Congress – Capital Zoo

Our Three-Party Government

Paul Ryan’s announcement today that he is not running for re-election is a sudden – though not entirely shocking – capstone to an eventful political career: vice presidential candidate, Budget Committee and Ways and Means Committee chair, Speaker of the House.

The word is that Ryan is leaving out of a desire to spend more time with his family – he has three school age children – and out of a sense of accomplishment, particularly last fall’s massive tax cut. But it’s no secret that Ryan was never in love with being Speaker. He had to be coaxed into the role when his predecessor John Boehner stepped down in 2015 and Republicans couldn’t agree on anyone else to replace him.

Ryan’s tenure as Speaker will be remembered for his ability to garner respect (albeit grudging at times) from all wings of his fractious party. But his speakership, and that of Boehner, reveal another important truth: there are really three parties in Washington. And none of them have a working majority.

There are the Democrats, of course, who are unified by a loathing of Donald Trump and essentially nothing else.

There are the Republicans, the establishment party of Wall Street and Big Business, supporters of robust international engagement and free trade.

And then there is that third party: nationalist, nativist, pro-gun, anti-trade. And very, very angry.

Born from the ashes of the Republicans’ 2008 electoral collapse, it first took shape as the Tea Party, riding a wave of fury over Obamacare and the financial bailout. The Republican Party co-opted this group long enough to secure a House majority in 2010 and a Senate majority in 2014. But like a parasite that subsumes its host, the Angry Party has all but conquered the GOP.

Despite a membership that is estimated at around just 30 or 40 members, the House Freedom Caucus – the institutional home of the Angry Party – has wielded undue influence over the House Republican Caucus. On issue after issue they have stymied efforts by Boehner and then Ryan to strike deals with Democrats and even Senate Republicans. They are credited (or blamed) for driving Boehner from the Speaker’s chair, and have made Paul Ryan’s life miserable ever since.

Of course, the Angry Party’s greatest triumph came in 2016, when Donald Trump, who channels the anger of the Angry Party better than anyone, not only won the Republican nomination, but saw the GOP coalesce around him. Other than a manic desire to slash taxes, Donald Trump and Paul Ryan are as different in temperament and style as two people could possibly be,. Yet it was Ryan’s ally and fellow Badger Stater, Reince Priebus who as Chair of the Republican National Committee gave Trump legitimacy by getting the party behind him once the nomination was locked up. Ever since Trump’s election, Ryan has chosen a path of gently rebuking Trump when it was absolutely necessary, but otherwise working hand-in-hand with him on major issues.

For Ryan, as with Boehner, the political calculus has been clear: pass legislation backed by the Freedom Caucus and watch it die in the Senate, or secure Democratic support and risk being overthrown.

In that sense, both Ryan and Boehner were less leaders of a majority party, and more akin to prime ministers, cobbling together a coalition government of two separate parties who don’t particularly trust each other, but need each other to succeed. As most nations with parliamentary systems can attest, coalition governments are very hard to maintain over a long period of time.

Paul Ryan tried to keep the coalition together. But it’s hard when all the passion is with one side. And as Ryan joins the ever-growing list of establishment House Republicans not seeking re-election, the uncivil civil war between the Reductions and the Angries will enter a new phase. Undoubtedly, the next Republican leader will need to have the support of the Freedom Caucus. It is not out of the question that the next House Republican leader will actually be a member of the Freedom Caucus, giving the Angry Party control over two of the three policy-making centers of the federal government.

Meanwhile, Democrats are hoping they can keep their warring factions cohesive long enough to win back the House in November.

Either way, Paul Ryan’s greatest legacy might be being the last Republican Speaker of the House for a long time.

Photo: Gage Skidmore

On Infrastructure, There’s No Such Thing as Free Money

Miami_traffic_jam,_I-95_North_rush_hour Since the 2016 election, the one issue on which most everyone has pinned their hopes for bipartisanship has been infrastructure. Rebuilding “our highways, bridges, tunnels, airports, schools, hospitals” was one of the only policy items then-President-elect Trump mentioned in his victory speech, and it’s an area where even Democrats think they can find common ground with the White House.

