After weeks of frenzied closed-door haggling, Republicans appear to be on the cusp of what could be the greatest legislative achievement of the Trump administration: Passing the first comprehensive tax reform plan since 1986. And on Sunday, Republican leaders reiterated that they had cobbled together the votes to push the reconciled version of the GOP tax plan through both the House and the Senate – in the process accomplishing the improbable feat of passing the tax bill by year’s end, according to Reuters.
Treasury Secretary Steven Mnuchin told CBS News’ “Face the Nation” on Sunday that Trump expected to realize his goal of signing the tax bill before Christmas. “This is a historic event,” Mnuchin said. “People said we wouldn’t get this done; we’re on the verge of getting this done."
House Speaker Paul Ryan said last week that he expects the House to vote on the legislation on Monday or Tuesday, while the Senate would likely bring it to a vote on Tuesday or Wednesday. If both chambers are successful, Trump has said he would sign the bill, which, would add at least $1 trillion to the $20 trillion national debt over 10 years.
John Cornyn, the Republican senate whip, said on ABC’s “This Week” that he was “confident” the Senate would pass the legislation, “probably on Tuesday."
Republican Rep Kevin Brady also said he believed his party had the votes to pass the bill: “I think we are headed – the American people are headed – for a big win on Tuesday,” Brady, the House of Representatives’ top tax writer, said on Fox News’ “Sunday Morning Futures with Maria Bartiromo."
WIth Sen. John McCain’s health having taken a turn for the worse, and Democrat Doug Jones waiting to take the Alabama Senate seat once held by Attorney General Jeff Sessions, the urgency to pass the tax bill has only intensified.
If Republicans are successful, Trump will happily take credit (just like he would ultimately be blamed for its failure). But as Politico reports in a story published late Sunday, Trump largely played a hands-off role in crafting the legislation – leaving many of the details up to lawmakers. However, the president was a major asset to Republicans when it came to another element of passing the bill: convincing lawmakers to vote for it.
According to Politico, the bill’s success so far is due in part to Trump’s strategic decision to do one simple thing: focus on the hard sell.
Trump has spent weeks wooing, prodding, cajoling and personally calling Republican lawmakers to pass sweeping tax legislation in time for Christmas – a deadline Trump himself set months ago – but he and his staff have left many of the policy decisions up to Republican lawmakers and top congressional staffers.
In the final weeks of negotiations, Trump has acted as the cheerleader and closer. He’s personally phoned lawmakers whose support of the bill wavered at times – including Republican Sens. Bob Corker, Ron Johnson and Steve Daines – while staying in close touch with congressional leadership to check on progress toward a win, according to several White House aides, congressional officials and people close to the administration.
Indeed, Politico found Trump’s approach to real-estate development to be an apt metaphor for his handling of the tax bill.
As a real-estate developer, Trump knew that it was easier to put his name on other people’s buildings than to construct the edifices himself. And now, it seems, he’s discovered the same approach works in Washington, too.
Before heading to Camp David, Trump once again extolled the bill for slashing taxes and benefiting small-business owners.
TAX CUTS will increase investment in the American economy and in U.S. workers, leading to higher growth, higher wages, and more JOBS! pic.twitter.com/4GxM8psMU1
— Donald J. Trump (@realDonaldTrump) December 16, 2017
But passing the bill won’t be the end of the road for Congressional Republicans, who were forced to make many concessions in the final version of the bill thanks to their slim Senate majority. Many of the provisions that would benefit individual taxpayers, like cuts to the individual rate and a new 20% deduction for millions of businesses are scheduled to vanish after 2025. Meanwhile, lawmakers made a corporate-tax-rate cut and international tax rules permanent to encourage long-run planning, but other business provisions arrive, then disappear, according to the Wall Street Journal.
Plus, the sheer size of the debt pile-on – at least $1 trillion – will create instability in the tax code that will trouble lawmakers for years.
Martin Sullivan, chief economist at Tax Analysts, said the bill will require Congress to make small changes over the years to ensure government revenues don’t reach a dangerously low level: "It’s just the beginning. It’s a whole new chapter,” he said. “It’s built on unstable financial foundations and on unstable political foundations. And it was built in great haste."
Which, for the market, is great news: if it results, as Trump hopes, in economic growth, it's good for stocks; if however the worst case scenario emerges and the financial situation is destabilized by tax reform, it would likely lead to another Fed bail out, which is even greater news for stocks, and so on, ad inf.