The Tax Bill's Fate Won't Float (or Sink) the Republicans in 2018

Speaker Paul Ryan says Tuesday’s Democratic victories give his party extra incentive to forge forward on an overhaul. But why?

Kevin Lamarque / Reuters

Surveying the damage of elections in Virginia and New Jersey on Tuesday, Paul Ryan had a clear prescription for ailing Republicans Wednesday morning: The results made it all the more important to pass the tax rewrite currently under consideration.

“I fundamentally believe when we deliver on comprehensive tax reform and tax relief, especially for middle income families, people will see their paychecks going up, they’ll see faster economic growth, better jobs being created,” he said at a Washington Examiner forum. “I think that’s going to bear fruit politically, but most importantly it’s going to help people. That’s the promise we made. If anything, this puts more pressure on making sure we follow through.”

Ryan is not the only Republican to make this case. Senator Lindsey Graham, for example, told CNN, “If we don’t produce, it'll get worse. The antidote to this problem is to pass a tax cut that Americans believe helps them and their families, to replace a broken health-care system with something better. And if we do those things, I think we’ll do fine in the fall.”

Ryan and Graham could be right, but it seems more likely that the opposite is true. Congressional Republicans have reasons for passing the tax overhaul, but it’s hard to believe that it’s the secret to their electoral success next November.

Although the bill is somewhat unpopular as written, the specific provisions are even less likely to win widespread popular approval. Any suggestion that the Republicans’ base is clamoring for the bill appears to conflate the demands of GOP donors with those of rank-and-file GOP voters. Besides, passing a major party priority may be a wise policy move, but it’s often politically hazardous, riling up opponents but producing little electoral payoff—just ask Democrats circa 2010. Ryan’s argument rests on the premise that voters demand some major legislation, any major legislation, from the party, and that assumption is suspect.

A Washington Post-ABC News poll last week found half of Americans oppose the plan, versus just a third who back it. (By contrast, a Politico/Morning Consult poll released Thursday found support for the plan at 45-36, down three points from a week ago but still safely popular.) Unlike the Affordable Care Act, which was unpopular as a whole despite widespread vote support for many of its key provisions, the tax bill gets less popular when you break it into specific provisions.

As Jonathan Chait writes, some of them seem designed to elicit devastating attack ads. Most people don’t care to see tax rates fall for the wealthy or corporations, and while it seems most people will see some reduction in taxes, others will actually see an increase. Will the reductions be large enough, and have enough impact fast enough, to convince voters? Don’t bet on it.

There is one group for which a tax cut is deeply important: Republican donors. While only 2 percent of Americans feel taxes are the most pressing problem facing the country as of October, there are lots of wealthy people who would like a hefty tax cut, and who see this moment, with a GOP White House, House, and Senate, as the best chance to get it. Some Republican members have acknowledged this with startling bluntness. Representative Chris Collins of New York said, “My donors are basically saying, ‘Get it done or don’t ever call me again.’” Graham said financial contributions would dry up if the package didn’t pass. And Gary Cohn, the White House point man on tax reform, told John Harwood, “The most excited group out there are big CEOs, about our tax plan.”

The 2016 election was supposed to signal the demise of the conventional business-friendly Republican approach. Donald Trump campaigned as a populist and harangued big banks and Wall Street. His victory showed that rank-and-file GOP voters weren’t all that interested in business-friendly policies. Yet once in office, Trump has governed close to the old Republican orthodoxy, and he now supports large tax cuts for business and the wealthy. It is probably not a coincidence that Trump is a billionaire businessman.

But imagine, for the sake of the argument, that the cut actually was a major priority for the GOP base. That still wouldn’t mean that passing the bill would translate into widespread success at the polls in a year’s time. Consider, again, the Affordable Care Act. Expanding health care was a longstanding priority for the Democratic Party and its base, but the law’s passage translated most prominently into enthusiasm among its opponents. The Tea Party and an energized base helped Republicans take control of the House from Democrats.

When I put this theory to Tom Perriello, a Democrat who voted for the ACA and then lost his seat in the following election, he argued the parallel was weak—in fact, he said, the Democrats’ error was not taking up health care, but rather not passing a larger stimulus first. Yet he thought Republicans would still suffer if they passed the current tax plan.

“The ACA was important to our base. The tax cuts are not important to their base,” Perriello said. “It turns off swing voters, gets our voters excited, and depresses their base.”

In particular, supporting the GOP tax plan as it stands now could well be politically suicidal for some representatives. That’s particularly true for members in states like New York, New Jersey, and California, which will be hit especially hard if Congress passes a bill eliminating the state and local tax deduction. Lee Zeldin, a New York Republican, told NPR this week he couldn’t support the bill as currently written. “I’m representing a New York district,” he said. “And I understand well that if I am not representing my home district and my home state, I can’t expect some other member of Congress from some other state to do that for me.” Even if Ryan thinks passing the bill is good for the party as a whole, it might be perilous for specific members, especially those in states where the GOP is most endangered.

“Ryan has to nationalize it—that’s his job—but if I’m an individual member I’m looking back at how it’s going to affect my district,” Bart Stupak, a former Democratic representative from Michigan, said. Stupak knows something about tough votes: He survived voting for the Clinton tax overhaul in 1993, then found himself pinched between his opposition to abortion and pressure from Democrats to vote for the ACA.

“You came off an election day that wasn’t good for Republicans, and now you’re asking me to raise taxes, and the left is telling me I’m giving away the farm to the rich, and I’ve got to go back to my district, and I’m painfully aware that maybe that message didn’t work too well on Tuesday,” he told me.

Surely after the months-long Republican misfire on health care, Congress needs to just notch an achievement, right? It’s tough to judge this claim, because it’s tough to find an example of a time when a single party controlled the White House and both Houses of Congress and made it this long without major legislation. (Presidents have run, and tried to run, against Congresses controlled by the other party by labeling them “do-nothing Congresses,” with varying results.) That doesn’t mean that significant numbers of voters have any value-neutral yearning for legislation, regardless of the benefits. Here again, the exception is GOP donors, who reportedly railed about the lack of productivity per se to Senate Majority Leader Mitch McConnell last month.

For Trump, the need to just get something done is perhaps more pressing. He entered office with an ambitious slate of suggestions, and he has so far been stopped in his tracks on most of them. Trump’s rotten approval ratings are also almost certainly a much greater drain on members’ electoral prospects than their ability to pass a tax rewrite, or lack thereof. Some members seem to realize this, as demonstrated by the quickening pace of retirements among House Republicans over the last few days and weeks, including Bob Goodlatte, the chair of the powerful Judiciary Committee, who announced his decision on Thursday.

There are valid reasons for Republicans to continue pressing tax reform—donors’ wishes are important, like it or not; many members also feel that lower taxes are important as both a matter of freedom and economic efficiency. It’s not as if the GOP would profit from suddenly adopting a progressive approach to taxation. But if you think the fate of the tax plan will determine whether Republicans do well in the 2018 elections, I’ve got a bridge to sell you in Brooklyn. Buy now, before the mortgage-interest deduction gets capped.