Everyone loves infrastructure. But paying for it is another matter. The debate over how to pay for fixing all those highways, bridges and so on is as old as . . . well, as many of those highways and bridges themselves. The American Society of Civil Engineers estimates that we need some $3.7 trillion through 2025 to maintain and update our infrastructure, but planned investments total just $1.8 trillion.

That’s a large funding gap to fill.

Providing $1.9 trillion in extra funding over the next seven years is a hard sell, particularly with a GOP-led Congress. (Let’s put aside for a second that said Congress just passed a $1.5 trillion tax cut package, and of course the U.S. has spent $5 trillion in the Iraq and Afghanistan wars.) As a result, Washington think tanks and policy wonks have spent countless hours in devising all sorts of innovative ways to finance infrastructure, with the goal of making the multi-trillion-dollar price tag more palatable.

So in his State of the Union address, Trump announced a new infrastructure ~~scheme~~ plan to be unveiled next week. It’s believed the plan will propose $200 billion in new federal funding that will leverage an additional $1.3 trillion in state, local and private sector spending.

The response so far, has been less than ecstatic. As the New York Times reported:

The increased infrastructure spending would be offset by unspecified budget cuts. Officials would not detail where those cuts would come from, or how the proposal would effectively leverage at least $6.50 in additional infrastructure spending for every dollar spent by the federal government, a ratio many infrastructure experts consider far-fetched … Administration officials say an increase in federal funds would unleash a wave of spending from cities, states and the private sector, the result of unspecified incentives in the plan. But many local and state officials have expressed concern in recent days that the administration’s faith in that potential effect is misplaced.

Ultimately, this “infrastructure alchemy” – spinning fiscal gold out of thin air – ignores several immutable facts: if fixing our infrastructure costs trillions, someone (read: the public) will have to pay for it, whether through increased fees, higher taxes, or the fiscal consequences of deficit spending.

And second, the public is less opposed to shelling out for infrastructure than some might think: polls show the public supports more spending on infrastructure, and while public opinion is split on raising taxes for infrastructure, it’s hardly a third rail.

Most importantly, we know how to pay for infrastructure, because we’ve done it, and have been doing it, for years, with programs and funding mechanisms that have a track record of working. Yet policymakers have neglected, or in some cases, worked to undermine many of these provisions, even as they exclaim the need to invest more in infrastructure. Consider:

The federal gas tax, which has served as a reliable financing tool for highways since the dawn of the Interstate Highway System (with a slice for mass transit since 1982). But the tax has not been raised since 1993 (although some states have raised theirs). The U.S. Chamber of Commerce estimates that raising the tax by 25 cents per gallon would being in an extra $394 billion over the next 10 years.
The tax treatment of bonds, both public and private. Municipal bonds help state and local governments issue debt for building and repairing infrastructure at a more favorable rate; The Committee for a Responsible Federal Budget notes they “comprise a substantial municipal bond market, with over $3.7 trillion in outstanding bonds and $11.3 billion traded daily in 2012.” Meanwhile, private activity bonds primarily benefit a private entity but with some public benefit, like hospitals and airports. Both bond types survived elimination attempts in the year-end tax bill but could not avoid changes that have investors worried about their future attractiveness.
Other bond programs, like Build America Bonds, that were created as part of the 2009 stimulus package. Over the next two years, $181 billion in BABs were issued. However, BABs were authorized for only two years, and direct payments to issuers were cut as part of the 2013 budget sequester.
Federal loan programs, which leverage an average of $40 for every dollar of federal spending, but often are funded at levels far below the need. One example is Transportation Infrastructure Finance and Innovation Act (TIFIA) which provides financial assistance in the form of direct loans, loan guarantees, and standby lines of credit. A successful program, but it’s authorized to allocate just $285 million in 2018 and $300 million in each of 2019 and 2020.

