The most important thing happening on Capitol Hill right now is the Republican push for tax reform, which would alter the economy in major ways while giving major benefits to corporations and the wealthy. Just a month ago experts doubted that such a huge legislative project would pass the House and Senate by the end of the year, but the GOP has built up a surprising head of steam: As I write this Tuesday afternoon, the House has passed a version of the tax bill and the Senate version just came out of committee and could come to a vote as soon as Thursday.
Even if the Senate passes its bill (which it will unless more than two Republicans vote against it), the fight isn't over. There are significant differences between the House and Senate versions—for one, the Senate bill may strike down the Affordable Care Act mandate requiring people to buy insurance. That is one of many points of disagreement that will have to be hammered out in a House–Senate conference, where the whole project could sputter out.
The speed at which things are proceeding is alarming for many longtime congressional watchers—instead of holding hearings and soliciting expert comment, Republican leaders seem hell-bent on rushing votes through in order to get a win for their uber-wealthy donors, a cynical motivation some lawmakers have actually admitted to. (In its slapdash process, the race on tax reform is similar to the clusterfuck that was ACA repeal.) The Senate is currently planning on voting on its bill even before the nonpartisan Joint Committee on Taxation (JCT) can release its "dynamic estimate" of the legislation—an extremely educated guess about what effects the tax changes would have on the broader economy.
It's this disregard for the JCT that had Martin Sullivan particularly angry. Sullivan is a longtime expert at Tax Analysts, a respected nonpartisan organization that explains tax policy to lawmakers and the public. On Monday, Sullivan published an uncharacteristically strident blog post decrying the "waste, fraud, and abuse" perpetrated by Senate Republicans as they shouldered aside norms to pass this bill. Sullivan started his 30-year career in the tax field in the Reagan administration's Treasury department and is far from a progressive firebrand—if he's worried and pissed about the state of tax politics, you should be too. I called him to talk about what was wrong with Congress's process, and whether the Senate would pass this bill:
VICE: So what about this process on taxes makes it so exceptional? You began your career during the '86 tax debate. How does this time compare to that time?
Martin Sullivan: There are many major differences. One is that the tax reform act of 1986 was a bipartisan bill. The current bills are very partisan and I see no hope of them becoming bipartisan. Secondly, the process is entirely different—it's reckless because of the speed at which they're going. After they announced it in 1985, it took 13 months before the president signed it into law on the lawn of the White House. Right now they're trying to push this bill through in about 13 weeks.
What I find upsetting is the disparity between the promises being made, the way this is being marketed, and the reality of what the bill is doing. The promise of large middle-class tax cuts are not credible in most cases. The benefits are clearly going to major corporations and the wealthy.
Why did you focus on the JCT's dynamic scoring in your blog post?
The core of the debate over the bill is A) job creation and B) its effect on deficits. Since 1995, it has been a major goal of Republicans to incorporate dynamic estimation into the JCT's official process. That they are moving so quickly to not allow these estimates to be part of the debate is legislative malpractice. The JCT has spent millions of dollars and untold man-hours building these models at the behest of the Republicans, and now they are going to ignore them. That's why I call it "waste."
Why are they rushing it through so quickly?
Allow me to make three points. Everyone says, and everyone is correct, that Republicans absolutely need to have a win, politically, and by moving quickly you can prevent the barnacles of lobbyists from attaching themselves to the bill, preventing this bill's downfall. That's normal. You always have that in the legislative process. But the other thing is that we're moving extremely quickly on an extremely complex bill.
The other point is, we have no economic emergency here. There is no war that needs to be funded, there's no depression that requires stimulus. So the rushing has no justification except a political one.
Finally, I believe one reason is they want to make sure they get the bill out before the dynamic score comes out. Because they'll be embarrassed by the dynamic score.
Why do you assume the dynamic score will embarrass them?
There's a $1.5 trillion static revenue loss [as a result of the tax changes in the bill]. If there's economic growth from the bill, that will be partially offset. So far, from the Penn-Wharton and Tax Policy Center models, that offset looks very small. I would expect the dynamic score to be less than $500 billion.
If they did slow this process down by waiting for the dynamic score to come out and holding hearings, would that change the bill?
It might give pause to deficit hawks like Bob Corker and Jeff Flake. It would also have a publicity effect: All the headlines would read, "Official estimates say job growth would be minimal," or "Deficit increases would be significant." That would add to the public's already low opinion of this bill.
Republicans would have to provide even more benefits to small businesses in that case. The obvious money pot here is the $1.5 trillion for the corporate rate being cut from 35 to 20 percent. If you polled the business community six months ago and said, We guarantee you're going to have a 25 percent tax rate, they would have taken it and run.
Is there anything wrong with the basic idea of reducing corporate tax rates?
No. All economists would agree that the biggest problem with our tax system from a growth point of view—not an equity point of view—is our high corporate tax rate. I'm in favor of lowering the corporate tax rate, President Obama was in favor of lowering the corporate tax rate, but the political problem is both Democrats and Republicans can't face their constituents and say, We need a big tax cut for corporations.
There is an economic need for business tax reform. There is no economic need for individual tax reform—but the political need is titanic. That's what's going on here.
What has changed between the 80s and now that has made the process of trying to pass tax reform so different?
Driving all this is the political need to have a win after the Republican failure to repeal and replace the Affordable Care Act. They have unprecedented political pressure to get something done. It's sort of like running full-speed down a steep slope—They're running so fast they're going to just fall over. This bill is full of more ticking time bombs than a Road Runner cartoon. I believe if they do not change this bill to include significantly more middle-class tax relief and more tax relief for small businesses, they will have passed the bill—but it will be so unpopular it will not help them in 2018 and 2020.
Do you think the bill will have passed out of the Senate by Friday?
I might pass out by Friday.
If Republicans maintain discipline on the Senate floor, this bill could pass on Thursday or Friday. But that doesn't necessarily mean this bill is sailing through. There's some talk about the House just adopting the Senate bill, but I think there are too many differences.
One thing to remember is we have a tremendous amount of backroom activity. Whether or not they pass the bill by Friday, all these bills so far to me are just placeholders. The question is, how close are they getting to an agreement between the House and Senate, and how close are they getting to the necessary 50 votes in the Senate? You could have party-line votes on the Senate floor because they'll say, Don't worry we'll fix it in conference. All these holdouts always have the ability to kill this bill during the conference. They don't have to obstruct at this point. They can, but it isn't their last chance. I do this with my kids—I don't say no until I have to.
This interview has been edited and condensed for clarity.
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