Politics

All the GOP’s Eggs Are Now in the Tax Basket

The pressure’s on as House Republicans try to move their tax bill

Sen. John Kennedy holds up his wallet during a Tuesday news conference in the Capitol as he says that families and small businesses would benefit from the GOP’s tax plan. (Tom Williams/CQ Roll Call)

It’s hard enough to digest the policy details of the GOP tax overhaul plan — but add in a dose of distraction from the sprawling probe of Russian interference into last year’s elections and it’s easy to lose any budding “taxmentum.”

 

Selling a comprehensive tax code rewrite — even if it’s packaged as a tax cut for individuals and businesses — is so challenging that Congress hasn’t done it since 1986.

Now, on the cusp of moving a bill, the special counsel’s recent indictments have rocked K Street, including one of its best-known firms, the Podesta Group.

Still, against that backdrop, the Trump administration and congressional Republicans — along with many in the nation’s business community — say they are keeping their attention fixated on building momentum for the tax measure.

The stakes couldn’t be higher: Republican control of  Congress is on the line. The biggest GOP donors may pack up their bags of cash if their party can’t push forward a meaningful tax bill. Voters, too, may lose enthusiasm for Republicans.

“I’ve been doing this for three decades, and I’ve never seen a moment where the outcome on one issue could determine the party’s fate or direction,” says Tim Phillips, who runs Americans for Prosperity, a group funded by conservative brothers Charles and David Koch, among others. “This moment is the biggest I’ve ever seen for a party on one single issue.”

Of donors and voters alike he says, “They’re expecting results.”

Former Sen. John Breaux, the Louisiana Democrat who has built a lobby practice at Squire Patton Boggs, agrees that Republicans find themselves in a possible predicament.

“Politically, it’s a real challenge if the Republicans cannot pass tax reform and repeal Obamacare, if they can’t do an infrastructure bill,” Breaux says. “That’s three big strikes — three is enough to call you out.” 

Who's Getting to Write the Tax Bill

Former Rep. Thomas M. Reynolds, who was chief of the House GOP’s campaign committee, says there’s no question: Republicans campaigned on a fairer, simpler, comprehensive tax overhaul.

They also promised to repeal and replace Obamacare — but still haven’t been able to do it.  A major infrastructure measure, something President Donald Trump campaigned on, seems to have evaporated. Those lapses, especially on health care, infuse the tax overhaul with even more significance.

“That has to weigh on many members’ minds,” says Reynolds, now with Holland & Knight. Republicans, he adds, told voters, “If we get the opportunity to control the Senate, the House and the presidency, we’ll get that job done.”

Though many forces on K Street are working to support the tax bill, other business groups that stand to lose their favored deductions or tax breaks are building opposition — which complicates the debate.

Jay Timmons, president of the National Association of Manufacturers, said he highlights the potential for workers to see gains when he speaks to lawmakers and administration officials about the tax overhaul. His member companies will look to invest in new jobs and give existing employees a raise, he said.

Timmons notes NAM has launched a social media campaign intended to mobilize its membership and grass-roots activists.

The Trump administration, Republicans in Congress and lobbyists pushing for the overhaul are heavily courting some Democratic senators up for re-election next year in states carried by Trump: Heidi Heitkamp of North Dakota, Joe Manchin III of West Virginia, Joe Donnelly of Indiana, Claire McCaskill of Missouri and Jon Tester of Montana.

Their support, or lack of it, could determine the bill’s outcome — especially if not all Senate Republicans go along.

Breaux, a moderate back when moderates were the power center on the Hill, said the chances of passing a tax overhaul are 50-50, but “if they can involve some Democrats, it greatly increases the odds of getting something done that’s fair.”

Though the Republicans are the ones with the most at risk, the tax measure could potentially drag down both parties, especially if it devolves into a stalemate.

Democratic lobbyist Jeff Forbes said if Republicans can’t pass a tax bill, “they start to look super ineffective.” But there’s a danger for his party, too, as it defends 25 Senate seats while Republicans protect eight.

“Democrats run the risk of being the party of ‘no,’ and with more incumbents that hurts us. We have to find a way to show we can help govern,” he said.

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