The stalemate on TrumpCare with the House Freedom Caucus is part of a larger negotiating strategy by President Trump to force their hand, as Richard Wagner explains.
On Friday, President Trump announced that the House would not move forward with the American Health Care Act for now.
Part of being a shrewd negotiator is being willing to walk away. Trump knows this. His solid conservative rivals in the Republican Party know this. Trump’s neoliberal critics likely know this also, but pretend otherwise. Trump has received some very predictable criticisms claiming that he has failed, or that he clearly doesn’t know the art of the deal.
However, we are not even 100 days into Trump’s presidency yet, not even three months. By comparison, Obamacare was introduced in the House in July of 2009, and didn’t become law until March of 2010 – that’s nine months.
The headlines from some second rate media sources of the center-left were sadly exaggerated, and show their desperation to take any and all jabs at President Trump.
“Trumpcare already on life support” – Slate
“The AHCA was killed & and people are celebrating…” – Bustle
“How Donald Trump lost on healthcare” – VOX
So if Trump can’t accomplish in a month in a half, with a slim majority in both the House and Senate, what took Obama nine months with a 60 supermajority in the Senate; why Trump must be a loser, right?
Romper’s Korey Raye Lane gave a far more sober analysis from the center-left.
“[A] temporary halt on repealing and replacing Obamacare doesn’t necessarily mean that the ACA is completely safe. With a Republican-controlled House, Senate, and White House, it’s likely that the health care debate is far from over.”
So what is Trump doing?
Trump has known from the beginning that he was going to have to struggle with the Republicans as much as the Democrats in Congress. As explained a few days ago, Trump is playing chicken with the solid conservatives. What we have just seen is the two cars both slam on their brakes before ramming into each other. But now, they are staring each other down. As I also explained, the Republicans need Trump far more than he needs them. And they both know it.
As first, Trump’s statements about “no Democratic support” may have seemed unimportant. But consider this. At a press conference late Friday, during a Q&A, Trump stated on TrumpCare:
“As we got closer and closer everyone was talking about how wonderful [Obamacare] was. Now it will go back to real life, people will see how bad it is and it’s getting much worse. When President Obama left, 2017 was going to be a very bad year for Obamacare. Going to see explosive premium increases and the deductibles are so high that no one is going to be able to use it.”
“I honestly believe the Democrats will come to us and say let’s get together and get a great health care bill or plan that’s really great for the people in this country and I think that’s going to happen.”
Anyone who thinks that Trump has any loyalty to the Republican Party or conservative principles hasn’t been paying attention. Trump is progressive in the classic sense of the term. Senate Democrats see that also. They have considered the possibility of actually proposing some of Trump’s more progressive policy agenda to see if Trump would actually follow through.
Trump is essentially indicating to the Republicans that there are other ways he could pass a replacement for Obamacare. If he were to do this in cooperation with Democrats, it likely would be more adamantly opposed by the solid conservatives than the American Health Care Act. This, of course, depends on the Democrats putting policy before partisanship. But that is only one of Trump’s cards.
He can also continue to stare down the solid conservatives. They want Obamacare repealed, and they can’t do it without Trump. If Trump fails and loses re-election, he likely moves on to talk radio, or whatever new venture he wants to undertake. But for the Republicans, this may be their last chance to save their party. If they lose without Trump, they really lose.
Is Tax Reform next?
“We are going, right now, for tax reform. Which we could’ve done earlier but this really would’ve worked out better if we could’ve had Democrat support. Remember we had no Democrat support. So now we’re going to go for tax reform.” – President Trump
For Trump and his populist base, tariffs are crucial. Those Midwestern rust belt voters came over to Trump primarily because of job loss due to “free trade”. As our Jake Tibbets explained during the campaign, “NAFTA has cost mostly industrial, mostly unionized American workers 700,000 jobs since its implementation. China’s admittance to the WTO, on the other hand, has cost the nation’s workers roughly 3,000,000 jobs. This has had an undeniable effect on private sector union membership, dropping from 16% in 1993 to less than 7% in 2014.”
The solid conservatives want what they always want – tax cuts across the board. It’s a prerequisite when running for President as a Republican to promise a broad tax cut. Trump, however, placed a heavy condition on his tax cut policy. Trump has included substantial tariffs as part of his plan. This will be the battle on tax reform. Trump’s conditions are clear – if the Republicans want their tax cuts, they’re going to have to take some tariffs in place of those tax cuts. It’s also more fiscally responsible to offset tax cuts with tariff increases.
Trump has also proposed a broad “border tax” on all imports sold in America. While many in mainstream media wail and rent their clothes, attempt everything from trying to frighten us into thinking that it’s going to kill retail, to the other extreme of claiming it actually won’t work at all; in truth, this idea is actually not that shocking. Most countries already do this via a VAT tax, which is essentially a tax on manufactured goods that ignores borders.
Therefore, if you are in Germany, for example, a 17% VAT tax can apply to goods both made in Germany and made abroad and sold in Germany. Germany can then have a much lower corporate tax rate (roughly 15% compared to 35% in the US). A US border tax coupled with cuts to the corporate tax rate would have the same effect.
What will the solid conservatives do?
They’ve now seen that Trump is not going to give them what they want with nothing in return. The solid conservatives can hope that Trump, much like Obama, will buckle and decide that passing something is better than nothing. (That’s how we ended up with Obamacare.)
However, Trump is not Obama, and unlike Obama, thrives under fire. Trump will likely stand his ground. The solid conservatives are going to have to decide if maintaining that cheap labor abroad is worth keeping an inefficient and burdensome tax code at home. Once again, the Democrats are sitting right over there, some supporting tariffs. Bernie Sanders never left the Senate and has long opposed bad trade deals. He’s just one of many.
Even without the Democrats, Trump could force another stalemate. Trump can take it. But the solid conservatives may become far less solid, knowing that they may never again have a Republican President, House, and Senate. Sooner or later, the solid conservatives will have to stop conserving and embrace change.