Mar 27, 2017

4 more problems for tax reform

Alex Brandon / AP

On Friday we posted four reasons why healthcare reform's failure is a giant red flag for tax reform, and things got worse over the weekend ― particularly when House Freedom Caucus leadership suggested that a tax package needn't be revenue neutral. Here are four additional challenges:

  • The White House still has not shared a draft plan with its Congressional allies (even informally), which is being viewed as evidence that the internal squabble over things like BAT have not yet been resolved.
  • Congress gets to tax reform via reconciliation which, given the healthcare debacle, means that the fiscal 2018 budget resolution might need to go first. Republicans could re-purpose the healthcare reconciliation vehicle instead but: (a) That would mean healthcare reform is really off the table; (2) It includes a massive savings requirement that tax reform will have trouble filling.
  • Did you say budget? You mean the same sort of budget that the House couldn't pass last spring because of the exact same GOP faction conflicts that we just saw on display? Defense and deficit hawks will each claw for the spending mice. Oh, and the Freedom Caucus might try to scuttle any tax deal that doesn't include a WH and leadership promise to reengage on healthcare.
  • None of this addresses the debt limit, which will very much need to be addressed.
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