Early GOP Economic Bills

Update 663 — Early GOP Economic Bills
What is Message, What Meant to Enact?

In the early days of the 118th Congress, the House GOP has wasted no time setting the legislative tone for the next two years. The over 350 bills proposed by the GOP to date range from seriously threatening to downright silly. The bills make clearer the Republican economic policy agenda and paucity of enactable items. We sort through the specifics of these bills in our update below.

Whether the bills make it to law or are DOA, Democrats and the administration have an opportunity to determine. Controversial threats to entitlements and a contentious bill to abolish the IRS and enact a 30 percent national sales tax could make the GOP agenda target practice in 2024. Importantly, tomorrow in Springfield, VA, Biden is expected to step up and open the debate on these bills.

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The vast majority of bills proposed in the first three weeks by the Republican majority will never see the House floor, let alone become law. However, some offer clues as to Republicans priorities this Congress. Culture war issues like abortion and education feature heavily as always, as do attempts to assert the legislative branch’s power over the executive branch and rein in agencies’ regulatory powers. Some hot-button issues from the 2010s do briefly appear, like a bill repealing Obamacare, but they have largely been supplanted by more current issues, like funding for the IRS and the federal COVID-19 response. 

Unkindest Cuts — Fair Tax Act and the IRS

The Fair Tax Act of 2023, introduced by Rep. Buddy Carter (R-GA), will receive a vote on the floor of the House as a result of a side deal that helped secure votes for McCarthy’s speaker bid. The controversial bill, which has the support of 23 additional cosponsors, would eliminate federal income tax in favor of a national sales tax, abolish the IRS, and establish a monthly family consumption allowance.

A national sales tax is a bad idea for a number of reasons, mainly because sales taxes are regressive. A 23 percent sales tax (actually a 29.9 percent effective rate because it’s a “tax-inclusive” tax on a tax) would be devastating for a low-income worker who has to spend most or all of their paycheck each month. Meanwhile, millionaires and billionaires with much higher annual incomes would be paying a lower marginal tax rate on their income than most average workers. 

Americans with post-tax money in their savings or retirement accounts would also be doubly taxed on that money at the point of sale. A national sales tax would diminish state and local sales tax revenues, particularly in states and localities with the highest sales tax rates. Finally, without conformity between what is taxed by the federal and state and local sales taxes, the administration and enforcement of the federal sales tax would be fraught with difficulty.

The bill has even been contentious within the Republican party. The mainstream right views this bill as a gift to Democrats, who could paint the Fair Tax Act as the Republican party position. Republican opponents of the bill– whose 23 cosponsors are drawn primarily from the Freedom Caucus– believe that they can block the bill in committee.

With Republicans’ slim support, the Fair Tax Act is unlikely to even pass the House. However, other bills – like Rep. Adrian Smith’s (R-NE) H.R. 23 – have garnered more support in order to rescind IRS funds from the Inflation Reduction Act without taking the extreme steps of abolishing the agency. 

Republicans have also introduced a number of other bills either rescinding the $80 billion for the IRS in the Inflation Reduction Act or making cumbersome stipulations about its hiring process. Unlike the Fair Tax Act, most of these bills won’t make it to a floor vote. However, they are indicative of Republicans’ commitment to anti-IRS messaging, which they featured heavily in the 2020 election, sometimes going so far as to perpetuate myths about armed IRS agents.

Targeting the Executive

Republicans have made it well known that they intend to make heavy use of their oversight and hearing powers to target the Biden administration, but the new House majority will also take direct aim at the executive branch through legislation.

The Republican party has historically been hostile to regulation, and this Congress will be no different, with members having already introduced a number of bills aiming to curb federal agencies’ regulatory power. The Regulations from the Executive in Need of Scrutiny (REINS) Act of 2023, for example, has gathered 174 Republican co-sponsors, the most of any bill so far this Congress, and would require congressional approval before any major rule proposed by an executive agency can take effect. Other bills would:

  • Require executive agencies to submit monthly reports on their rulemaking activities to the Office of Information and Regulatory Affairs for publication (ALERT Act of 2023, (Rep. Good (R-VA))

Still more bills take aim at executive orders. Republicans have introduced bills that would:

  • Require the White House to provide an inflation estimate for executive orders with a significant effect on the annual gross budget (REIN IN Inflation Act, Rep. Stefanik (R-NY))

One bill takes aim at the Federal Reserve, with which many Republicans had a fraught relationship in the last years of the Trump administration. The Federal Reserve Transparency Act, introduced by Rep. Massie (R-KY), would require the Government Accountability Office to perform an audit of the independent agency within a year.

None of this is likely to make it through a Democratic Senate, but it does reinforce the idea that Republicans will be using their majority in the House to highlight opposition to the White House and to continue a long history of shilling deregulation. 

An Emphasis on Economics

While the dismantling of the IRS and the increased policing of the executive branch will be at the top of the GOP’s to-do list, we are also seeing a variety of economic-based themes emerging from the House. Most notably, early legislation touches on: 

  • Budget – During his quest to become speaker, McCarthy struck an unofficial but still meaningful agreement with his detractors to cap FY2024 discretionary spending at FY2022 levels- roughly $1.47 trillion. 
  • Inflation – Several Republicans, including House Financial Services Committee Chair McHenry (R-NC), introduced the “Reduce Exacerbated Inflation Negatively Impacting the Nation Act,” otherwise known as the REIN IN Inflation Act, a bill that would require the administration to publish the inflationary impact of executive actions before enacting them. 
  • Entitlements – Republicans have already introduced a small handful of bills that would alter Social Security and Medicare. Furthermore, Republicans have taken a hard stance on negotiating cuts to the entitlement programs in exchange for raising the debt limit.
  • COVID and COVID Funding – Rep. Brett Gurthie (R-KY), introduced “The Pandemic is Over Act,” a bill meant to officially terminate the public health emergency first declared by HHS in 2020. 
  • Education – Rep. Scott Fitzgerald (R-WI) introduced the “Curriculum Review of Teachings Transparency Act,” a bill meant to amend the Elementary and Secondary Education Act of 1965 to ensure that local educational agencies post the curriculum online. The bill is said to help keep parents in the know about what their children are learning in school and under what guiding principles.

Moreover, a number of issue areas that were discussed heavily in the 2022 election cycle have already been placed at the forefront of the House GOP agenda, like abortion rights and US election integrity. 

The GOP’s Achilles Heel

Despite the plethora of regressive bills gaining momentum in the House, the truth of the matter stands: it is highly unlikely that any of them will make it to the House floor, let alone become rule of law. Not only will Democrats put up a fight in their role as the minority, but Republicans may not be able to find consensus among themselves, especially with the new House Rules Committee in full swing with the addition of three Republican hard right Freedom Caucus members. 

Most, if not all, of these bills will fail to make any meaningful legislative progress, but we should take this time to recognize the recurring and frankly troubling themes that are (re-)emerging from the Republican party. Taking a close look at the specifics of these early bills will not only allow Democrats to better prepare their defense, but it will also help them to identify messaging opportunities for the 2024 election cycle. Democrats must make lemonade from the policy lemons offered by the House GOP — to make the best of a bad-case scenario. Democrats have a good chance of retaking the House majority in the 2024 election, only made better by GOP economy policy overreach.