Certainly, each of these programs has their drawbacks: the gas tax is regressive, disproportionately hurting lower-income Americans, and also loses its purchasing power as cars get more fuel-efficient. Other financing tools like bonds may seem like “free money,” but their reach is only as far as demand on the bond markets will take them. And some of the programs are tainted by partisanship, such as Build Americas Bonds which, despite their success, are inexorably tied to President Obama’s stimulus package.

But instead of coming up with shiny new ideas that are unproven, overly complex and could lead to a host of unknown unintended consequences, policymakers would be wise to look at what already works and build on them.

Ultimately, there’s no free money. But if we can drain $1.5 trillion from the Treasury to pay for “job-creating” tax cuts and $5 million in Middle East wars to protect our way of life, expending money to fix the roads, transit and other infrastructure on which both our economy and quality of life depends should be common sense.

If we fail to do so, there should be no mistake about the reason: It’s not that we don’t know how to pay for infrastructure. It’s that we don’t want to.

Five Reasons Why a Shutdown Will Hurt the GOP (And One Why it Will Help)

closed Your faithful blogger has fond memories of the 1995 government shutdown: furloughed without pay, catching a matinée of Waterworld, wondering when/if the next paycheck would arrive. Like the inhabitants of Kevin Costner’s over-budget epic, Republicans and Democrats were at war with each other, and hopelessly lost at sea.

As Congress and the White House barrel towards another potential shutdown Friday at midnight, both sides are prepping their spin on why the other side will shoulder the blame. But history – and common sense – suggest that Republicans have the most to lose, in the short run, at least. Here’s why:

1. They control government. During the previous two shutdowns (1995 and 2013), a Democrat sat in the White House. This time the GOP controls both sides of Pennsylvania Avenue. It’s a lot easier to spread the blame when both parties have a finger on the button. And while it’s true that Senate Democrats can prevent a funding bill from getting 60 votes, the voters see the Republicans are ultimately in charge.

2. They are viewed as more hostile to government. Republicans make no secret of their desire to shrink government and criticize the size and scope of the federal footprint. In fact, some conservative commentators are making the argument that a shutdown will show the public how irrelevant Washington is to their lives. When you’re caught with the murder weapon and an MO, it’s hard to pin the blame on the other guy.

3. They are viewed as more hostile to compromise. Since the Tea Party wave of 2010, Congressional Republicans have shown their stubborn streak, dismissing compromise as a four-letter word and demonstrating an unwillingness to negotiate. Hell, they basically overthrew their last House Speaker because he wasn’t hard-line enough. Democrats, meanwhile, have a hard-won reputation as, let’s say, more ready to cave when the pressure is on. It may be true that the Democrats’ spines have been stiffened by pressure from DACA supporters, but the take-no-prisoners reputation the GOP has cultivated over recent years will be hard to overcome.

4. They always get blamed. Republicans tried the “See? We don’t need government!” tack before, and it failed. Miserably. In both 1995 and 2013, images of shuttered national parks turned the public sharply against the party they believed was behind the shutdown. Although Republicans will attempt to pin the blame for a shutdown this time on Democrats’ demands for a resolution of DACA, old perceptions tend to stick.

5. The President is unpopular. Gallup currently pegs Donald Trump’s approval rating at 39 percent. Numbers as low as those create a sort of reverse Midas touch, making everything the White House touches turn sour. It will be hard to convince voters that a President they dislike is the good guy in a prolonged shutdown battle.

In short, a combination of history, reputation, and precedent all suggest that Republicans would get more of the blame for a shutdown if it takes place. Then why go through with it?

Besides their Lucy-won’t-yank-the-football-away-this-time cockeyed optimism that Republicans show every time the possibility of a shutdown rolls around, there is another reason conservatives may be hungering for the government to close: Shutdowns reduce public trust in government. And if you want a smaller government, gaining broad support for the notion that government is incompetent is a good way to go.

