CPI’s Weekly Compass for September 26, 2017

CPI Staff — Tuesday, September 26, 2017

Here are the top stories conservatives are following this week:

What’s Really Happening

Obamacare Groundhog Day: We’ve seen this movie before, haven’t we? Republicans promise bold action, spend weeks arguing and catering to liberal Republicans, then announce they can’t get to agreement yet on promised conservative policy goals and just need to get past the next election to finally do something. Last week, Senate Majority Leader Mitch McConnell (R-Kentucky) announced there would be a vote on the new Obamacare reform bill written by Senators Lindsey Graham (R-South Carolina) and Bill Cassidy (R-Louisiana). Just days later, Senators John McCain (R-Arizona) and Susan Collins (R-Maine) announced their opposition, likely sinking the bill’s chances of passing.

So what’s really happening in this debate? Conservatives have consistently fought for repeal of Obamacare, and thought Republicans were unified on that goal. In fact, all Republicans, including McCain and Collins, supported and passed a simple Obamacare repeal bill in 2015, but Obama vetoed it. As R Street scholar James Wallner explains, they could have simply passed the same repeal bill in early 2017 and let Trump sign it. Instead they made a fateful decision to force agreement on a replacement measure attached to repeal.

It seems many in the Republican Party are content with the Washington takeover of health care and are simply fighting for an end to the Obamacare repeal debate. They are hoping to either pass something, anything, label whatever passes as “repeal and replace” and consider the issue done … or … blame obscure parliamentary rules for being unable to address the issue without Democrat votes and kick the can past the next election. Conservatives for their part continue to try to negotiate in good faith as liberal Republicans demand more federal control and funding.

Texas Public Policy Foundation’s health care expert Chris Jacobs has pointed out numerous problems in the Graham-Cassidy bill. Senator Rand Paul (R-Kentucky) lists his demands for a yes vote: cut spending, repeal regulations, expand association health plans. Ted Cruz (R-Texas) is seeking more state flexibility. A new version of Graham-Cassidy was released yesterday trying to answer conservative concerns, while also doling out special spending for Maine and Alaska, an attempt to win over Senators Susan Collins (R-Maine) and Lisa Murkowski (R-Alaska). A new CBO score on the bill is due next Monday. However, Republicans are under a deadline of passing Obamacare legislation by Sept. 30this Saturday, unless they overrule the parliamentarian or extend the deadline with new budget instructions.

Trump Tax Cuts Come Into View: Republicans are nearing a full court press on tax reform, as details of the plan continue to leak:

  • $5.5 trillion tax cut over 10 years
  • 35% top individual rate (down from 39.6%)
  • Reduce income taxes from 7 brackets of rates down to 3 (12%, 25%, 35%)
  • 25% “pass through” business rate (down from 39.6%)
  • 20% corporate rate (down from 35%)
  • Repeal death tax, individual & corporate AMT
  • Increase child tax credit

In order to pass any tax reform plan with a simple majority in the Senate, Republicans will need to pass a new budget resolution with reconciliation instructions, just as they did on Obamacare. This presents a difficult decision for Republicans who made repealing Obamacare their signature issue for 8 years. Senator Graham has warned leaders that whatever is done on tax reform must allow the reconciliation rules to continue for Obamacare repeal.

What is important to understand that even if Republicans allow for both tax reform and Obamacare repeal reconciliation in a new budget resolution, the rules of the Budget Act will require them to combine both efforts into one bill or choose between them. The Budget Act only allows for one reconciliation bill that includes tax provisions. Because Obamacare repeal or reform requires changes to federal tax law, Republicans will not be able to do both separately under the same budget.

Policy Perspectives

Notable Events