President Trump and the Republican congressional leadership desperately want to pass a tax bill before the end of 2017, but there are many legislative hurdles along the way to that goal.
Trump believes that large tax cuts for corporations and wealthy individuals will result in faster economic and job growth, higher wages for many Americans, and a continuation of the stock market rally that has become his measure of popular support in the face of low approval ratings in public opinion polls.
House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell believe passage of a tax bill is essential for the Republican congressional majority to claim any legislative accomplishments in 2017, to inspire Republican base voters to turn out in next year’s midterm elections, and, not unimportantly, to keep campaign contributions from well-heeled donors flowing to GOP coffers.
One obstacle to passing a tax bill in the House will be Republican members from suburban districts that Hillary Clinton won in last year’s presidential election. Many middle-class and upper-middle-class voters in these districts — a constituency that does turn out in midterms — will see their taxes go up under the bills introduced in the House and Senate, due to elimination or reductions of the deductions now available for home mortgage interest and state and local income and property taxes.
There are enough Republicans in the House from high-tax states such as California, Illinois, New Jersey and New York to put House passage of the bill in jeopardy if many of them were to vote “no” on the floor. Last week’s election results — where Democratic candidates did very well in suburban districts in Virginia and other states — make clear to these GOP House members that middle-class independent and Democratic voters are energized against the Republicans right now.
In the Senate, the concerns of suburban voters do not matter all that much, since there are no Republican senators from any of the states with large numbers of middle-class taxpayers who would be adversely affected by the tax plans introduced to date. The obstacles in the Senate will come from deficit hawks — many of them Republicans who will not be running for another term — who are concerned that the proposed tax cuts are not being paid for, and will only add to the national debt.
Sens. John McCain and Jeff Flake of Arizona, and Bob Corker of Tennessee, all fall into this group. The procedures Congress has adopted for the tax bill would enable it to be passed in the Senate with a 50-vote majority, not requiring any Democratic votes, only if the increase in the debt over the next 10 years is no more than $1.5 trillion.
While the Senate’s tax plan has not yet been scored by the Congressional Budget Office, the CBO’s analysis of the House plan is that it would increase the debt by $1.75 trillion, requiring $250 million in reduced tax cuts in order to comply with the Senate procedures.
Even if tax bills are passed in both House and Senate, they will almost certainly differ in many important details, which will have to be reconciled in a House-Senate conference committee. The conference committee report will then have to be approved on the floors of both chambers.
Changes made to obtain the support of suburban Republicans in the House could require lower or delayed corporate tax cuts in order to pay for restoration of all or part of the deductions for mortgage interest and state and local taxes. So too will changes to accommodate the deficit hawks. And Trump’s desire to use the tax bill as a vehicle for repealing Obamacare’s individual mandate introduces an additional complication into the politics of getting a tax bill to his desk this year.
Eric L. Davis is professor emeritus of political science at Middlebury College.