As P.J. O’Rourke once said, “The Republicans are the party that says government doesn’t work and then they get elected and prove it.” A third government shutdown in 20 years reinforces the notion that Washington is dysfunctional and out-of-touch. Despite the short-term political fallout, that perception is a long-term win for those who want a smaller government.

Of course, a shutdown is not inevitable. Both sides could finds a way to avoid this fiscal cliff and pass a short-term continuing resolution. But even then, all they do is delay a crisis to another day.

So buckle up. Find Waterworld on Amazon. And get ready to party like it’s 1995.

Photo: pxhere.com

Six Reasons Congress (Probably) Won’t Do Much This Year

capitol_usa_washington_dc_sunrise_national_mall_city_landmark_parliament-1371061 As Congress comes back to town to start its 2018 session, the to-do list is long: preventing a government shutdown, dealing with the expired Children’s Health Insurance Program, renewing the foreign surveillance program, doing something on Dreamers (and maybe the border wall), disaster relief, and a few more.

Republican leaders have placed even more big items on their wish list: entitlement reform, infrastructure funding, welfare reform, amending Dodd-Frank, and taking another stab at Obamacare repeal are all being bandied about as follow-ups to their success on taxes.

But the odds of Congress accomplishing much before the midterms is pretty slim. Here are six reasons why:

1. Republicans aren’t on the same page. If there are two issues on which virtually all Republican lawmakers could agree, it’s cutting taxes and repealing Obamacare. They accomplished the first at the end of 2017, but failed mightily at the second (although they did manage to repeal the individual mandate in the tax bill). Beyond those two issues, what else unites Republicans as much?

Immigration reform is a top priority, but one that exposes severe cracks in the GOP coalition between those who want more border security and nothing that even remotely looks like amnesty, and those who support a more nuanced approach. Entitlement reform? In theory yes, but the political challenges make many GOPers queasy. Even energy issues have lost urgency since the pro-production crowd got drilling in the Arctic National Wildlife Refuge into the tax bill.

Simply put, there is no other issue for which Republicans can be counted on to put aside their differences and political queasiness like taxes and Obamacare. And as 2017 showed, neither of them was easy. The fact that House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell are not on the same page about entitlement reform and welfare further shows that, with taxes behind them, Republicans don’t have a unifying agenda.

2. Republicans will need Democrats. Republicans were able to muscle tax reform through (and nearly repeal Obamacare) thanks to the reconciliation process, which enabled them to advance both with a minimum of 50 votes (and the Veep’s tie-breaking vote). But under budget rules, they can’t use reconciliation again this fiscal year. Without it (and with a 51-49 seat majority) they will need the support of at least nine Senate Democrats on any major item they bring up.

This means major items like entitlement reform and welfare reform – where there are stark differences between the parties – will be hard, if not impossible, to enact. True, there are exactly nine Democrats up for re-election in 2018 in states that voted for Donald Trump in 2016. But the odds of Sherrod Brown (D-OH), Bob Casey (R-PA), or Tammy Baldwin (D-WI), to name three Democratic Senators facing the voters in November, supporting entitlement cuts are basically zero. And in any event . . .

3. Both parties need to energize their bases. Midterm elections are typically won or lost on which party best energizes and turns out its base. After a year in which Republicans kept Democrats out of the discussions on health care and taxes (see reconciliation, above), and with the possibility of taking back one or more chambers in the 2018 midterms, Democrats have no incentive to play ball with the Republican majority. The more Democrats draw stark differences between them and Republicans, the more energize their base will become.

On the GOP side, with 2017 elections showing flagging enthusiasm, there is little incentive for Republicans to compromise, either. Their political calculus will be, the more base-pleasing their proposals are, the more likely their voters will come out – especially if they can paint Democrats as obstructionists. Although there are a number of House Republicans from blue states like New York and California who will want bipartisanship on issues like immigration and the environment, they don’t control the agenda.

