Thursday, June 8, 2017

Border Adjustment Tax Seems Impossible But Remains on Life Support

Despite holding a hearing May 23rd that built a strong record against the BAT, and which provided an opportunity for Republicans to openly oppose the plan, Brady and Ryan continue to coyly hold fast to their insistence on the BAT.  As noted in Bloomberg this week, this stubbornness is putting tax reform in doubt.

The pat explanation - that Ryan is a "wonk" - does not ring true to me.  Ryan is bright and is an accomplished politician, to say the least.  He is Speaker of the House and has been a Vice Presidential candidate.  It is hard to dismiss him with condescension.  So what is his gambit?

It's a good question.  Roll Call counts 30 House Republicans who have expressed serious doubts or opposition to the plan, plus at least 18 Republican Senators.  There is just NO WAY that this provision can pass out of Congress over that obstacle given the likelihood that the tax bill will get zero Democratic votes, and the more Members of Congress come out against the BAT, the safer it is for others to go public with their reservations.  This headcount of Republican resistance is a major degradation of where Brady and Ryan were just weeks ago.  The well-financed and supremely well-organized Americans for Affordable Products coalition is providing unrelenting and effective resistance to the BAT, keeping the headlines and Op-Eds flowing.  The pressure will not relent.  I do not see a credible plan to raise the BAT from the dead.

That said, The Hill reports that Senator Orrin Hatch, the Chairman of the Senate Finance Committee, doesn't rule it out.  He previously said that he had "real reservations" about the plan and knows well that he lacks the necessary votes given the strong opposition of several Senators who are unlikely to come back to the fold (Perdue, Cotton and Graham).  Notably, the White House has also stated its opposition to the BAT. This appears to leave little room for a Second Coming.

While it seems like a good guess that the BAT is being saved as a "trade" later, even that seems far fetched because you can't get much value for something has no value.  Ryan and Brady lack credibility when it comes to forcing the plan into law, and thus have little leverage in a trade.

This all seems like politics, and that's the worry.  Hatch's warning that the BAT could spring back to life is the Doomsday scenario - a back room sellout at the last minute, out of public view.  While this in the nightmare, it seems less and less likely as the machinery of Midterms are coming on fast.  Notably, today's election results in the U.K. hint that the worldwide fever that propelled people like Trump into office is passing fast.  Supporting something as drastic and reckless as the BAT gets more politically hazardous every day.  And the delay in passing any portion of the Trump agenda means that whatever anger it would or will engender has less and less time to pass.  It all adds up to voter anger.  And as everyone knows, there are (many) other reasons for voter anger at the polls in 2018. Not a pretty picture for Republican prospects in 2018.

If the Republicans have any hope of demonstrating they are able to govern, they will need to drop the BAT and move on to something else soon, long before the 2018 Midterms.  The BAT has to go, but the decision to kill it rests with Ryan and to a lesser extent, Brady. Stand by but please keep the pressure on.  They need to feel the heat every day until they cave.

1 comment:

  1. Veronique de Rugy agrees with me, unfortunately. See her article She called it "not . . . dead enough".