The Memo: GOP looks to get back on track with tax reform

The Memo: GOP looks to get back on track with tax reform
© Greg Nash

Republicans are more desperate than ever to keep tax reform on track.

This will be an intense push that, if successful, would supply a much-needed legislative win and give the party a way to move past the controversy over alleged links between President TrumpDonald TrumpMeghan McCain: Democrats 'should give a little credit' to Trump for COVID-19 vaccine Trump testing czar warns lockdowns may be on table if people don't get vaccinated Overnight Health Care: CDC details Massachusetts outbreak that sparked mask update | White House says national vaccine mandate 'not under consideration at this time' MORE’s campaign and Russia.

Up until news broke of a suspected terror attack in New York City on Tuesday afternoon, political headlines had been dominated by the indictments against former Trump campaign chairman Paul Manafort and his associate Richard Gates, as well as news of a plea deal with former Trump campaign foreign policy adviser George Papadopoulos.

The president continues to insist that there was “NO COLLUSION!,” as he put it in a Monday tweet. 

By Tuesday morning, Trump was among those hoping for a change of subject.

“I hope people will start to focus on our Massive Tax Cuts for Business (jobs) and the Middle Class (in addition to Democrat corruption)!” he tweeted.

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House Republicans plan to release their most specific tax reform plan yet on Wednesday, though they will signal that changes are still likely.

Given the failure to repeal and replace the Affordable Care Act, Republicans acknowledge that the stakes are sky-high for tax reform.

“Tax reform is, for many reasons, a train that is leaving the station of its own accord,” said conservative strategist Greg Mueller. “The president and the House majority and the Senate majority are all in agreement that this is a must-do.”

But passage of the tax-reform package is by no means guaranteed.

During President George W. Bush's first term, he signed major tax cuts into law. In 2001, 40 Democrats — 28 in the House and a dozen in the Senate — backed the bill. This year, the number of defecting Democrats will be much lower and could be zero. 

In advance of the House plan being unveiled, there has been speculation over various specifics, such as the fate of the deduction for state and local taxes, potential changes to regulations governing 401(k) retirement accounts and the possibility that a corporate tax cut could be gradually phased in.

Democrats, for their part, see the GOP twisting uncomfortably. Even Republican-leaning voters, they say, are in an unforgiving mood with their leaders in Washington.

Democratic strategist Chris Kofinis said that a Republican failure to enact tax reform “will reinforce what people have been saying: that they are incapable of governing. They are now at the 15 yard line and if they don’t get to the end zone, they have a problem. 

The White House lamented the media’s focus on allegations of collusion with Russia on Tuesday, with press secretary Sarah Huckabee Sanders making the argument that reporters were “completely obsessed” with the Russia story to the detriment of pocketbook issues.

"There are a lot of other things happening around the country, and, frankly, a lot of other things that people care a lot more about,” Sanders told the daily media briefing. “The media refuses to cover it, and I think that's the distraction, instead of the focus being constantly on tax cuts and tax reforms.”

Trump’s supporters argue that he has not received sufficient credit for a strong economy — gross domestic product growth has been above 3 percent on an annualized basis for the past two consecutive quarters. His detractors suggest that his low ratings would be even lower if the economy were more robust.

The hope among Republicans is that tax reform could fuel an economic expansion. Some suggest success could drive Trump’s poll ratings up — and not just fleetingly.

David Winston, a veteran GOP pollster, said that for all the controversies that have swirled around Trump, his poll ratings had mostly bumped up and down within a relatively modest range.

“That is where tax reform becomes a very important priority,” Winston said. “I think tax reform is a fundamental moment in terms of the way people gave Republicans the responsibility of governing. … If it happens, then they are getting what they voted for. If it doesn’t happen, then the faith the American electorate placed in Republicans is going to be questioned. 

There is one area of agreement among Republicans and Democrats alike. Both sides agree that Speaker Paul RyanPaul Davis RyanRealClearPolitics reporter says Freedom Caucus shows how much GOP changed under Trump Juan Williams: Biden's child tax credit is a game-changer Trump clash ahead: Ron DeSantis positions himself as GOP's future in a direct-mail piece MORE (R-Wis.) also has an enormous amount riding on the outcome of the tax reform push.

Success will burnish his reputation after the early tumultuous months of the Trump presidency.

But failure could have just as dramatic an impact.

“If they come back with nothing done, Paul Ryan becomes the poster-person for incompetent governance in Washington,” said Democratic strategist Hank Sheinkopf.

“The Democrats are likely directly polling what Paul Ryan’s favorables and unfavorables are already” in preparation of next year’s midterm elections, Sheinkopf added. “Paul Ryan may be the message in 2018.”

The Memo is a reported column by Niall Stanage, primarily focused on Donald Trump’s presidency.