Republicans Face Messaging Battle on Tax Overhaul

Health care defeat spurs heightened awareness of the upcoming messaging battle on taxes

From left, Speaker of the House Paul Ryan, R-Wis., Senate Finance Committee chairman Orrin Hatch, R-Utah, and Senate Majority Leader Mitch McConnell, R-Ky.  (Photo By Bill Clark/CQ Roll Call)
From left, Speaker of the House Paul Ryan, R-Wis., Senate Finance Committee chairman Orrin Hatch, R-Utah, and Senate Majority Leader Mitch McConnell, R-Ky.  (Photo By Bill Clark/CQ Roll Call)
Posted October 4, 2017 at 5:05am

The messaging battle over a pending overhaul of the U.S. tax code has begun. And while Republicans say they feel confident they will overcome the opposition this time around, a lingering defeat on health care continues to concern proponents.

The administration and congressional GOP leaders last week unveiled a framework for the still unreleased tax legislation. It immediately set off a cascade of reaction — positive and negative — as Republicans labeled it a middle-class tax break and Democrats called it a giveaway for the rich.

It is round two of a clash over the major tenets of the GOP agenda.

As they tried to repeal and replace the 2010 health care law earlier this year, Republicans found it difficult to overcome opposition from Democrats and major health care stakeholders. Democrats framed nearly every proposal from the GOP as a blow to coverage for individuals with pre-existing conditions and a massive, if not fatal, funding cut to the Medicaid program.

Public opinion was further swayed by late-night talk show host Jimmy Kimmel, who spent significant airtime assailing legislation from Sen. Bill Cassidy of Louisiana. As a guest on Kimmel’s show in May, the Republican senator had promised to advance a bill that would pass the “Jimmy Kimmel test” — an informal measure of whether people with pre-existing conditions would be jeopardized.

Now Republicans know they have to be more vigilant in framing the debate. After fighting with Democrats for years on tax issues, several GOP members say they are prepared to combat the message that the tax legislation will benefit only the rich.

“For Republicans, it’s more traditional. We’re used to that. Every time there’s been a debate about taxes here, that’s the argument that Democrats make,” Senate Republican Conference Chairman John Thune of South Dakota said. “The public is almost kind of numb to that. They know this is what the Democrats are going to say.”

Other members cautioned that Democrats might have the upper hand in the early stages of the debate.

“Anytime you’re developing policy, there are challenges in messaging because the full details of the policy have not been fleshed out. Which means the Democrats can be unified in attacks,” Sen. Ted Cruz of Texas said. “Until the policy details have been resolved, it’s difficult to have unity in a message defending the legislation.”

Even if Republicans ultimately believe the advantage is on their side, they face a potentially tumultuous next few months as they work to advance a major tax bill that is ripe for varied interpretation.

Ryan, on Sept. 27, Touts ‘Simple, Fair’ Tax Overhaul Plan

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Opposition already fired up

Opposition to the GOP framework is already fierce, and several recent analyses have given Democrats ammunition.

A report by the nonpartisan Tax Policy Center predicted that some lower income individuals, but not all, could see a decrease in their tax rate.

“In 2018, all income groups would see their average taxes fall, but some taxpayers in each group would face tax increases,” according to the report.

In a blow to Republican talking points, the report also found that by 2027, roughly 30 percent of taxpayers with incomes between $50,000 and $150,000 would experience tax increases.

Individuals in the top 1 percent of income earners in the country would receive 80 percent of the total benefit from the proposal, the Tax Policy Center estimated. The proposal to eliminate the estate tax would also affect only the wealthy. 

Democrats pounced.

“Republicans may talk a good game to the middle class, but they cannot deny the math: Their plan would raise taxes on hardworking Americans and their families, while adding trillions to the mounting debt burden they so often decry,” House Minority Whip Steny H. Hoyer of Maryland said in a statement.

But Republicans were ready with their rebuttal. They employed a tactic similar to the one the party used during the health care debate: discredit the opposition.

Senate Majority Leader Mitch McConnell’s office on Tuesday blasted out a series of messages that sought to paint the Tax Policy Center as a partisan organization that has a record of opposing GOP plans.

“The Tax Policy Center is a joint project of the left-leaning Brookings Institution and the Urban Institute that the media routinely labels ‘nonpartisan,’” one email read, quoting a Wall Street Journal editorial. “Its record of hostility to any GOP tax reform that cuts tax rates shows the opposite.” 

Dance of the deficit

The messaging hurdles Republicans face don’t end with whom the legislation will benefit. The party is also preparing for a major battle over what impact the bill will have on the federal deficit.

GOP members say the proposal will spur economic activity through reduced taxes, ultimately resulting in a revenue driver. Key to their analysis is the use of dynamic scoring, which takes into account macroeconomic effects of the bill.

But there is significant debate over the use of such scoring, and some recent reports that rely on more traditional methods of analysis could be major headaches for Republicans.

The Tax Policy Center, for example, estimated that the framework would reduce federal revenue by $2.4 trillion over 10 years. Another report from the Committee for a Responsible Federal Budget said it could cost $2.2 trillion.

The impact on the deficit appears to already be a concern for some Senate Republicans.

“If it looks like to me … we’re adding one penny to the deficit, I am not going to be for it, OK? I’m sorry. It is the greatest threat to our nation. The greatest threat to our nation,” Sen. Bob Corker of Tennessee told NBC’s Chuck Todd last week.

The GOP is facing a tight margin on the tax effort.

In the Senate, the party can afford to lose only two votes — calling in Vice President Mike Pence to break the tie — to pass the measure under the fast-track budget procedure known as reconciliation.

And with Republican House members from states such as New York and New Jersey expressing initial hesitation over the possible removal of individuals’ ability to deduct state and local taxes, advancing the legislation in that chamber could be equally as tough. Other high-tax states with significant GOP representation include California, with its 14 Republican House members.

In short, the battle over the tax overhaul is only getting started, and it’s already heated.