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December 19, 2017

House Republicans Pass Tax Bill; Senate Expected to Vote on Final Passage Tonight


The House passed the final version of Republicans' $1.5 trillion tax overhaul on Tuesday afternoon, by a vote of 227-203.

Senate Republicans are now set to debate the bill and could vote Tuesday evening. That means that by the time many Americans go to bed on Tuesday, Congress may have passed Republicans' tax overhaul bill.

The House vote fell largely along party lines. No Democrats voted in favor of the bill, as was the case when the House passed its initial version of the bill in November. Twelve House Republicans voted against the bill.

A reader wrote to me to point out that while the corporate tax cut is permanent, the cuts to individual rates (achieved mostly by doubling the individual exemption) are only temporary and will, per the terms of the bill being passed, end in four years or so.

That's true -- according to the text of the bill.

However, I think we have to remember how this bill is being passed. It's being passed through the reconciliation process to avoid the Democrat filibuster -- which, of course, they would deploy, if they could.

A bill cannot be passed through reconciliation if it increases the deficit in a ten year window. The bill is written to satisfy those terms -- with a vanishing individual tax cut in four years. On paper, it won't increase the deficit.

Obamacare similarly gamed the reconcilliation process by featuring a full four years of tax increases before the six years of tax expenditures under Obamacare. Obamacare only satisfied the no-net-increase-in-deficit due to this gimmick of four years of tax hikes before the big payouts began.

I think the "vanishing" individual tax cut is just a similar gimmick. Yes, it's supposed to expire in four years -- for purposes of being compliant with the Byrd rule on the filibuster-proof reconciliation process.

But what I imagine they're thinking is that this is the most popular element in the tax plan, and therefore, in four years, it will either be passed anew or Democrats will reap the whirlwind by imposing a big tax hike on Americans.

Now, yes, that last part does include the possibility that Democrats will fall on their swords, as they did to pass Obamacare, and cut the individual exemption in half, increasing everyone's taxes.

But this seems to me to be a justifiable calculated risk. They probably won't have the guts to do that, and if they do, the odds that they'll lose the next following congressional elections -- and then we'll get the tax cut back -- are good.

In addition, there is the outside chance that this big stimulus to the economy (isn't it strange liberals always forget that an economic stimulus can be achieved by tax cuts?!) will goose the GDP growth and increase wages and further lower the unemployment rate -- and substantially increase the GOP's standing with the public before the 2018 and 2020 elections.

And they're going to need that. The generic congressional ballot is like 50/39 against them.

Maybe this is even a poison pill for Democrats, an insurance policy in case they take the House in 2018. If they take the House, their rabid partisans will demand that they re-hike taxes.

In time for the 2020 election.

You take what you can, when you can. You take some chances to put yourself in a position to win, and then just hope for the breaks.

Below, House Republicans talk up their victory:

digg this
posted by Ace at 03:55 PM

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