4. Legislative success doesn’t portend electoral success. A lot of ink was spilled in 2017 on Republicans’ desperation to get something big passed; had tax reform failed, a lot of observers would have chiseled their political obituary in stone. That would seem to indicate that Republicans will crave more legislative success to ensure they keep their majorities.

But history has shown that big policy success doesn’t lead to election wins – especially if those wins piss off the other side. Leading up to the 1994 midterms, the first with Bill Clinton in the White House, Democrats had scored big victories on gun control and deficit reduction; they ended up losing both chambers. In 2010, two years into Barack Obama’s first term, Democrats boasted of passing Obamacare, stimulus, and Dodd-Frank. They lost the House and nearly lost the Senate.

In fact, the only recent example of a party in the White House gaining seats in their first midterm was in 2002, when Republicans took back the Senate two years into George W. Bush’s first term. That was due in no small part to the post-9/11 political landscape. But beyond that, the only major legislative achievement Republicans could boast of was . . . a major tax cut. With that history, Republicans may be less motivated to expend political capital on controversial issues that won’t help them at the polls.

5. The must-dos will suck up time. Even if Congress and the White House can finally approve this month appropriations bills for the remainder of the current fiscal year (and that’s looking iffy, since discussions have barely begun), they will find themselves forced to address a host of simmering issues, from the Dreamers to stabilizing the Obamacare insurance markets. Republicans would love to see these wrapped up into larger reforms of immigration and health care, but for all the reasons stated earlier big packages will be mightily tough.

With only 108 scheduled legislative days in the House before the election and a similar number in the Senate, those must-dos will eat up a lot of time. And that’s not even counting unexpected must-dos, like confirmations of Cabinet secretaries in case any leave (has anyone heard from Rex Tillerson lately?).

6. The Executive Branch is not exactly helping. Presidents play a major role in shepherding policy through Congress: using the bully pulpit to drive consistent messages that dominate the news cycle, offering serious policy proposals and putting forth consistent redlines on what they will sign or veto, cajoling or intimidating members of Congress.

Unless you’ve been hiding out on Ahch-to the past year, you’ve noticed that the White House has not been a study in message discipline, policy seriousness or effective lawmaker-wooing. Most accounts suggest that President Trump’s major role in passing tax reform was in staying the hell out of the way. Unless the President was right when he claimed he understood the “big bills” better than any of his predecessors, Congress is going to have to do it while ignoring the simmering dumpster fire down Pennsylvania Avenue.

As a result, beyond its must-dos, the odds of Congress and the White House achieving any significant policy goals is pretty slim. The one caveat to all of this: if Republicans hang onto their majorities in November election, it is quite possible that a lame-duck session could yield some significant action.

On the other hand, if Robert Mueller concludes his investigation right around then, everything will go out the window.

Welcome to 2018!

2018: The Year in Review

strp Join Capital Zoo as we peer into our crystal ball and review the year that’s about to be:

January 4: President Trump claims that the voice on the infamous Access Hollywood tape is really Hilary Clinton’s. Congressional Republicans demand an investigation into Clinton’s sexual assaults.

February 11: Soohorang, the official mascot of the 2018 PyeongChang Winter Olympics, is banned for blood doping.

February 20: President Trump signs an executive order requiring all federal agencies to pay government contractors in Bitcoin.

March 4: The Academy of Motion Picture Arts and Sciences announces that actors credibly accused of sexual assault or harassment are ineligible for Oscars. As a result, the Academy Award for Best Actor goes to Stormtrooper #2 from The Last Jedi.

March 14: Video surfaces of President Trump thanking Vladimir Putin for throwing the election to him. Congressional Republicans call for the appointment of a special counsel into Clinton.

April 7: Fresh off his Oscar win, Stormtrooper #2 wins season 26 of Dancing with the Stars.

April 20: The Homeland Security Department finishes construction of Trump’s border wall. However, due to a precipitous drop in the value of Bitcoins, the contractor is underpaid. As a result, the wall is thirty inches tall.

wall

May 2: Lin-Manuel Miranda premieres his new musical, Trump, in which he successfully rhymes “Scaramucci” with “Pair of Guccis” and “Grab her tushie.”

