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The GOP Takes A Big Step Toward Passing A Big Policy Goal

Friday was really bad for the Republican Party in that President Trump’s one-time national security adviser Michael Flynn pled guilty to lying to the FBI and there are indications that he might testify to politically damaging and possibly illegal actions by Trump’s son-in-law Jared Kushner and maybe even the president himself. But Friday (and early Saturday) was really great for Republicans in that the party took a huge step towards a goal it had long before Trump was even running for president: a huge cut in corporate tax rates that GOP leaders say will encourage American companies to increase their current workers’ pay and hire more employees. (Many economics experts strongly dispute these claims.)

The Senate voted 51-49 to pass its version of the tax bill. That does not guarantee that the provision will become law. The policies the GOP are trying to pass are unpopular with the public and have the potential to substantially increase the national deficit. The House and Senate versions, moreover, have some major differences, and getting all of the hard-to-please members and factions in each chamber (think Maine’s Susan Collins, Arizona’s John McCain and the House Freedom Caucus) all on board for the same bill won’t be simple.

But this tax bill has advanced much further than the Obamacare repeal, which stalled in the Senate, in a much shorter time period. It has a good chance of becoming law, perhaps even before Christmas. If it does, it’ll have big implications — both in terms of policy and politics.

1. Both the House and Senate versions of this legislation radically overhaul America’s tax system, mostly notably in cutting corporate taxes from 35 to 20 percent, while getting rid of many existing tax deductions in order to make up for the lost revenue. They also substantially cut taxes on certain kinds of businesses that do not organize themselves as corporations. And the bills cut some taxes that disproportionately hit wealthy people. These changes will benefit wealthy business owners like Trump.

In short, this is a full-on embrace of trickle-down economics, premised on the idea that corporations and businesses taking in more money will pass that down to workers. Once enacted, these policies will likely be difficult for Democrats to undo — much like Republicans are having a hard time rolling back the increased Medicaid spending and protections for pre-existing conditions that were key features of Obamacare. It’s just hard to imagine Democrats will find it easy to raise the corporate rate substantially in the future. Companies are likely to suggest any hike in that rate will force them to layoff employees.

2. The Senate version repeals Obamacare’s individual mandate. I expect the House to agree to include the mandate repeal, so it’s likely to be included in whatever law Trump would potentially sign. In other words, this legislation could become part of a series of moves made by Trump’s executive branch that some say amount to a “synthetic repeal” of the Affordable Care Act, even if Republicans couldn’t find the votes to kill that entire law.

3. If ultimately passed by both chambers and signed by Trump, the tax bill gives the president and congressional Republicans their first big legislative win since the start of Trump’s tenure. What does that mean politically? Well, here’s one thing it doesn’t necessarily mean: more congressional seats for Republicans. Since this bill is so unpopular, it’s hard to see this legislation helping boost the congressional Republicans ahead of the 2018 midterm elections — and it may hurt them.

It’s also not clear if this bill’s passage means congressional Republicans will rally around Trump — in general or on the Russia investigation specifically. Sure, Republicans could decide that the success of the tax bill shows that Trump is an effective governing partner, even if he behaves erratically. But Republicans on Capitol Hill could also go in the opposite direction, deciding that a tax overhaul is probably the only big bill that will pass during Trump’s presidency. Under that theory, they would begin to more forcefully distance themselves from him, perhaps even clearing the path for Trump to be impeached and removed from office if the investigation by special counsel Robert Mueller shows serious misconduct by the president.

The safest bet, in terms of what the passage of the tax bill tells us about the future workings of Trump and Congress, is perhaps “maybe not that much.” Congressional Republicans are likely to continue to flail both legislatively and in terms of how they deal with an unpredictable president, defending Trump at times, attacking him at others.

But if nothing else, the enactment of the tax bill would shift Trump from a do-nothing president who can’t implement an agenda even with his party in control of both houses of Congress to the president who signed the most extensive tax overhaul in three decades. Trump will likely brag about this bill as a huge accomplishment — a big league one, he might say. He will demand that the “fake news” ” cover the bill’s passage intensely, and that coverage will never be enough for him. Trump spoke often as a candidate about “winning,” and now, after a first year full of political and policy setbacks, he is closer to a huge win as president.

Perry Bacon Jr. is a senior writer for FiveThirtyEight.

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