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What do Republicans need to pass tax reform? Democrats.

- November 7, 2017

Last week, House Republicans unveiled their tax plan, and its initial prospects do not look very good. Already, Democratic leaders, key interest groups and even some Republican members are opposed. Betting markets are pessimistic. In short, the early money is that Republican-led tax reform won’t be any more successful than Republican-led Obamacare repeal.

Fortunately for Republicans, there is a path to success. In fact, this path is how the vast majority of congressional bills — including landmark legislation — still get passed. It sounds crazy to say this in such polarized times, but the path is . . . bipartisanship.

Yes, that means Republicans need one thing to get tax reform done: Democrats.

There are two reasons Republicans will struggle to do tax reform alone. First, they have a public opinion problem. Key elements of their tax reform plan lack much public support. For example, the plan would lower the tax rate for corporations, but Americans are evenly divided on whether it would hurt or help the economy, and more say it would make the tax system “less fair” than “more fair.” Meanwhile, the reputation of the party has taken at hit: More Americans trust Democrats than trust Republicans to handle the issue of taxes. This was not true in April. Republicans also lag Democrats in the “generic ballot” measure of voting in the 2018 House elections.

President Trump is unlikely to help much. He was a historically unpopular candidate, and now he’s a historically unpopular president. Confidence in his ability to handle key tasks of governing has fallen. More than half (58 percent) of Americans are not confident in his ability to “make wise decisions about tax policy.”  On this dimension, he scores worse than congressional leaders in both parties — and Democratic congressional leaders score slightly better than Republican congressional leaders. When asked about “Trump’s tax plan” in an Oct. 29-Nov. 1 Washington Post poll, 50 percent opposed it and only 33 percent supported it. Meanwhile, 56 percent say Trump is doing a “not so good” or “poor” job improving the tax system.

Second, Republicans have a congressional rules problem. They are trying to do tax reform using the reconciliation process, which allows them to pass a bill in the Senate with only 50 votes — that is, with no Democratic votes.

As my colleague Sarah Binder noted more than a month ago, this is a double-edged sword. It requires that Republicans hang together with almost no defections. Furthermore, it requires that any tax reform plan not raise long-term deficits — or else it potentially becomes subject to a filibuster and would require 60 votes to pass. This means Republicans have to find ways to pay for at least some of the tax cuts they propose. This has led them to target popular tax deductions for state and local taxes, mortgage interest and student loan interest.

To be sure, there is absolutely an argument for reducing those deductions, which themselves benefit wealthier people. But to take on popular tax breaks with a razor-thin majority is hardly an easy task. As James Wallner notes, this sort of thing is how reconciliation ends up imposing real costs on majority-party members.

So here’s where bipartisanship comes in. You might think that congressional politics are far too partisan and ideologically polarized for Democrats and Republicans to vote together on anything except ceremonial stuff, such as naming post offices. You’d be wrong. Consider this graph, based on data from the political scientists Frances Lee and James Curry:

What this shows, as Curry and Lee wrote on this site several months ago, is that in most Congresses, major bills that become law typically get the support of at least 50 percent of minority party members on average — and often far more than 50 percent. To be sure, polarization takes its toll on Congress’s ability to get big things done. And large Senate majorities — like the Democratic one during Obama’s first two years in office — can move with little minority support. But in most years, when lawmakers succeed their efforts are usually bipartisan. This typically means that deals are “win-win”: each side gets what it wants most in the deal.

This is especially true for big, complicated things like tax reform, which inevitably creates real winners and losers and thus necessitates a stable supporting coalition. That phrase hardly describes today’s Republican Party. Or, as Obama administration economist Jason Furman puts it at the end of this slide deck on the House tax reform plan: “Easier to get 70 out of 100 Senators for genuine reform than 50 out of 52 Republicans.” Indeed, some Democrats seem willing to be part of a bipartisan effort.

Are there costs to bipartisanship? Of course. You don’t get everything you want. And nothing about bipartisanship guarantees that a bill or law is perfect.

But bipartisanship would provide political cover for the inevitable controversies that any tax reform package will create.