Wednesday, Jan 17, 2018
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David Shribman

COMMENTARY

Tax-bill test: How revolutionary are the GOP rebels?

  • Trump-Time

    President Donald Trump, who ran on "draining the swamp," may have to face down some of the longest-serving swamp-dwellers in his drive for tax reform.

    ASSOCIATED PRESS

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    Shribman

NORTH CONWAY, N.H. — Within living memory, this part of the world, framed by White Mountain peaks and garlanded by firs and hemlock, was the sturdy redoubt of the old conservatism. There was linguistic irony to the ideology that prevailed here — think of it as the conservatism of the conifers — because in these mountain fastnesses nothing was worshiped quite so much as the slowness of change.

These days conservatism has a different velocity, and in this corner of the North Country — amid these cathedrals of pines — the contrast between the old conservatism and the new couldn’t be more vivid, especially so in this season of change, where just the other day the hills were pockmarked by snow and a few hours later the rains fell.

Trump-Time

President Donald Trump, who ran on "draining the swamp," may have to face down some of the longest-serving swamp-dwellers in his drive for tax reform.

ASSOCIATED PRESS Enlarge

That was the old conservatism: hesitant, even tentative change. The new conservatism, on display 500 miles to the south in Washington, is marked by lurches of change — swift, transformative change, the kind that substituted the old conservatism of the Bush ascendancy for the new conservatism of the Tea Party, the Freedom Caucus and, on some days but not all, the Trump administration.

This week the Senate, constructed by the Founders not as a foundry of change but as a bulwark against it, will consider tax overhaul. The House — in a hurry, devoting a mere two weeks to transforming a tax system a third of a century old — passed its own version earlier this month, and the Senate, the place where time is forgotten, is girding to have its say. Either way, the drive for tax overhaul is a drive for dramatic change — and it offers important lessons about the new world order of American politics. Some of it may even please liberals, though they will be chary of admitting it. The key questions:

Are the Republicans producing a tax bill that represents dramatic reform or are they talking populist language while serving the party’s traditional corporate allies?

For ages the Republicans were the party of big business, even when their leaders had no roots in what we today describe as the wealthiest 1 percent. Sen. Bob Dole, the quintessential Republican of the last age, was no plutocrat; his father ran a butter and egg station in Russell, Kan., and as a young county attorney he had to sign his grandparents’ welfare checks.

The GOP’s transformation began with the Newt Gingrich revolution of 1993, when the party’s focus began to change from big business to small business. That is why the cri de coeur of Sen. Ron Johnson of Wisconsin was so significant. The Republican is a Paul Ryan ally but, more important, he is a small businessman, having run his family’s plastics manufacturing company before joining the Senate in 2011.

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Shribman

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Mr. Johnson’s cause is the legislation’s treatment of so-called “pass-through” businesses, which account for 90 percent of the country’s businesses. These are taxed at the individual rate, not the corporate rate. As a result, the legislation would tax these operations at 32 percent rather than the 20 percent big companies must pay.

Bottom line: The Johnson rebellion is a test of whether the new GOP is the servant of its traditional corporate constituency or whether it is a more populist political force responsive to the interests of the majority of Americans in the private sector who work for small businesses.

Will the Republican rebels who talk about “draining the swamp” face down the rebellion from some of the biggest swamp-dwellers in the capital?

Among the alligators, tadpoles, and mosquito larvae in the Washington swamp sits the home real-estate industry, which has enjoyed the deductibility of home interest for more than a century and which continues to argue that the mortgage interest deduction is the rock upon which the American Dream is built. For decades its lobbyists have argued that removing this tax break would put home ownership beyond the means of millions, when in fact this provision disproportionately benefits the wealthy. Besides, according to a Swiss Finance Institute study, the rate of home ownership in Canada, Britain and Australia, where such interest is not deductible, exceeds that of the United States.

Bottom line: If lawmakers bow to this giant special interest, they will signal they are willing to talk the easy populist language but are unwilling to walk the difficult populist trail.

Mr. Trump and his Capitol Hill allies are at war with the way Washington works. But are they embracing one of the governing principles of the capital, which is that tax bills and budgets need not be honest, and that the calculations of the effect of legislation in the “out years” can be as phony as the legislation’s authors need it to be? 

For generations lawmakers have supported legislation that they knew rested on fraudulent economic assumptions and accounting tricks. These contrivances have been favored by congressional leaders of both parties, their legislative products resembling the assessment that the British foreign secretary Viscount Castlereagh applied to the early 19th century Holy Alliance of Russia, Prussia and Austria: “a piece of sublime mysticism and nonsense.”

The nonpartisan Joint Committee on Taxation already has warned that the bill the Senate will consider this week would actually raise taxes on families with incomes under $75,000 — a conclusion that leading GOP figures contest. But it is incontrovertible that the legislation calls for the bulk of the tax cuts to expire in 2025, which is a wily dodge; it allows lawmakers to skirt a congressional rule prohibiting bills requiring only a Senate majority from adding to the deficit after the passage of a decade’s time. Moreover, a study by the nonpartisan Committee for a Responsible Federal Budget found that the bill has a full $515 billion in gimmicks and would add $2.2 trillion to the deficit.

Bottom line: These maneuvers are the algae that are the very foodstuff of the swamp animals Mr. Trump and his allies are sworn to eliminate. The chances that the tax bill that goes to the president’s desk before Christmas will be algae-free? Slim.

That is a conclusion that both Republican rebels and Republican regulars should deplore, and one that Democratic lawmakers will take exception to even though they practiced the same deception games when they were in power. Viewed that way, there is little difference between Obamacare’s claim that Americans could keep their doctors and Mr. Trump’s claim that tax overhaul is a populist imperative.

David Shribman is executive editor of the Pittsburgh Post-Gazette. Contact him at: dshribman@post-gazette.com.

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