It’s Donald Trump and the Republicans versus the Washington swamp’s most devious predators in the legislative duel of a generation.
By plunging into a majority-defining fight for tax reform, the White House and GOP leaders are pitting their wits against the most resourceful, well-funded, and experienced players of the inside Washington game.
There’s a reason that there’s been no genuine tax reform bill passed for three decades. It’s the same reason why many insiders believe that this attempt will be doomed, and eventually shrivel to the mere doling out of tax cuts.
Tax reform sets up the ultimate duel between power brokers in the White House and Capitol Hill leaders, and lobbyists, special interests, industry groups, liberal campaigners, conservative think tanks, deficit hawks and any other pressure group that fears seeing a treasured tax break wither.
“Great Tax Cut rollout today. The lobbyists are storming Capital Hill, but the Republicans will hold strong and do what is right for America!” Trump tweeted Thursday night.
“Look, tax policy today is very swampy,” said Rep. Tom MacArthur, a Republican who is not sold on the bill, owing to worries about mortgage interests and property tax deductions.
Within hours of the long-awaited bill being released on Thursday, some members were already feeling the heat, which will build day-by-day until the first crucial votes in the House and the Senate.
“Look, my phone’s ringing,” said Rep. Jeff Fortenberry, R-Nebraska.
By Thursday evening, a collection of powerful industry groups had already lined up in an attempt to gut the legislation.
“Some of my best supporters, associations and stuff, don’t like provisions in this tax cut,” said Rep. Mike Simpson, a Republican from Idaho who has already heard opposition to the bill. “Every association that I know of has come into my office and said ‘you know this tax reform is really important, we got to get this done except this one provision here.'”
The National Association of Home Builders did not even wait for the bill to be published, after declaring war at the weekend after learning its pet credit was under fire. The bill would cap mortgage interest deduction $500,000, down from $1 million.
“The House Republican tax reform plan abandons middle-class taxpayers in favor of high-income Americans and wealthy corporations,” said NAHB’s Granger MacDonald.
The National Federation of Independent Business and National Association of Realtors also swiftly registered their displeasure.
“Tax hikes and falling home prices are a one-two punch that homeowners simply can’t afford,” said the group’s William E. Brown. “The nation’s 1.3 million realtors cannot support a bill that takes homeownership off the table for millions of middle-class families.”
But another lobby was declaring victory after the pensions sector killed off a bid to limit the amount of tax free cash Americans salt away in 401K plans, that angered Trump and caused industry outrage.
The contrasting fortunes of the two sectors exemplified the essential truth that every tax reform bill causes winners and losers. Sometimes the fight becomes so intense that legislative efforts simply get swamped and suffocate.
Republican leaders acknowledge the fight ahead, but insist that, overall, this is a plan that will give a generational lift to the middle class, despite Democratic claims it is just another disguised giveaway to the GOP’s rich friends. And if is passes it will mean more than a win for Trump.
Will it may not count as draining the swamp — his core campaign promise will certainly qualify as a win over its most dangerous inhabitants.
The President played Santa for Americans as he touted the bill that represents the best remaining chance he has to wrack up a genuine legislative victory this holiday season.
“We are giving them a big beautiful Christmas present in the form of a tremendous tax cut,” Trump said at the White House on Thursday.
Win or lose the House?
But Christmas cheer for Republicans will only come if lawmakers resolve to make difficult choices and tough votes that could put careers on the line.
They face a daunting choice: defend the interests of donors and interest groups or actually pass a major bill they can campaign on.
Many are arguing that in a year in which Congress has yet to send the President a major accomplishment, they are going to have to grit out the K street howls or face a grim reality: the return of Democrat Nancy Pelosi as House speaker.
“We feel our mortality in holding office really weighing on this vote,” said Rep. Tom Rooney, a Republican from Florida.
“Put it this way: If we don’t pass this, we go into an election season without having a major piece of legislation passed with a majority in the House, the Senate and the White House. How do you go home and say ‘vote for me for re-election?’ We didn’t do anything.”
The barren 10 months for the GOP majority has not just dismayed the GOP’s conservative base — it has also dampened energy from an even more vital group — the big dollar donors who bankroll campaigns.
But here again, it’s the winners and losers equation that puts so much pressure on House Speaker Paul Ryan’s rank-and-file.
Winners and losers
Tax legislation is always about difficult choices.
This bill clocks in at 429 pages, and while it drops the corporate rate from 35% to 20% and doubles the standard deduction for individuals — targets of some lobbyists for years, it has to also offset the cost by closing various loopholes.
That includes doing away with deductions for items like medical expenses or dozens of obscure breaks like one that allows pharmaceutical companies to write off research on rare diseases.
“As Congress debates and refines this important legislation, we look forward to working with lawmakers to ensure that our nation’s tax code most effectively encourages innovation, investment and American entrepreneurship,” the Biotechnology Innovation Organization said in a statement.
“This would include maintaining the Orphan Drug Tax Credit, and the inclusion of incentives for pre-revenue innovation and for the development of advanced biofuels, renewable chemicals and bio-based products.”
Mark Meadows, a Republican from North Carolina and chairman of the conservative House Freedom Caucus, said that members must take a 30,000-foot view.
He said for example that the bill would crush the mortgage interest deduction on second homes, and his district includes parts of Asheville, and the Nantahala National Forest, a popular tourist area.
As an aside, noted that the lithium battery industry was also a loser because deductions for electric cars were cut out of the bill — another sign of the compromises a tax reform bill requires.
“When you look at some of those things, there will be people who will be strongly advocating and I think you have to look at it from a more holistic point of view,” Meadows said.
But such is the imperative for Republicans to get something, anything passed, after the debacle of their Obamacare repeal effort — the price of failure, this time, could be higher than the price of standing up to special interests.
“I don’t think you are going to see lobbyists win the day here where they’re getting back a bunch of little carve outs for industries,” said MacArthur. “I don’t think so.”