May 5: President Trump rolls over his phone in bed, accidentally tweeting out 280 characters of gibberish. It is retweeted 784,000 times.

May 6: CNN devotes its entire day of programming to analyzing Trump’s tweet.

May 17: Stormtrooper #2 gets his own talk show on NBC.

June 1: The alt-right movement, suffering from a profoundly hostile public image, changes its name to “Crabtree & Evelyn.”

June 2: Ivanka Trump announces her new line of body lotions will be sold exclusively at Crabtree & Evelyn. It is not immediately clear which one she is referring to.

June 18: Special counsel Robert Mueller announces his team has found definitive proof that President Trump personally colluded with Russia during the 2016 election. Congressional Republicans commence impeachment hearings on Hillary Clinton.

June 20: North Korean ruler Kim Jong Un opens a Twitter account. Surprisingly, most of his posts are Stranger Things fan fiction and retweets of Bobby Flay recipes.

June 28: Hillary Clinton releases her next book, What Happened During the What Happened Book Tour, and its follow-up, How What Happened Happened During the What Happened During the What Happened Book Tour Book Tour.

July 6: Steve Bannon announces he is temporarily removing himself from public life.

July 7: Steve Bannon’s neighbors report seeing a six-foot tall chrysalis growing in Bannon’s living room, accompanied by a strange vibration.

July 15: House Republicans demand the appointment of a special counsel to investigate Special Counsel Robert Mueller. House Democrats respond by calling for the appointment of a special counsel to investigate the Special Counsel investigating the Special Counsel.

July 25: The Department of Labor reports that 63 percent of working-age adults in the Washington, DC, metropolitan area currently are employed by special counsels.

August 3: The Trump administration issues a directive to agencies banning additional words, including “education,” “organic,” and “Mueller”

August 12: Looking to bolster their offense, the New York Yankees acquire Tectron X47, a sentient 15-door tall cyborg developed in Japan for a three-year, $591 million contract.

ynk

August 28: The Homeland Security Department acknowledges that, due to the devaluation of the Bitcoin, its 30-inch tall border wall was built out of blocks of government-surplus cheddar cheese.

September 1: The Border Patrol reports an unusually large number of feral mice entering the country illegally.

September 16: Every starting and back-up NFL quarterback gets a concussion, forcing the League to cancel the rest of the season. In an unrelated development, Colin Kaepernick begins working as a Jimmy John’s delivery boy.

September 23: Steve Bannon finally emerges from his chrysalis as a matterless black aura that floats above the surface of the Earth, menacing all who stand in its path, but mostly Jared Kushner.

October 2: Vice President Pence confesses that he once made eye contact with a woman who was not his wife and announces his immediate resignation from office.

October 10: President Trump’s first nominee to replace Vice President Pence is withdrawn when, during his Senate hearing, he fails to correctly identify the United States on a map.

October 15: President Trump’s second nominee to replace Pence is withdrawn when, during his Senate hearing, he admits to being Vladimir Putin with a fake mustache and nose.

November 6: The battle for control of the Senate comes down to Arizona, whose election is thrown into chaos when feral mice, having fully devoured the government-surplus cheddar cheese border wall, eat through thousands of paper ballots.

November 10: Paul Ryan relinquishes the Speakership and resigns from Congress to become the official spokesman for P90X.

November 15: Unable to find a candidate who is not the subject of an ongoing sexual harassment investigation, Republicans nominate Stormtrooper #2 to run for Ryan’s Wisconsin seat. He wins and is immediately elected Speaker of the House by acclamation.

December 5: Steve Bannon’s matterless black aura returns to work at Goldman Sachs, where it proceeds to make $5 billion hedging against the government’s use of Bitcoins.

December 30: Calling himself the winningest leader in the history of the world, Donald Trump announces he has nothing left to accomplish and resigns from the Presidency. Without a sitting Vice President, the line of succession falls to House Speaker Stormtrooper #2, who is administered the oath of office by newly confirmed Supreme Court Chief Justice Ted Nugent.

