes out of the conference committee is palatable to at least 50 GOP Senators.
The consequences of failure for the Republican Party may be so awful, however, that the law does get passed. After all, after 10 months of complete control of the House and the Senate and the White House, the party has failed to pass a single major bill into law. Supporters of the Establishment Wing and of the Trump Wing will blame each other, and the party will go into the 2018 mid-term elections badly divided. Regardless of allegiance, one believes that the fear of the Democrats getting control of the House or the Senate might be enough to create a compromise that allows the bill to become law.
The issue is just how far apart are the two chambers going to be if the Senate can pass anything at all. And if it can not, how will the blame be apportioned by the electorate. This is the price of incompetence.
© Copyright 2017 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Ubuntu Linux.
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