Step aboard my way-back machine to 1985 and 1986, when it was morning in America and President Ronald Reagan wielded moral authority and an ability for cutting deals to achieve great outcomes.
The Tax Reform Act of 1986, which simplified the income tax code, broadened the tax base and eliminated many tax shelters, was sponsored by Democrats Richard Gephardt in the House and Sen. Bill Bradley in the Senate. It passed the House on a voice vote and in the Senate 97-3. The joint conference committee report passed the House 292-136 and the Senate 74-23.
So one of Reagan’s greatest achievements was a truly bipartisan effort that took three years to achieve, and lasted over three decades.
Now look at the freak and creep show on Capitol Hill today. Republicans are trying to ram through tax reform in the most partisan fashion, in just a matter of weeks, because President Donald Trump and congressional Republicans really need a victory. Having abjectly failed on another set of partisan blunders, the repeal and replace of Obamacare, their donor base is angry and threatening to stop writing campaign checks.
They are trying to woo three Senate Democrats, including Indiana’s Joe Donnelly, after not attracting a single Democrat in the House. But there’s a big poison pill for Donnelly — the Senate version included repealing the Obamacare individual mandate, which could end coverage for 13 million Americans.
“I’ve said from the beginning that I’m willing to partner with Republicans and Democrats as well as the administration on tax reform,” Donnelly said. “This should not include making health care more expensive for or taking it away from millions of Americans.”
So intent is Trump to get this win that he’ll make a deal with the devil, or in this case Republican Alabama Senate nominee Roy Moore, who has been accused by nine women (including one who was age 14 at the time), of sexual harassment and/or assault.
If the political machinations aren’t troubling enough, let’s look at the actual legislation. It does some good things, like cutting the corporate tax rate from 35 percent to 20 percent. It allows U.S. companies to bring back off-shore profits tax free, or as Douglas Holtz-Eakin, who ran the Congressional Budget Office during the George W. Bush presidency, puts it, “That levels the tax playing field.”
But there are problems, with economist Steve Rattner observing, “It helps the rich more than anyone else, it increases the debt and kicks a lot of people off of Obamacare.” He notes that “50 percent of the benefits go to the top 5 percent. This administration is running around calling it a middle class tax cut.” But the middle class cuts get phased out after a few years.
Economist Jeffrey Sachs of Columbia University adds, "What will happen is we will have bulging budget deficits, we will have a fiscal crisis, we will have a downturn in the housing market because they are cutting corporate taxes in part by raising the property taxes. So the Republicans want us to forget the fact that the starting point of all of this is $1.5 trillion of deficits accumulated over the coming decade.”
White House economic adviser Gary Cohn says the corporate tax cuts will fuel the economy and cut deficits. But at a meeting of CEOs hosted by the Wall Street Journal, Cohn asked how many planned to increase their capital expenditures. CNBC reported: only a smattering raised their hands. "Why aren't the other hands up?" an incredulous Cohn asked. Perhaps it’s because a National Bureau of Economic Research study published in 2014 found "little evidence that corporate tax cuts boost economic activity."
The way-back machine is back on, and we hear U.S. Reps. Todd Rokita and Luke Messer, both running for the Senate, talk about the evils of budget deficits. In 2012, Messer told WTHR-TV, “Today, the federal government is five times as big as it was 30 years ago, and the federal national debt has ballooned — growing from $1.2 trillion in 1983 to almost $16 trillion today. We have to do better.” Rokita said in 2011, "The debt hole is too great now that you can't just grow your way out.”
Both voted for the House version, so the deficit hawks no longer chirp. Anything for a partisan victory, because Trump needs one, even if our kids and grandchildren get stuck with the bill.
Yes, bipartisan reform. What a concept.