Update 236 — A Historically Unpopular Tax Bill

Republican lawmakers are on the cusp of passing the most far-reaching changes to the federal tax code since the Reagan era tax cuts and the first major legislative achievement for Donald Trump.  Though they are finally delivering on a central electoral mandate, Republicans face a hard truth: the American people really don’t like their bill. The Tax Cuts and Jobs Act is getting more unpopular by the week, this as President Trump’s approval rating has fallen to 33 percent — his lowest approval rating ever.

Last Friday at 5:30 pm, the bill’s conference committee published the final legislative language. While the text contained a few surprises, the conferenced legislation will do little to alter the decidedly negative public view of it. To the contrary — the many obscure provisions that will slowly come to light in the coming months is likely to reinforce that view. More on this below.

Best,

Dana

—————————–

How This Happened

The American public has picked up on the GOP tax plan. This plan has not changed materially in the 90 years since the Hoover administration, but the public appears finally to be fed up with it. Among the factors leading to public dismay:

• a permanent, drastic reduction of corporate tax rate and a more generous estate tax exemption, coupled with sunsetting individual rate cuts that turn into hikes for many working families;
• an virtually abandonment of previously-espoused principles of fiscal responsibility with a bill that will add 1-1.5 trillion to the national debt;
• a cap of the popular state and local tax deduction at $10,000; and
• the innumerable favors to donors, captains of industry, and those whose deductions were spared.

With the bill’s final passage all but assured, Republicans are closing in on what they see as a badly-needed policy win. It should reduce the number of GOP incumbents primaried from the right. But policy and political victories are not necessarily synonymous, but it seems many of these bad policies are bad November politics.

Republicans were in a rush to pass this bill even before Doug Jones turned one of Alabama’s Senate seats blue. The bill has become less popular by the week and has turned sour even in traditional Republican strongholds.

A Quinnipiac poll released last week reveals 55 percent of voters now disapprove of the bill, with only 16 percent of voters expecting the tax bill to lower their taxes and a full 44 percent expecting a tax hike. FiveThirtyEight’s most recent December average has 52 percent of voters disapproving of the bill and 33 percent approving. With this 19 point deficit, the Tax Cuts and Jobs act has the dubious distinction of being the least-popular tax legislation polled since 1981.

The Quinnipiac poll found that 43 percent said they would be less likely to support a political candidate who voted for the tax bill, while just 18 percent of those polled say that support for the bill would make them more likely to support a candidate. This weekend, Democratic pollsters released data showing that the approval ratings of incumbent Republicans responded negatively to advertisements about the tax bill.

State Cases

After Doug Jones’ victory in Alabama, races in traditionally noncompetitive states suddenly seem up for grabs. This should worry Republicans. State polling reveals that voters in reliably red states are as opposed to this bill as voters  elsewhere. Hart Research Associates polled three states — on red and two purple — on the tax bill. Those who disapprove of the tax bill understand that the legislation favors the wealthy and does not reduce their own taxes.

Tennessee:  The poll found that 47 percent of Tennesseans disapprove of the tax bill and just 37 percent approve. Soon to retire, Senator Corker all but guaranteed the bill’s passage on Friday when he signaled his support. Given the legislation’s unpopularity in Tennessee, however, he might not be doing any favors to the Republican running in his wake.

Arizona:  44 percent of Arizonans dislike the tax bill and only 26 percent approve of it. With such a conservative state shaking its head no, Republicans seem to have overdosed on Arizona’s favorite son Barry Goldwater’s libertarian “survival-of-the-fittest” philosophy. While this does not necessarily mean that voters will punish Republicans at the ballot box, it certainly leaves them vulnerable. Jeff Flake, retiring Arizona Senator (and rumored Trump Primary challenger) has yet to commit to the final version of the bill.

Maine:  53 percent of voters disapprove of the tax plan. Just 22 percent approve. Maine is more purple than anything else, so the degree of difference — 31 percent — is stark. Given these figures, it is little wonder that Senator Collins was hesitant to commit her vote to final passage.

Time will tell if Collins will pay for her vote with her seat. But the poll revealed that officials who support the tax bill lost an average of three percentage points of approval after constituents learned about their position.

GOP Response

Republican response to these abysmal polling numbers have been mixed. Leadership has made a concerted effort to appeal to the public interest. In one last tax reform sales pitch last Wednesday, President Trump repeatedly highlighted the bill’s purported benefits for the middle class, even bringing middle class supporters to the podium to speak.

Over the weekend, Sen. Cornyn reassured voters that “everybody in every tax bracket will see a tax cut.” House Majority Whip Steve Scalise dismissed the polling data, arguing that it “doesn’t recognize just how powerful this bill is going to be to put more money in the pockets of hard working Americans.” Others, like Sen. Graham, accepted the negative polling, but argued that passing unpopular legislation is better than passing nothing at all.

Some members of Congress evince anxiety about hitching their wagons to such unpopular legislation. Sen. Flake has refused to commit to the final version and the bill’s plummeting popularity in his state may not move a retiring members (unless he think he may have a future in politics). Sen. Rubio was able to extract minor concessions for the Child Tax Credit by announcing his intention to vote against the bill.

The bill now tweaked has Sen. Rubio’s support, but his posturing is significant. He may be planning for another Presidential run and he clearly calculates that it is important to be seen as supporting working families. It is hard to disagree with this strategy, but it is of limited utility since he will vote yes on final passage.

State of Play/Timeline

Unpopular or not, members have run out of time to work on their bill.  Over the weekend, Sen. McCain announced that he has returned to Arizona to recover from chemotherapy. The loss of McCain’s vote, combined with the spectre of Doug Jones’ swearing in, leaves GOP leaders locked into its ambitious timetable.

The House will likely kick things off tomorrow with the aim to pass the bill the same day.  The Senate will follow soon thereafter, starting either tomorrow afternoon or Wednesday morning.  Even with the slight delay, Republican leadership is on track to meet their promise of getting the tax bill onto President Trump’s desk by Christmas.