“Repeal and replace” of Obamacare crashed and burned in a high drama vote on the floor of the Senate with John McCain joining two colleagues to sink it. But during that week, it was decided to drop the border adjustment tax and depend upon growth to make up for lost revenue from the tax cuts. That decision removed a major impediment to moving the tax reform legislation and the loss of the health care legislation made the effort an existential requirement. No tax reform, no legislative accomplishments, no control of Congress and the end of careers for many powerful members.
Analysts point out a number of conditions that helped tax reform avoid the fate of “replace and repeal.” Legislative leaders decided to:
- Build a consensus, including with the President, around reducing corporate taxes. It was the most popular item in the caucus and the most related to the growth, highlighted by the surging market.
- Forget the deficit. Argue growth and dynamic scoring will cover the shortfall.
- Focus Trump and don’t let him wander off the reservation
- Start with big number and pull it back: cuts of $2 trillion or more down to a modest $1.5 trillion, vary the rate from 18 percent to 21 percent to win votes and balance the books.
- Get lucky. John McCain comes on early, Kevin McCarthy keeps California delegation mostly on board
- Stay flexible on the final bill to bring on board senators with special needs
- Set a date – year end – and use it to drive deals and decisions