The Republican Tax Cuts Were a Political Failure. What Does That Mean for a Party That Agrees on Little Else?
The GOP needs a new theory of government.
When Republicans passed the Tax Cuts and Jobs Act in December of last year, they expected it to be the centerpiece of their midterm campaign. "This was a promise made. This is a promise kept," Speaker of the House Paul Ryan said at a news conference celebrating the bill's passage. "If we can't sell this to the American people, we ought to go into another line of work," said Senate Majority Leader Mitch McConnell. Judging by last week's midterm results, Republicans may need to update their résumés.
The tax law permanently cut corporate tax rates and reduced individual income taxes through the middle of the next decade while increasing the deficit by more than $1 trillion. Republicans initially talked it up, tying it to a wave of corporate bonuses for workers. But the party quickly abandoned that argument in congressional races across the country. Polls found support dwindling, even among Republicans, while the already strong opposition increased among Democrats. A Gallup survey found that a majority of Americans said they saw no increase in their take-home pay.
On election day, voters confirmed their feelings. Not only did they hand control of the House to Democrats, many of whom had run against the law, but exit polls conducted by NBC News showed that 45 percent of voters said the tax law had no impact at all on their household finances, while 22 percent said they had been hurt by it. Just 28 percent said it helped.
There are reasons for these feelings: Although the tax cuts have provided a boost to the economy, they have performed more like a short-term, deficit-financed stimulus than a permanent reorientation toward economic growth and higher wages. Republican claims that the law would prove deficit neutral have not come true. And while it is possible to defend most of the individual components of the tax bill—even Obama administration economists argued for a somewhat lower corporate tax rate—it is more difficult to defend soaring deficits, or the decision to treat individual rate cuts as temporary in order to game congressional budget scoring rules.
Yet even if you believe the law on balance was good, or at least good enough, policy, it's hard to avoid the conclusion that it was an abject failure as a political gambit—that it failed to connect with a majority of Americans. This presents something of a problem for a party that is united by few other issues and has focused on tax cuts to the exclusion of the rest of a domestic policy agenda. What does the party of tax cuts do when tax cuts no longer sell?
For the moment, at least, the answer turns out to be: Push for more tax cuts.
Even as polling shows that voters were largely indifferent to last year's tax bill, Republicans have touted dubious follow-ups. House Republicans passed a second round of tax reductions that made the law's individual rate cuts permanent. As expected, the Senate ignored the bill, but if it passed, it would have increased the original law's already considerable impact on the deficit. President Donald Trump spent the weeks before the election advertising a new middle-class tax cut that was no more real than the fake Trump steaks he touted on the campaign trail. The Republican Party became enthralled by fantasy tax cuts that would never become law, even as the ones they had already passed were leading them to electoral defeat.
The GOP's devotion to tax cutting, imaginary or otherwise, is especially notable given that the midterm elections were largely fought on substantive policy grounds. Although Trump's character and temperament undoubtedly influenced the election, voters were focused on pocketbook issues—jobs, the economy, education, and health care.
Health care, in particular, dominated many races, with Democrats charging that Republicans didn't support Obamacare's pre-existing conditions regulations while GOP candidates insisted that they did. In some cases, their claims were defensible in a narrow technical sense, since most Republicans voted for Obamacare repeal bills that kept some but not all of the health law's pre-existing conditions rules. Even still, their answers were designed to obscure more than to reveal. Republicans obfuscated about their health care ideas because, following the failure of last year's repeal bill, they don't really have any.
Yet as it turned out, health care was what voters cared about. CNN's exit polls found that it was the single most important issue in the election, with 41 percent listing it as their top concern. Health care voters preferred Democrats by a wide margin. It is more than a little ironic that the health law that cost Democrats the House in 2010 probably helped Republicans lose their House majority in 2018.
When the tax law passed year, a senior White House aide contrasted Republicans with Democrats, telling The Daily Beast, "Taxes are our issue. Health care is theirs." Republicans have almost entirely ceded that policy ground.
To become a vital force in American governance, and to compete in elections that revolve around anything other than immigration or support for the president, Republicans will need to develop clear, easy-to-articulate positions on the array of domestic policy issues that matter most to voters—particularly health care, education, and entitlements—and actually talk about them during campaigns, even, perhaps especially, when the temptation to focus on culture war issues arises.
For Republicans, that will probably mean focusing on reforms that make government programs work more efficiently rather than on new benefits and new programs. It will mean abandoning the current GOP conception of deficit-financed tax cuts as costless handouts to voters in favor of an understanding that taxes are a price we pay for government.
But smart white papers and clever talking points alone won't be enough. The GOP needs more than a suite of new policy ideas; it needs a general theory of government—an animating idea about what the state is for, what it should do, and how, exactly, it should fund all of those things.
Because if Republicans don't make an effort, Democrats will. They already are. Not only are the party's likely 2020 presidential contenders rallying around Medicare for All, whatever that turns out to mean, but they are rolling out big-picture plans to expand a slew of benefits and programs. Republicans have united around opposition to these programs, but have yet to figure out what they stand for instead, which amounts to a defense of the status quo.
Since the Reagan administration, the Republican Party has been in the business of selling tax cuts, but the political effectiveness of that approach now appears to be waning. Which means that McConnell may have inadvertently been right: To compete in today's most salient political arguments, Republicans will indeed need to find another line of work.