The GOP’s Pyrrhic Victory

Why, many asked, did the Republican Party allow itself to be taken over by Donald Trump? An answer that some have given over the past few months is that a unified Republican government means that a Republican legislative agenda will advance. Yes, Trump is a dreadful president, and abhorred by many of the party elite, but he is deeply popular with the GOP base; the Republican Party is now, irreversibly, the Party of Trump. But for all his flaws, if Trump can take the party to electoral victory, and is willing to sign virtually anything the Republican Congress sends to his desk, so what if they sell their souls to Trumpism?

A unified Republican government may indeed be in place, but the first year of Trump’s presidency has proved largely unfruitful for the GOP. Aside from the successful seating of Neil Gorsuch as a Supreme Court justice, the Republicans failed to repeal Obamacare, despite years of promises and riling up the base on the 44th president’s signature legislative achievement. This has only increased the stakes for the GOP as it eyes tax reform; as Senator Lindsey Graham said, “If we fail on taxes, that’s the end of the Republican Party’s governing majority in 2018…it’s the end of the Republican Party as we know it”. The sight of the Republican’s devil’s bargain amounting to absolutely nothing would be painful indeed.

Taking a look at the actual specifics of tax reform, however, reveals that even if the Republicans were to be able to pass the Tax Cuts and Jobs act, it may well be more of a poisoned chalice. In fact, House Republicans have come up with a uniquely terrible piece of legislation. The main contents of the Republican tax bill are explained well by Vox, but in summary, it would dramatically cut taxes for the wealthy and large corporates, while hurting the middle class and busting the deficit (which is ironic, because the Republicans are supposed to be the party of deficit hawks).

Indeed, the economic rationale for the tax bill is especially flimsy. The tax bill is based on overtly rosy projections of economic growth and on the repeatedly-disproven theory of trickle-down economics. Republicans have also sold the bill as a key way to generate economic growth; Speaker Paul Ryan, one of the biggest enthusiasts for tax reform in the GOP, believes religiously in this. A nonpartisan analysis has revealed, however, that little growth would result from Ryan’s tax reform push. You can also take a look at Paul Krugman’s analysis for more on the bad economics behind the bill.

The Week chose to call it a ‘class war’:

The Republican donor class and their employees in Congress are barely even attempting to hide the fact that this tax “reform” is about transferring as much income and wealth to the ultra-rich as possible, on their direct orders. It’s a huge corporate tax cut, a cut to Trump Organization-style “pass-through” companies, plus a sharp cut in the inheritance tax, which would be abolished completely in 2024…The tax benefits for ultra-wealthy children in particular would be stupendous. The youngest generation of idle rich families, like the Trumps, Kochs, Waltons, and Rockefellers, would be able to inherit billions upon billions tax-free — which would also blow a huge hole in the capital gains tax, by enabling owners to just transfer appreciated assets to their children instead of selling them….This will blow up the deficit — but much to my surprise, Republicans are attempting to offset some of the cost by jacking up taxes on the middle class.

The GOP, of course, must pass this bill. They know that they cannot fail on this, and for a variety of reasons. Firstly, as mentioned earlier, the GOP Congress cannot afford to fail on taxes after failing repeatedly on healthcare; they would never be forgiven by the base that voted them into office. Neither would they be forgiven by their donors, many of whom are looking to benefit immensely from the passage of the Tax Cuts and Jobs Act. Third, in many ways cutting taxes is the main raison d’être for the Republican party (and Paul Ryan in particular); if Reagan cut taxes, and Bush cut taxes, then Trump must also be able to cut taxes. The passage of this bill is in many ways a Republican dream come true.

But it would not be so for the average American. Let us take a look, for example, at what the GOP bill would do to graduate students. In The Atlantic’s article ‘The Republican War on College’, it is described that the tax reform bill would tax tuition waivers, which would mean that for graduate students, unpaid tuition would be treated as income, dramatically increasing their tax and immediately making graduate school unaffordable for many. The tax bill would also reduce benefits for higher education by $60 billion and force schools to raise already sky-high levels of tuition fees. The impact would be gruesome. Take UC Berkeley students, for example, where 10% of students report experiencing homelessness at some point in their college career. The Republican tax plan would only add greatly to their financial burdens. And the sad part is that with so many tax cuts for the rich, the Republicans have been scrambling to find places to make up for the lost state revenue; as Senator Rand Paul said, “If you lower the taxes on the rich and lower the taxes on the poor and then say, ‘Oh, it’s going to be revenue neutral,’ we’ve got to raise somebody’s taxes to pay for it.”

Unsurprisingly, the tax bill, much like the attempt to repeal Obamacare, is unpopular with the majority of Americans. Polls have shown that less than forty percent of people support the push for tax reform, and this means that Republicans will not be likely to go unpunished come the 2018 midterms. After all, the bill is likely to generate little benefit but instead further increase the deficit while intensifying the level of income inequality in America. History provides a guidance: in 1986, after Reagan signed a GOP tax effort into law, the Republicans lost control of the Senate. Of course, Republicans would suffer even more if the tax push were to be defeated, as they would have zero accomplishments to tout to their constituents. The result is that the Republicans are in a quagmire: they can choose to push ahead with a highly unpopular bill that would damage America’s economic standing and suffer losses as a result, or they could fail and suffer even greater losses. It is the true definition of a lose-lose situation.

Therefore, if the Senate were to successfully pass a tax bill that is acceptable to the House, it would be a Pyrrhic victory. With many retiring senators, it is possible that the Republican Senate majority, already razor-thin, would be cut down even further, despite unfavourable electoral terrain for the Democrats in 2018; the House, on the other hand, could very plausibly flip to Democratic hands. What makes this even more likely is Donald Trump’s continually tanking approval ratings, which would likely act as a stone that drags the entire Republican ship with him. A GOP midterm loss would have significant political repercussions; a Democratic Congress would be much less forgiving to President Trump’s several wrongdoings and this could all very possibly culminate in the first successful impeachment of an American president in history.

The Republican Party chose to bargain their soul to Trumpism, in order to advance their conservative agenda. In the end, both Trumpism and their conservatism may end up sinking them.