Tax Reform and the Politics of Tennessee

Nancy already wrote about the president’s plan to advance his tax reform effort by inviting Democratic Sens. Joe Donnelly of Indiana, Joe Manchin of West Virginia and Heidi Heitkamp of North Dakota to eat dinner tonight at the White House. I want to focus on a different angle on the same story. After spending much of August writing in frustration about the budget reconciliation process for tax reform because the mainstream media was not reporting that it requires the Republicans to pass a new budget, it’s comforting to see that they have all now caught on:

Under Washington’s complicated ways, passing a congressional budget blueprint is the only way to set in motion a special process for rewriting the tax code. If Congress can pass a budget, Republicans controlling the Senate don’t need to worry about a Democratic filibuster blocking any tax bill.

House action has been held up by a battle between moderates and conservatives over whether to pair spending cuts with the filibuster-proof tax measure. Senate action has been on hold while the House struggles.

One interesting thing here is how Tennessee politics and potential retirements are impacting the process. The House Budget Committee chairwoman, Rep. Diane Black (TN-06), is intent on running for governor of the Volunteer State. But a rule adopted by House Republicans in 2014 says that she must give up her gavel if she is seeking another office. Asked about this at the Tennessee State Fair yesterday, she said she wasn’t sure if she would serve out her entire term but was intent on at least seeing through the effort to pass a budget.

“I’m still doing what I promised I would do and that’s to try to get the budget across the line,” Black said. “It’s out of my committee, but I feel obligated to continue to work to get that done and we’re working on that right now.”

I imagine that she’ll start getting more and more antsy as the process drags on and begins to impact her effort to win the GOP nomination for governor. Simple delay in getting something passed could cause her problems, but a failure to pass any budget at all would not look good on her résumé.

Meanwhile, over in the Senate, Bob Corker—the junior senator from Tennessee—is seriously contemplating retirement. But he’s also creating a problem because he’s not a proponent of supply-side Voodoo Economics:

On the budget panel, Sen. Bob Corker, R-Tenn., is hoping to limit the deficit cost of the tax effort, while [Sen. Pat] Toomey [of Pennsylvania] is on the other end of the spectrum favoring more robust deficit-financed tax cuts. GOP leaders have asked them to try to craft an agreement among the 12 budget panel Republicans. Any Republican defection on the budget plan would deadlock the narrowly divided committee.

“I’m a fiscal hawk, OK? I believe in pro-growth tax reform and I believe that’s a mechanism toward lowering deficits,” Corker said Monday. “But I’m also someone who wants to be realistic about all of this, and not let this just be party time that takes us no place but massive deficits down the road.”

Corker is better known for his role as chairman of the Senate Foreign Relations Committee than for his work on the budget, and he recently created a problem for himself when he said that President Trump “has not yet been able to demonstrate the stability nor some of the competence that he needs to demonstrate in order to be successful…He has not demonstrated that he understands what has made this nation great and what it is today.”

The sharp rebuke in August set off a torrent of criticism from the White House, with press secretary Sarah Sanders calling it a “ridiculous and outrageous claim” at the time and Trump tweeting about the episode.

“Strange statement by Bob Corker considering that he is constantly asking me whether or not he should run again in ’18,” Trump tweeted. “Tennessee not happy!”

If Corker makes the decision to retire, he may feel freer to buck the president and his own leadership in the Senate as they try to ram home some kind of tax bill. If he wants to seek reelection, he may be more concerned about repairing his strained relationship with the White House.

There are a lot of complications that go unstated in the reports I cited above. The budget reconciliation process is supposed to be budget neutral. If it isn’t, the provisions need to sunset after ten years, just as in the case of President George W. Bush’s tax cuts. In both the House and the Senate, there is division among Republicans about whether the loss of revenue that comes with the tax cuts they’re envisioning should be matched with lower spending. Some are willing to let the tax cuts expire, while others want to use magic dynamic scoring to argue that there will be no loss in revenue because of pixie-generated economic growth. Then there are people like Bob Corker who want to ruin the fun by injecting too much reality into the debate.

For now, the ball is in the House’s court. The budget has come out of Diane Black’s committee. The leadership needs to see if they can pass it. And, of course, eventually the House and Senate will have to come together and both pass the budget. Success in just one chamber of Congress won’t be sufficient:

Even in the best of times, budget resolutions are hard to pass, because they commit Congress to an overall vision. And this is not the best of times. The last few months have revealed vast gaps between the more centrist Republicans and their hardcore right-wing colleagues in the House Freedom Caucus and the Republican Study Committee. The latter groups have enough votes to scuttle any bill passed purely by GOP majorities. And the only reason the 2017 budget resolution passed is because “there was no pretense that it was a real budget,” as [Stan] Collander put it. It only existed to make ObamaCare repeal possible, and everyone in the GOP knew it.

But the failure to kill ObamaCare soured hardline conservatives against using the resolution purely for procedural purposes: “The House Freedom Caucus let it be known last January that its members wouldn’t vote for another nondescript budget resolution just to put reconciliation instructions in place,” Collander explained. As a result, any budget resolution that can pass the House likely can’t pass the more moderate Senate, and vice versa — the TrumpCare dilemma reborn in another form.

The stakes are pretty high. The following might be a little dramatic, but it’s not too far off the mark:

All these pressures put the GOP at profound risk of fracturing completely. In which case, both Republican moderates and President Trump might negotiate with Democrats. Should that happen, it would utterly undo the Republicans’ identity as a party, the coherence of their message, and any claim they may have left to their voters’ loyalty.

So the use of reconciliation to pass tax reform looks less like a power play by a dominant and confident party, and more like a desperate attempt by the Republican leadership to fence in its own members: to force them to work with one another, lest they tear themselves apart. But the most remarkable and pathetic aspect of this whole drama is that the fence likely won’t hold.

So say goodbye to the Republican Party as we know it. And say goodbye to tax reform.

Even if the process doesn’t chew up the entire Republican Party, it has the potential to have a huge impact on the future politics of Tennessee.

Martin Longman

Martin Longman is the web editor for the Washington Monthly and the main blogger at Booman Tribune.