the national interest

Obamacare Repeal Failed, But Tax Cuts Will Probably Pass. Here’s Why.

Mitch McConnell, Donald Trump, and Paul Ryan. Photo: Mandel Ngan/AFP/Getty Images

On its surface, the lead-up to the voting on the Republican tax-cut plan bears a strong resemblance to the lead-up to the voting on the Republican Obamacare-repeal plan. There is overwhelming public opposition, a thin margin for error, and many possible defectors whose objections to the bill tug in opposing directions. But while the repeal effort collapsed, the tax cuts nonetheless stand a strong chance of passage — about 80 percent, according to Goldman Sachs, which is only slightly higher than the odds I would give it. Unlike on health care, says Senate Whip John Cornyn, “Every single member of the Republican conference is working to get to yes” on taxes.

Past may not be prologue, because the tax-cut bill differs from the health-care bill in several key respects that give it a much higher chance of passing.

1. There are fewer losers. Obamacare repeal would have deprived some 30 million Americans of their access to health insurance, and the loss of so many paying customers would have wreaked havoc on the livelihoods of doctors, hospitals, and other providers.

It’s hard to directly compare the total number of losers in each bill. But the tax-cut plan would increase the deficit by $1.5 trillion over the next decade, while Obamacare repeal reduced the deficit by a little over $100 billion over the same period. Obviously, a plan to jack up deficits would have costs over the long run, but those costs are highly diffuse and long-term. The tax-cut bill has more dessert and fewer vegetables.

2. The losers lose much less. The tax-cut bill would increase taxes for a large number of people. But the losses would for the most part amount to a couple percent of household income. The losers from Obamacare repeal would have stood to endure medical bankruptcy and even death. The dire human consequences helped spur the massive mobilization efforts to save the law, and that played an important role in persuading wavering Republicans to take the political risk of defecting from their leadership. The tax-cut bill eliminates the individual mandate, but does not tear up the guts of Obamacare’s coverage system in the same way.

The tax-cut bill may be irresponsible and immoral, but the moral stakes are still not as high. It is not the kind of bill that would make a Republican senator decide they couldn’t live with themselves if they enabled it to pass.

3. Tax cuts deliver massively concentrated gains to influential constituencies. Obamacare repeal also contained tax cuts for the rich. But its tax cuts for the rich were smaller than the ones in the tax-cut plan. What’s more, the combination of tax cuts for the rich and cuts to health-care subsidies proved so politically toxic that Republicans were forced to scale them back, thus weakening an important source of donor pressure to act. Now, donors are frothing for the tax cuts.

4. Tax-cutting is theology for the GOP. The party has been organized for more than a quarter-century around the dogma of tax-cutting. Whatever hatred Republicans were able to build up against Obamacare starting in 2009, it cannot match the cumulative effect of 30 years of voodoo-economics dogma. The party’s entire governing class believes both that rich people are unfairly targeted by progressive taxation, and that tax-cutting will absolutely and necessarily generate prosperity. A handful of conservative dissidents question this theology, but they remain marginal to conservative thinking.

Cutting taxes for the affluent is truly what Republican politicians got into this business to do. In this way, it is more like the struggle to pass Obamacare than the struggle to repeal it. Democrats were willing to take risks to pass the law in 2010 because helping people get insurance is a core of their public mission.

5. Republicans believe their party must pass the bill. Even before repeal collapsed, Republicans began insisting that they had to pass tax cuts or else their congressional majority was doomed. The actual political logic here is far from airtight — why would passing a bill that polls at 25 percent help win elections? — but they show every sign of believing this.

And so, for all the difficulty they have in passing a bill in an absurdly short time span, and all the attendant bugs and loopholes they will be creating in their mad rush, the centripetal forces seem to be prevailing.

Repeal Failed But Tax Cuts Will Probably Pass. Here’s Why.