Tax Reform: Political (Pyrrhic) Victory?
Republicans are hoping that voters view far-from-perfect tax reform as better than the status quo.
In the wee hours of Saturday morning, Senate Republicans managed to pass their tax reform package. It’s a “yuge” political win for both the congressional GOP and for President Donald Trump. The bill will now go to conference with the House, as both chambers have passed reform along the same broad outline and compromise before Christmas is quite doable.
There are some caveats to everything we just said, however. Sen. Bob Corker (R-TN) was the lone Republican “no” on the Senate’s bill; he objected to how much it would add to the deficit. We share his concerns about our national debt, but our problem is with the spending side of things. Meanwhile, 13 House Republicans voted against that chamber’s bill, and Democrats, who know how to march in lockstep, were unified in both House and Senate. Thus the lack of any bipartisan consensus, the rushed and opaque work outside regular order, and the middle-of-the-night vote is all somewhat reminiscent of ObamaCare. Will tax reform similarly end up as a Pyrrhic victory for the GOP? Democrats and their media mouthpieces will continue to attack it as “tax cuts for the rich at the expense of the poor,” perhaps costing the GOP control of Congress in 2018.
We’ve certainly done our share of reporting on the mixed bag of the GOP’s reform efforts, and we’d prefer any number of different prescriptions. But politically it’s the overall perception of the bill among the electorate that will matter next year. So Republicans hope that people see through Democrats’ class warfare rhetoric, that biased realtors are wrong about the damage to home prices, and that the Keynesians are underestimating economic growth generated by more Americans keeping more of their money. Leftists are wrong, of course. For one thing, just wait until the lower corporate tax rate results in a stock market boost, adding more money to the 401(k)s of millions of American workers. The economic effect will be good, even if it could be better with policy tweaks.
In short, Republicans are hoping that far-from-perfect tax reform is better than the status quo.