Republicans in Congress return from vacation next week under attack from all sides. They need to put some wins on the boards, and show the country they can govern. They need to pass tax reform.
President Trump is blasting the GOP leadership for having failed to repeal and replace ObamaCare, and for ignoring his advice to tie the debt ceiling increase to the noncontroversial Veterans Affairs’ Choice Program extension.
Voters are fed up, too. Approval ratings for Congress have plunged from poor to terrible, with the latest Gallup poll showing only 16 percent of Republicans saying that GOP legislators are doing a good job. Sentiment about Majority Leader Mitch McConnell and House Speaker Paul Ryan is dismal, with approval for both tumbling to record lows below 20 percent.
Maybe more worrisome is the cautionary note sounded on Larry Kudlow’s radio show by Noelle Nikpour, a Republican strategist. In reaching out recently to favorite long-time bundlers, she has run into a brick wall. Some ask, “What have Republicans done for me lately?”
The message is clear, though. Republicans in Congress cannot let perfect be the enemy of good, as they did in the fight over repealing ObamaCare.
It’s understandable. Voters were promised that if they delivered the Senate, the House and the White House to the GOP, the country would break through the stifling gridlock of the past several years and begin to rebuild our infrastructure, cut through the regulatory thicket, renew entrepreneurship, and overhaul our failing health care system. To date, all the country has to show for putting Republicans in charge is Neil Gorsuch on the Supreme Court. That’s not nothing, as they say, but it’s not enough.
Meanwhile, President Trump, who is suffering his own approval issues, was elected by millions who expected the successful businessman to “get stuff done.” They liked his eagerness to roll back anti-business regulations, his questioning of trade agreements that sidelined American workers, and his repudiation of the stultifying political correctness of the Obama years. Though most of his supporters still give him the benefit of the doubt, their patience is fraying. He, too, needs to push his agenda forward. Blaming inaction on his own party – people he relies on for passing legislation -- is not a winning game.
Bottom line: for the Republican Party, and for the country, we need progress. We need to raise the debt ceiling, approve a budget and then pass a wide-ranging tax reform package that lowers rates for individuals and businesses and resolves some of our tax code’s most troublesome features, such as how we treat corporate profits earned overseas. The current approach, which is to tax repatriated income, is unique among developed countries and self-defeating. It encourages companies to pile up profits overseas, forcing them to borrow against those holdings in order to pay dividends, for instance, and makes it easier to invest abroad than at home. That must end.
President Trump has signaled a willingness to hit the road, and sell Americans on tax reform. The White House has been integral to writing the soon-to-be-revealed program; they have skin in the game. Since that was not the case with Congress’ attempts to overhaul ObamaCare, the country witnessed a muddled message and embarrassing infighting between legislators and the White House.
There should be no such schism in advocating tax reform. There will be, for sure, plenty of haggling over which deductions bite the dust in order to allow tax rates overall to come down. Because Democrats will not work with the GOP to simplify and lower taxes, preferring to use any tax overhaul to redistribute the country’s wealth instead of build it up, Republicans will need to pass tax changes via budget reconciliation, which requires that the effort be revenue neutral over an agreed-upon time frame.
There are ways that the tax planners can manipulate the numbers – changing the number of years under consideration or using more aggressive growth estimates, for instance. But, to drop corporate and individual rates significantly, as the White House has promised to do, will require some deductions to disappear. Already, some are objecting to indications that the mortgage interest deduction might vanish. The real estate lobby is ferocious, and will go to great lengths to protect the numerous tax benefits that accrue to home owners. Most likely is a compromise that takes into account income, or property values, to spare lower earning households.
The message is clear, though. Republicans in Congress cannot let perfect be the enemy of good, as they did in the fight over repealing ObamaCare. Reforming our system so that it rewards workers and job creators is good for everybody. Rival CEOs David Abney and Fred Smith, of UPS and FexEx, respectively, recently teamed to write an op-ed pushing for measures that might boost growth, including tax reform. They write, “Studies show that permanently lowering the corporate rate by even 10 percentage points would increase GDP by 1% to 2% without lowering tax revenue.” That is a powerful selling point.
Nothing will threaten Republicans’ ability to keep their majority in the House and the Senate more than inaction. Voters should tell their legislators: get to work. Move the pro-growth agenda forward; that’s why we elected you and that’s how you’ll keep your job.