Wednesday, April 12, 2017

Listen: the apparent GOP plan and the actual reality.

As best we can tell from all public and leaked statements, the GOP plan for legislation this year was a pretty simple one.  At this stage, it's worth revisiting -- and comparing with reality.

Bear in mind that while there were numerous priorities and ideas, the Republicans coalesced around a few important ones -- some supported by the president and some supported by his party.  They wanted to repeal Obamacare, they wanted to permanently cut taxes for the rich and reform the system, and they wanted to pass an infrastructure bill.

Importantly, however, they would not be able to do these things in any order.  Thanks to legislative rules, financial reasons, and political issues, they were locked into a pretty set order.

Stage One: Obamacare Repeal

Obamacare has significantly slowed the rise of healthcare costs and given a lot more people healthcare.  It achieved these gains not only by subsidizing insurance for the sick and poor.  But since the law was also (astonishingly) revenue-neutral, it had to find that extra money somewhere.  Efficiency and cleverness got them halfway, but the law also instituted new taxes on the wealthy.

In other words, there's a big pile of money locked into Obamacare.  If you repeal most of it, you can get rid of the taxes on the wealthy and the coverage for the poor, and still keep some of the extra money.  Even better, in Republicans' view, would be to further cut the coverage for the poor.  That's even more money you get to keep, plus you get rid of Obamacare!

Further, if you're going to rely exclusively on Republican votes, then Obamacare might be the only way you can get a big pile of money like that.  The special Senate reconciliation rules allow the GOP to pass all kinds of money-related bills with only their 52 senators (avoiding a Democratic filibuster), but they can't pass anything that increases the deficit.

So if the Republicans wanted a big pile of money to spend on anything they'd like, but didn't want to compromise at all, Obamacare was the place to go.

But what bill are you going to pass?

The initial plan was to just repeal Obamacare now and replace it later, but it soon became obvious that this was politically untenable.  Insurers would be outraged and people would be scared.  So they needed a plan.

While candidate Trump swore he had a great plan tucked away in his back pocket, it was obviously a lie.  Indeed, it was so transparent that Marco Rubio publicly mocked the future president for his ignorance during a debate.  (This was, of course, before the brutal Chris Christie takedown of Rubio in a later debate).  But it was not impossible that Trump could simply adopt the plan of a different person or group.  Most of his draft budget was copied from the conservative Heritage Foundation's budget, for example.  So most people expected that the new president would have some plans -- or at least some basic priorities -- that he would demand be included in the GOP bill.

But he didn't.  President Trump didn't appear to actually care about the details -- he just sort of trusted that the famous Speaker Paul Ryan, the noted wonk and legislator, would come up with a plan that would (a) make healthcare better somehow, (b) pass the House and Senate, (c) deliver that big pile of money.

In the original plans, they wanted to get this done by "late February or early March."

Stage Two: Tax Reform

The next thing would be tax reform.  Having already freed up a big pile of money by hurting the poor, they could now spend it on the rich.

Tax reform is different than tax cuts.  Republicans already tried passing ten-year temporary tax cuts during the Bush years -- you'll remember what a massive surge in growth those cuts produced, right? -- and weren't satisfied with a repeat.  They weren't even satisfied with the idea of permanent tax cuts.  They wanted to reform the whole system by reducing the number of tax brackets.  Right now, there are seven.  As you make more money, each dollar you make over certain amounts is taxed by an increasing amount.  This is a progressive system, since it tries to distribute the burden of taxation fairly.  $1,000 means a lot more to someone making $40,000 a year than someone making $400,000 a year, after all!  Republicans want to eliminate some of those tax brackets, lumping people together into fewer groups.  Not coincidentally, this would also give a massive tax cut to the very wealthy.

Now, tax reform would be incredibly difficult -- more difficult than healthcare reform, in fact.  It would be even more difficult to pass tax reform with only Republican votes through the reconciliation process.  But if you have a giant pile of money on hand, the process is a lot easier.

If worse came to worse and they couldn't get tax reform done, they could always shelve it for the future and pass some permanent tax cuts instead.  Just shovel that giant pile of money towards the wealthy -- not ideal, but still pretty great for Republicans.

As originally planned, they wanted to get this passed and signed by August.

Stage Three: Infrastructure

From here, the plan was a little less-defined.  That was by design, since the president and Congressional leaders only agree on Stages One and Two.  Trump wants a "trillion dollar infrastructure bill," but (naturally) hasn't offered a whole lot of specifics.  This might only require a moderate amount of new funding, since a substantial sum could be offered as loans to states and municipalities, but there's still the question of the source of that funding.  Do you tack hundreds of millions onto the national debt?  Republicans hate that idea.  Do you pass some new taxes (like a border tax) to pay for the plan?  Republicans hate that idea.

There is one optimistic scenario where this is easy: the Trump administration's removal of regulations and the Stage Two tax reform have magically sped up the economy.  We've been bouncing up and down around 2% growth since the Great Recession -- fairly steady and uneventfully mediocre.  But Trump has promised to double GDP growth, vowing to return the economy to 4% growth.  I'm not going to go into all the reasons why this is probably not going to happen, but suffice to say that it's very unlikely.  (If it does happen, that will be amazing and will force a lot of people like myself to re-evaluate our prior beliefs).

But these were problems for a later date, Congressional Republicans figured.

The Problems

Let's return to the present.  As you know, Stage One never materialized.  Stage One never even really got started, in fact, because Paul Ryan is not actually that good at legislating.  He produced the American Health Care Act.  And the rest is history: it crashed and burned spectacularly.

So there's no big pile of money, which makes Stage Two really hard.  And even worse, it's becoming clear that Republicans are going to have a hard time finding the votes for many things.  Stage Two was going to be hard under any circumstances, but in a scenario where they can't use Obamacare funds and where they can't even count on their own party's votes...

Where do they go from here?

No one seems quite sure what to do next, honestly.  Discussions are ongoing on a few different fronts, but it would be hard to point to any major bills that are under discussion.  And while Trump originally said he would insist on abandoning healthcare reform, a couple of days ago someone must have explained all of this to him, since now he's asking Congress to get back to work on healthcare.  It's chaos, and there's no sign it's getting better.

I don't know what they're going to do next.  It bears repeating that Stage One makes Stage Two a lot easier, and Stage Three is something even Republicans don't agree on.  So that does indeed suggest that they might want to buckle back down on healthcare.  But having just hideously lost a very nasty and public fight, is that really something that Republican leadership wants to fast-track again?  I think you only get one bite at the rush-through-insane-healthcare-proposal apple, myself.  But a slow and deliberate approach is just going to hurt them even more.

There are other possible Stage Threes that they could tackle now: a border wall, a trade deal, etc.  But all of them are hard and none of them even have universal Republican backing.  Does Trump try to cut some bipartisan deals?  That's also really hard, especially when you're unprecedentedly toxic among Democrats.

As I said in "Listen: what might be next on the Trump agenda," I predict that there are different possible bills in secret development.  They will eventually get behind a new bill -- Stage One, Stage Two, or some iteration of Stage Three.  But for right now, you don't need to worry about a reckless and dangerous Republican legislative train.  It's not hurtling forward towards us.  It's not even inching slowly our way.

Right now, that train hasn't even left the station.

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