The late New York Gov. Mario Cuomo had a famous dictum that politicians campaign in poetry and govern in prose. After a successful run to the White House that at times resembled a freestyle beat poetry session, President Donald Trump and Republicans in Congress now face the task of channeling those energies into tax and spending policy.
On the campaign trail, Trump promised a whole host of benefits to various groups: no tax on tips, no tax on Social Security, no tax on overtime pay, no tax on emergency generators in states hit by natural disasters. Delivering on all those promises would be difficult enough, even before addressing the ticking time bomb that is the expiring provisions in the Tax Cuts and Jobs Act, which Trump signed during the first year of his first term.
Republicans know they simply cannot choose not to act — allowing the 2017 tax cuts to expire would mean higher taxes for millions of American households. But crafting a tax bill that keeps GOP members of all stripes happy is the equivalent of solving two different 1,000 jigsaw puzzles simultaneously. The White House will need to lead the way toward an agenda that delivers on its key themes of supporting workers and parents.
One key tension was put on display in a leaked negotiation document earlier this month. The all-important House Budget Committee, chaired by Texas Rep. Jodey Arrington, has been engaged in laying the groundwork for large-scale federal budget cuts for the past couple of years, pushing an aggressive blueprint called “Reverse the Curse.” That spirit influences the leaked menu that’s supposed to help the GOP train its focus on the tax changes the committee would like to see.
Some of the ideas are good, verging on great. Currently, Medicare pays more for services provided in outpatient centers at hospitals than the very same services provided by physicians. As the Niskanen Center’s Lawson Mansell has written, switching to so-called “site-neutral” payment reform could save $126.8 billion over a 10-year window — enough to give every new parent $2,000 at the time of a child’s birth as a so-called “baby bonus,” or direct assistance with the needs of childbirth. The idea simply needs sufficient political capital to break through resistance from big healthcare players.
The GOP budget menu includes other good ideas as well: the Biden administration’s signature green energy and electric vehicle tax credits are surely not long for this world. Expanding the scope and size of the tax on university endowments will unify most parts of the party’s base. Redesigning the Earned Income Tax Credit, or scrapping the Head of Household filing status, could simplify the tax code while leaving most low-income parents no worse off. Some of the small ball ideas, like eliminating favorable tax treatment for employer-provided gyms or transportation benefits, could lead to a more streamlined tax code and provide revenue for other worthy aims.
And then there are some stinkers: eliminating taxes on overtime would cost nearly three-quarters of a trillion dollars over 10 years. Attaching work requirements to the federal government’s SNAP (formerly known as food stamp) program, or capping the amount families with multiple children could get, would add a decent amount of bureaucratic headache for users while generating only a couple of billion dollars in savings.
Of course, the vast majority of the options the document sketches out won’t make it into a final package. But it showcases how many competing impulses lay within the GOP caucus. Should Republicans in Congress seek to indiscriminately slash federal government spending? To prioritize tax relief? And if so, for who? To lower tax rates as far as possible, knowing that doing so could complicate the Federal Reserve’s ability to fight inflation?
These questions will give Arrington, Speaker of the House Mike Johnson, Majority Leader Steve Scalise, and the rest of Republican leadership headaches over the weeks and months ahead. It’s not enough to just figure out the overarching strategic questions, like whether Republicans should pursue one big bill or split their legislative package into two parts. In a sense, they’re packing for a long vacation only what can fit in a carry-on. “All of the above” isn’t an option.
Ultimately, what could cut the Gordian knot of so many competing priorities would be strong leadership from the White House. If the president were to prioritize, say, an expanded Child Tax Credit and no tax on tips as the two signature victories in a tax bill, that would help Republicans find the requisite revenue options to make this happen. One effort to support families was introduced earlier this month by Utah Rep. Blake Moore, whose Family First Act would bump the current $2,000-per-child Child Tax Credit to $4,200 per child aged 6 and under, and $3,000 per school-age child, while consolidating other child-related benefits in the tax code.
Trump has historically disdained to get into the weeds of legislative dealmaking. But the messy bundle of competing priorities will need to be sorted out among the House GOP caucus before it has a chance of making it to the president’s desk. If there is no leadership from the top, the intra-house fighting will be messy. Arrington, for example, is reported to have rubbed many of his colleagues the wrong way with his heavy handed approach to spending cuts.
One leaked document isn’t the be-all and end-all of GOP tax negotiations. But it does lay out the kind of tough choices Republicans will need to make to prioritize what an authentically pro-parent, pro-worker agenda should look like. The goal should be favoring smart reform over slash-and-burn cuts, and prudent fiscal management over temporary sugar highs. Those goals are in reach — or could be, if Republicans make the right choices in upcoming weeks.