(Bloomberg) How McConnell Succeeded on Tax Cuts After Failing on Health Care

By Sahil Kapur

• GOP leader reflects on ‘scary moments’ in landmark effort
• McConnell says tax bill ‘takes the heart out of Obamacare’

A pivotal moment in the Republican party’s drive for tax overhaul legislation came in September, when two GOP senators agreed that tax cuts could add $1.5 trillion to deficits over 10 years, Senate Majority Leader Mitch McConnell said Tuesday.

But that compromise meant McConnell had to abandon his earlier position that tax cuts shouldn’t add to the nation’s “alarming” level of debt.

“Without that there would’ve been no tax bill,” the Kentucky Republican said in an interview, referring to a bargain struck between GOP senators Bob Corker of Tennessee and Pat Toomey of Pennsylvania over the size of the tax cut package.

The concession on deficit-busting cuts, along with lessons learned from the GOP’s embarrassing failure to repeal and replace the 2010 Affordable Care Act, helped McConnell get the party within striking distance of its first major legislative victory this year.

The Senate is poised to approve the final version of the tax bill Tuesday night. Following a procedural hiccup, the legislation will head back to the House on Wednesday for a final vote that’s expected to send it to President Donald Trump.

‘Rubik’s Cube’

To keep his caucus informed of a complex and fast-moving tax plan, McConnell said he delegated the responsibility of providing regular updates to a cadre of Senate Finance Committee members. Toomey, along with Tim Scott of South Carolina, Rob Portman of Ohio and John Thune of South Dakota were responsible for explaining the bill’s provisions to Republican senators in groups of five at a time.

“The reason that was important, frankly, is by the time they were voted out of committee there was a high level of awareness among our members of what was in it,” McConnell said of the bill. “So they didn’t feel like they were surprised. So once it came out of committee we had pretty large percentage of our members who were comfortable with it.”

To win over the last few needed votes, tax writers made some tweaks, he said. “There was some twisting of the Rubik’s Cube right at the end.”

And when it came to courting senators whose support was in question, McConnell was able to offer them sweeteners that he wasn’t able to do as easily in the health-care bill — the core of which was stripping federal subsidies to buy coverage.

Alaska’s Lisa Murkowski received an add-on to open up part of the ANWR to oil drilling, a career-long goal for her. Arizona’s John McCain got the “regular order” committee process he had demanded. Maine’s Susan Collins got an expanded medical-expense deduction, albeit a temporary one, in addition to the preservation of individuals’ state and local tax deductions under a $10,000 cap and an agreement from McConnell to back legislation that would stabilize health-insurance markets.

‘Scary Moments’

“It was also, I thought, extremely important to get Susan Collins on board,” McConnell said. “She represents kind of the left end of our conference. Susan was a tough negotiator but reasonable. She wanted to get to yes, and she did.”

Generally, he said: “We had scary moments along the way, we always do with this kind of margin.”

Ironically, even though the Senate wasn’t able to repeal Obamacare, once the repeal of the individual mandate — a cornerstone of the ACA — was included in the tax legislation, it helped to bolster support for the tax bill, McConnell said.

“It’s not a total replacement, but it takes the heart out of Obamacare,” McConnell said, echoing economists who argue that the law may be unsustainable without a mechanism to force healthy people into the marketplaces to hold down costs.

McConnell also attributed success on the tax bill to the fact that GOP senators were more energized about it than they ever were about health care. “I’ve often described the health care meetings as somewhat akin to getting a root canal,” he quipped.

And McConnell, showing his characteristic tendency not to over-promise, wouldn’t say if the tax success could be replicated with other items on the GOP agenda in 2018, such as infrastructure, welfare cuts or an overhaul of social safety-net programs.

“We’ll talk about next year, next year,” he said.

Source: Bloomberg