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Opinion: The GOP Tax Bill — All Hat and No Rabbit

Even passing no legislation might be a better option

From left, House Majority Leader Kevin McCarthy, Ways and Means Chairman Kevin Brady and Majority Whip Steve Scalise celebrate during a news conference after the chamber passed the GOP tax bill. (Tom Williams/CQ Roll Call)
From left, House Majority Leader Kevin McCarthy, Ways and Means Chairman Kevin Brady and Majority Whip Steve Scalise celebrate during a news conference after the chamber passed the GOP tax bill. (Tom Williams/CQ Roll Call)

All politics is state and local.

That update of Tip O’Neill’s dictum is inspired by the Republican tax bill. The legislation that passed the House on Thursday eviscerates the deduction for state and local taxes and the current Senate version, which just emerged from the Finance Committee, eliminates the write-off entirely.

This might seem like a devilishly clever move by a Republican Party whose locus of power lies in the low-tax states of the Sunbelt and Midwest. What better way to stick it to the latte-loving, Prius-propelled coastal liberal elites than to remove a tax break cherished in anti-Trump states like California, New York, New Jersey and Connecticut?

But in putting together their tax plan, the Republicans are akin to a magician who brought the hat but forgot the rabbit.

Start with major Republican donors who (surprise) are more likely to live in Manhattan or hedge fund hideaways like Greenwich, Connecticut, than they are to reside in Topeka or Little Rock.

When Treasury Secretary Steven Mnuchin recently addressed the New York Economic Club, there were murmured undertones of anger among GOP fundraisers over losing all (or most) of their hefty deductions for property, state and city taxes.

OK, as they have proved so often, the Republicans are too pure to ever cater to the desires of their donors.

Losing ground?

But what is mystifying is the GOP’s eagerness to jeopardize their control of the House in 2018. It was nervous self-interest that prompted 12 Republicans from New York, New Jersey and California to vote against the House bill.

Republican pollsters John and Jim McLaughlin asked in a recent column for the conservative website Newsmax, “With a mere 24 seat Republican majority in a possibly difficult year, is it worth passing a tax reform plan that turns out to be a tax increase for the voters of about 10 percent or more of our Republican caucus? Why aren’t we uniting our caucus with a tax cut for the majority of voters in every Republican district?”

After the Newsmax article appeared, John McLaughlin told me Friday, “I’d much rather be attacking Democrats for their job-killing votes than fighting among Republicans about who’s getting a tax cut and who isn’t.”

Three clients of McLaughlin and Associates (New York Republicans John Faso, Peter King and Lee Zeldin) voted against the House bill.

But the political downsides for Republicans in their headlong rush to pass a tax bill are not limited to the Northeast and California. The issue looks almost as dicey when viewed through the prism of Arizona — a state where the Republicans could lose the Senate seat of retiring Trump critic Jeff Flake.

In the GOP primary, Kelli Ward, the Steve Bannon-backed Trump disciple, will claim to be vindicated in her fury at the Republican establishment if Congress fails to approve a tax bill. But if the legislation passes, Rep. Martha McSally, the mainstream Republican said to be planning a Senate bid, will have to defend every clause in the bill she supported.

That may not be a political problem for McSally in the primary against Ward. But Rep. Kyrsten Sinema, the likely Democratic Senate nominee, is an adroit politician apt to jump on every special-interest giveaway in the tax bill.

The 400-page version that passed the House was cobbled together in two weeks without a single hearing. Given the complexity and arcane language of tax legislation, there are almost certainly lobbyist-inspired giveaways in the House bill that have not yet been exposed in the press coverage.

In overselling his health care bill, Barack Obama couldn’t resist the temptation to hyperbolically claim in August 2009, “If you like your health care plan, you keep your health care plan.”

By 2013, Obama was publicly apologizing that turmoil in the insurance markets had led to popular policies no longer being offered. As Obama told NBC’s Chuck Todd, “I am sorry that [people] are finding themselves in this situation based on assurances they got from me.”

You would think that the Republicans would have learned from Obama’s missteps, especially since they eagerly exploited them in their campaign against the Affordable Care Act.

But this is the party that can’t legislate straight.

Or a lump of coal …

Paul Ryan has been touting the tax bill as the political equivalent of a yummy candy cane in every stocking.

Describing the House bill to Rush Limbaugh earlier this month, the speaker said unequivocally, “It’s a tax cut for everybody. There’s a lot of misinformation out there, a lot of confusion — and more or less, a lot of hits from the left. But it’s a tax cut for everybody.”

Tell that to major GOP fundraisers from New York. Or those 12 Republican legislators from New York, New Jersey and California who voted against the House bill.

John McLaughlin, who polled for the 2016 Donald Trump campaign, stressed in a conversation with me that selling tax cuts as an engine for economic growth would be a much more fruitful approach for Republicans.

As McLaughlin put it, “Debating whether or not it’s a middle-class tax cut is the weaker argument because at some point, people are cynical and always think they’re going to pay more — while the rich will find a way not to pay. It also plays right into the class warfare argument that favors the Democrats.”

That’s the GOP dilemma: The only thing worse than not passing a tax bill is passing anything like the legislation that congressional Republicans are rushing to enshrine into law.

Roll Call columnist Walter Shapiro is a veteran of Politics Daily, USA Today, Time, Newsweek and The Washington Post. Follow him on Twitter @MrWalterShapiro.  

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