December 31: Billions of people around the world ring in the new year, vowing that 2019 will be a marked improvement over 2018.

The Simple Reason High-Tax States Are Getting Screwed by the Tax Bill

New-York-New-York-City-Chinatown-Manhattan-Usa-1777986.jpg As the GOP-led tax bill stumbles its way towards the finish line, a number of House Republicans from New York and a handful of other states have come out against it. There aren’t enough to derail the bill, but the notion of a Republican voting against a tax cut still seems about as likely as a Star Wars fan rating the prequels as the best of the canon.

The reason is simple: the Tax Cuts and Jobs Act is potentially devastating to places like New York, New Jersey and California. By limiting the deductibility of state and local taxes (SALT) and property taxes to $10,000, the bill may actually increase the tax burden on many of these states’ taxpayers. As New York Republican Rep. John Faso put it in announcing his opposition to the final package:

I remain concerned that as a result of the state’s high income and property taxes, the partial elimination of the SALT deduction effective January 1, 2018 impacts New York families more severely than those in other states. . . the overall impact of changes to the SALT deduction will accelerate the trend of hardworking individuals and businesses already leaving our state – further eroding New York’s tax base.

It’s easy to think that this treatment of New York and the like is an intentional act of blue-state sabotage by Republicans. In truth, the lower SALT is more likely due to the fact that it raises a lot of revenue, helping to keep the bill under the $1.5 trillion bogey that Republicans had to hit to avoid needing the votes of Senate Democrats. (And if you had to choose between sticking it to middle class voters, or raising the corporate tax rate to 22 percent, well . . . never mind.)

The real reason that high-tax states are being screwed in this bill is much simpler, and it does not bode well for them: They simply don’t have any juice in Congress anymore.

Consider the Senate: In 1986, the last time a major tax reform plan passed, the 10 states* with the (current) highest tax rates were represented collectively by an even proportion of Democrats and Republicans. Today, those ten states send 19 Democrats and only one Republican to the Senate. That’s one of the reasons why, even though Ronald Reagan desperately wanted to eliminate SALT in 1986 (and had a Republican-led Senate), he ultimately gave up on it.

senate

The House, meanwhile, presents a double whammy for these 10 states. First, those states are represented by a higher proportion of Democrats now than in 1986. In ’86, Democrats controlled the House. They don’t today, meaning that those 10 states’ representation in the House majority party has shrunk significantly.

house

Second, those 10 states have lost a net of seven seats due to reapportionment since 1986, giving them even less clout in the House.

caucuses2

The loss of clout among high-tax states has ramifications far beyond the tax bill. Let’s assume that voters in those states demand their state and local governments lower taxes to offset the increase on the federal side, particularly to help them get below the $10,000 cap. (This would be a tall order: some estimates put the average SALT deduction by California taxpayers at $23,000 and by New Yorkers at $26,000.)

Any reduction in revenue at the state and local level will likely be accompanied by spending cuts, particularly in states with balanced budget requirements. Those states will be forced to look to Washington for extra help. But with shrinking power in D.C., that help won’t come. And, as Rep. Faso warned, there is the possibility that the combo of higher taxes and less spending will lead more people to leave these states, further reducing their representation in the House.

From a purely political perspective, this should concern Democrats and cheer Republicans. But disrupting the longstanding fiscal relationship between states and the federal government that has been the cornerstone of tax policy for more than a century should concern everyone.

And, by the way, the White House should keep this in mind: While nine of the 10 “high-tax” states voted for Hillary Clinton in 2016, number four on the list is Wisconsin, the state that was critical to President Trump’s victory. Badger State voters might have second thoughts next time around if their loss of SALT leads to a tax increase.

*New York, Connecticut, New Jersey, Wisconsin, Illinois, California, Maryland, Minnesota, Rhode Island, Oregon

Category: Congress