(Bloomberg View) -- What's going wrong with the Republican tax bill? Tax reform is hard; tax cuts are easy. The party desperately wants tax cuts. Given that Democrats oppose a tax cut right now, especially one which gives any relief to high-income taxpayers, any tax cut will need to pass with only Republican votes.
That still should be easy! Republicans control both chambers of Congress and the White House. Figure out how large a cut the party wants, and cut rates -- either corporate or personal or some combination of both -- to hit that number. Done.
Instead, the Republicans running the budget process decided on a $1.5 trillion (over 10 years) cut, while the Republicans running the tax side of things decided on cuts that add up to some $5.5 trillion. That leaves them needing to find very large tax increases elsewhere, but with a tiny margin of error because they'll get no Democratic votes, and may even lose a few Republicans who actually care about budget discipline. They can make up some of the difference with phony projections and other gimmicks that hide the real costs, but the gap is too large to make up without some real changes that groups of taxpayers will feel, and oppose. And especially when those effects are geographically concentrated, it might cost the bill support from some congressional Republicans.
Eliminate the deduction for state and local taxes? Lose a bunch of votes in high-tax states. Change the rules on 401(k) plans? Lose a different set of votes. And then there's the problem of distribution: Any tax plan that gives lots of benefits to the wealthy will poll bad, but if solving the revenue hole winds up raising taxes on middle-class voters, it could do more than poll badly -- it may be a voting issue for a lot of people. And even if that's not true, the fear of it may cost support in the House or Senate from Republicans not willing to take that risk.
That's one big obstacle. The other is that their plan on "pass-through" taxation turns out to be essentially impossible to draft in order to do what they want it to do, as Josh Barro at Business Insider explains.
So how does this end? The one element more or less fixed into place is the $1.5 trillion maximum total, since it was in the budget they passed in October that enables them to use reconciliation procedures and therefore need only a simple majority in the Senate. Even that has some wiggle room. They could find additional ways to cheat the numbers in how the bill is scored. They could even go leave the current 2018 fiscal year budget behind and pass a new 2019 budget, with a different set of reconciliation instructions. But that brings them into the next calendar year, and the elections get closer and closer.
What remains is either finding pay-fors that don't prevent them from reaching House and Senate majorities, or having smaller cuts to begin with. Eventually, they'll have to choose one or the other (or a bit of both). At least, if they want to pass something. And they might want to make that "eventually" very soon, because the longer this goes on the greater the chance that it's just all going to fall apart.
1. Dan Drezner contrasts Trump's personnel record and professionalism with Robert Mueller's.
2. Interesting reporting on conservative talk radio against Steve Bannon in Wisconsin from National Journal's Adam Wollner. The more I read, the more I'm convinced that "Trump against the Establishment" is a terrible description of the complex struggles within the party.
3. In the Fix, Philip Bump on what historians have to say about John Kelly and the Civil War.
4. Adam Serwer on the Civil War and Civil War myths.
5. And my View colleague Francis Wilkinson on how Trump drove one Kentucky candidate into politics.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Jonathan Bernstein is a Bloomberg View columnist. He taught political science at the University of Texas at San Antonio and DePauw University and wrote A Plain Blog About Politics.
To contact the editor responsible for this story: Mike Nizza at mnizza3@bloomberg.net.
For more columns from Bloomberg View, visit http://www.bloomberg.com/view.
©2017 Bloomberg L.P.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
