Treasury Secretary Steven Mnuchin set an August deadline for passing tax reform, but now President Trump has apparently changed his mind, telling Fox Business that health care reform must come first.
“I have to do healthcare first, I want to do it first to really do it right,” Trump said in an interview Tuesday on the cable channel.
“We’re saving tremendous amounts of money on health care when we get this done, number one, and most importantly … we’re going to have great healthcare, and all of that savings goes into the tax,” Trump said. “If you don’t do that you can’t put any of the savings into the tax cuts and the tax reform.”
The change in priorities may be due to Trump’s decision to scrap the tax reform plan from his campaign and start over from scratch. Fox News reported that White House aides say that the goal is to cut tax rates to spur growth, but alternative ways of raising revenue have not been decided. Two options reportedly being considered are a border adjustment tax on imports and modified version of the border adjustment that would cut corporate taxes and eliminate much of the payroll tax. The resulting plan is similar to a value-added tax that would be in line with WTO rules. Eliminating payroll taxes would require creating a new source of funding for Social Security.
In reality, health care reform and tax reform share the same obstacles. Both are hampered by a divided Republican Party that holds a razor-thin majority in the Senate. Unless Senate Republicans go nuclear again to eliminate the remainder of the filibuster rule, at least eight Democrats will need to vote for cloture to advance any bill. If any Republican faction splits off from the rest of the party on a bill, the number of required Democrat votes increases.
The requirement for Democrat votes limits the extent of conservative reform that can go into a bill. If a bill goes far enough right to please the Freedom Caucus and Tea Party Republicans, then it loses support from moderate Republicans and is almost certain to be filibustered by Senate Democrats. On the other hand, if a bill isn’t conservative enough, it loses support of Congress’s conservative reformers.
There are stark differences between Republicans and Democrats on both reform packages, but ultimately compromise will be needed to get enough votes to pass any bill. While some elements of health care and tax reform can be packed into a reconciliation bill that is not subject to filibuster, full reform or repeal of Obamacare requires 60 votes for cloture in the Senate.
A possible solution is to simply eliminate the filibuster entirely. Republicans could pass their wish list relatively easily if bills were not subject to cloture votes. There are two obvious problems with this strategy.
First, the Republicans only have a two-vote majority in the Senate. There would be tremendous pressure on moderate Republicans like Susan Collins (R-Maine), Rob Portman (R-Ohio) and Lisa Murkowski (R-Alaska) to break ranks and vote with the Democrats. Bills would have to be watered down to prevent their defections.
Second, if Republicans eliminate the filibuster, they will get a taste of their own medicine the next time the Democrats have a majority. One day soon, the filibuster might be all that stands between a Democrat majority and gun control, single-payer health care, a $15 minimum wage and the rest of the liberal wish list.
The filibuster puts the brakes on legislation, conservative and liberal, Democrat and Republican. That’s a good thing and Republicans should learn to deal with it. The resulting bills may not be everything that conservatives want, but incremental change in the right direction is better than risking a full-court liberal press four years from now.
For now, it seems that no health care reform or tax reform is on the immediate horizon. It may be months before either the second attempt at health care or tax reform is ready. After eight years in the wilderness, conservative voters are unlikely to be very patient.