Why the Rush To Repeal Obamacare? It’s All About the Tax Cuts

The assumption has been that all of the frenetic activity to put together a bill to repeal/replace Obamacare in the House on Thursday was to tie its passage to the 7th anniversary of Obamacare. While that may have played a role, there is also the fact that Majority Leader McConnell seems poised to hurry a bill through the Senate as soon as the House is done.

Why all the rush? The explanation has more to do with what is next on the Republican agenda – tax cuts – than it does with health care. I have noted previously that this second item is dependent on successful completion of the first. Chye-Ching Huang did a great job of explaining why.

…passing the health package first facilitates deeper tax cuts for the wealthy and corporations in subsequent tax legislation.

That’s because the House GOP health plan reduces revenues by nearly $900 billion over the decade, according to the Congressional Budget Office (CBO), including $592 billion in tax cuts largely for the wealthy. Passing these tax cuts now as part of a health package allows the GOP to offset their cost through cuts to health care spending — particularly in Medicaid, which CBO estimates the House health care bill cuts by $880 billion over ten years. If these tax cuts were part of tax reform legislation rather than being in the health bill, Republican leaders would have to offset their cost

Huang goes on to quote Speaker Ryan himself making that case in an interview with Maria Bartiromo.

And more importantly, it would have been a trillion dollars more difficult to do tax reform had we done that first. That’s a big deal.

A trillion dollars, just to give you, in your mind a perspective, that’s 10 percentage points on rates for businesses…And so taking tax reform with a bigger trillion dollar number in it makes it really hard to do. That’s why doing this first [Obamacare repeal] makes tax reform that much easier to accomplish.

What Ryan didn’t mention is that the plan has been to do both Obamacare repeal and tax cuts in the Senate via the process of budget reconciliation (which bypasses the possibility of a filibuster) in order to avoid needing any Democratic support. But there are a lot of rules involved with reconciliation – like the fact that bills passed via that process cannot add to the deficit over the next 10 years.

Is the picture starting to come together? Republicans want to pass trillions of dollars of tax cuts, but have to offset their costs in order to use the reconciliation process and avoid having to work with Democrats. Because Obamacare repeal gives them an offset by reducing things like Medicaid to the tune of about $800 billion, it allows them to pile up those tax cuts.

In other words, it’s not just that Speaker Ryan has been dreaming about dismantling Medicaid since he went to keggers. He needs to reduce the money we’re spending on health care for the poor and disabled in order to fund his tax cuts for the wealthy. It’s really that simple.

Stan Collender explained why that fuels the rush to get Obamacare repealed. It’s an intricate process and you can read all about it at that link. But what it comes down to is that the clock is ticking on the timeline for getting this done. The FY18 budget and reconciliation deadlines (which Republicans plan to use to pass their massive tax cuts) come up in May-June. So Republicans now face the task of completing both a budget resolution and a tax reform reconciliation process – along with needing to raise the debt ceiling – in the next 2 1/2 months.

As Collender notes:

The GOP leadership could delay the FY18 budget resolution until the ACA repeal reconciliation bill is enacted, but that would greatly reduce the amount of time available for both the 2018 appropriations and tax reform. It would virtually guarantee that federal departments and agencies would start fiscal 2018 with a continuing resolution instead of the individual appropriations the House and Senate leadership have promised. It would also seriously exacerbate what has already become a significant political problem for congressional Republicans and the Trump administration: they promised that repeal and tax reform would happen quickly.

Major promises that Trump and the Republicans have made are going to start falling by the wayside pretty soon. That is why we’re seeing this frenzy to get something – almost anything – passed with respect to Obamacare. Ryan and Trump are playing fast and loose on a topic that not only affects our health, but makes up about 18% of our economy – all because they are in a hurry to give rich people a massive tax break.

Nancy LeTourneau

Nancy LeTourneau is a contributing writer for the Washington Monthly.