Republican congressional leaders say an overhaul of the nation’s tax system is the next big item on their agenda – but lawmakers quickly concede that winning approval of anything that ambitious this year is going to be difficult.
Traditionally, a new president and Congress from the same party use their mandate to get at least one big thing. Republicans control both the White House and Congress this year for the first time in a decade.
Their initial effort, to repeal and replace Obamacare, the 2010 health care law, collapsed last week and is unlikely to be revived. So they still need a victory to illustrate how they’re able to implement that mandate. If the GOP fails, they risk going into the midterm elections next year characterized as inept and unable to govern.
The trouble is that tax changes are unusually complex and take time. President Ronald Reagan made overhauling the tax code a big priority in 1984. He won re-election in a landslide, yet it wasn’t until the fall of 1986 that a plan was approved. And that was at a time when the two political parties were more willing to work together.
Republicans have a host of 2017-vintage obstacles in the way. The government faces a partial shutdown in late April unless Congress approves a budget.
That’s going to be a tough struggle, since President Donald Trump wants steep cuts in domestic spending and sharp increases in defense that Democrats and a lot of Republicans are likely to resist. He also wants such incendiary features as money for a wall between the United States and Mexico. And Congress will have to deal with benefits for retired coal miners, a dispute that nearly led to a partial shutdown in December.
That budget will keep the government running only until Sept. 30. Then lawmakers will have to come up with a blueprint for the entire fiscal year that begins the next day. And they have to agree on a way to deal with the debt ceiling, which will have to be raised or suspended later this year.
That’s why, in 2017, “there is the potential that this could be another failure for the party,” Darrell West, vice president and director of governance studies at the Brookings Institution, a Washington policy organization, said of big tax changes.
Lawmakers will try. Addressing reporters Friday after he withdrew the health care bill for the lack of support in his own party, House Speaker Paul Ryan vowed that lawmakers would turn to taxes.
“We will proceed with tax reform,” Ryan said, though acknowledging that the health care bill’s failure made an already heavy lift even heavier.
“Yes, this does make tax reform more difficult,” he said. “But it does not, in any way, make it impossible.”
At the Republican congressional retreat in Philadelphia in January, Ryan set a goal of completing the tax legislation during the first 200 days of Trump’s presidency, which ends just before the monthlong August recess.
Trump has four goals for his tax legislation: It has to lower taxes for middle-class families, simplify the tax code, promote economic growth and not add to the deficit.
House Ways and Means Chairman Kevin Brady, R-Texas, told Fox News over the weekend that his committee would have a tax bill ready to go this spring. The committee will write much of the House of Representatives’ version of a tax bill.
Brady’s counterpart in the Senate, Finance Committee Chairman Orrin Hatch, R-Utah, told CNBC last month, however, that getting tax legislation through Congress would be difficult. Senate Majority Leader Mitch McConnell, R-Ky., hasn’t committed to a specific timeline for a bill.
Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a nonpartisan watchdog group, saw one hope for a tax bill. Unlike health care, everyone agrees the tax code is broken, she said, and it’s been an important part of the Republican platform for years.
“The tax code is a disaster and is desperately in need of reform,” she said. “I think they kind of have to succeed. I don’t think they can afford to not succeed right now.”
Though the Senate never got bogged down on health care the way the House did, there were signs of trouble.
Conservatives, led by Kentucky Republican Sen. Rand Paul, opposed the House bill, saying it didn’t go far enough in repealing Obamacare. Maine moderate Republican Sen. Susan Collins opposed it because she thought it went too far in rolling back the law’s Medicaid expansion. McConnell could afford to lose no more than two of his 52 members.
“The divisions that exist among Republicans in the House are also a problem in the Senate,” West said.
MacGuineas, however, said Republicans had a much more clearly defined goal on taxes: Bring more taxpayers into the system while lowering their rates. It will require making some politically tough tradeoffs, she said. It can’t be just tax cuts. There will be winners and losers.
“Governing in a fiscally responsible way is hard,” she said. “That’s what leadership is.”
Could a not-so-unified Congress accomplish other big things Trump wants?
He has touted a $1 trillion infrastructure investment. But unlike President Barack Obama’s White House at the beginning of his first term, Trump’s fledgling administration has barely started moving on its plan.
Former Obama Transportation Secretary Ray LaHood, a onetime Republican congressman from Illinois, said that if Congress made good progress on tax policy, that would be a signal that the White House intended to make an infrastructure bill happen this year. But as with taxes, they can’t afford to wait too long, he said.
“If they don’t have a real, concrete infrastructure plan in place and passed by one or both houses by the end of August,” LaHood said, “they’ve probably lost an opportunity.”