NICK WARINO

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GOP Legislative Strategy Looks Like a Trainwreck

Tomorrow night Trump is giving a speech to a joint-session of Congress. It is the first high-profile move in the coming legislative battle over the future of the American economy.

A few important facts are emerging:

1. The GOP's plan to repeal the ACA is a critical first step in the leadership's entire legislative strategy. 

Repealing ACA--particularly the high income taxes that funds Medicaid expansion and exchange subsidies--is not merely an end in itself, but is a key part of their main goal of permanent tax cuts, and the spending cuts that would be needed to support such tax cuts (This is because of a variety of arcane Senate rules of procedure--I'll spare the details because it's all very boring).

2. The GOP's plan to repeal ACA is blowing up in their face. 

The GOP's leaked ACA repeal-and-replace plan guts Medicaid and kills the exchanges, replacing them with a package of regressive, stingy tax credits, Health Savings Accounts, and high-risk pools. So what's the problem? 

Here's the problem: it's already opposed by seven GOP Senate moderates because it's too radical (cuts to Medicaid and the exchanges), and by GOP radicals (The House Freedom Caucus) because it isn'tradical enough (they oppose any subsidies and the funding for them). It's also opposed by Bannon, Miller, and Kushner--and probably Trump too. Private insurers, AARP, Republican Governors, and their own constituents are against drastic repeal as well--and angrily letting them know about it at town halls. Meanwhile, dozens of recent national polls show the ACA is more popular than ever and only a small minority wants a repeal with no replacement.

This is a total quagmire. And it seems like the leadership is settling on a plan of just trying to force this to a vote and daring Members of Congress to vote against them--which they probably will. Because of how important ACA repeal is to the GOP's larger budget strategy, no one knows what would happen if ACA repeal is dropped.

3. ACA Repeal is exposing deep factional divisions in the GOP

For the purpose of budget related politics, I think there are 4 important factions within the GOP:

1. The Trumpies (Trump, Bannon, Miller, Kushner, Sessions)

2. The Congressional GOP leadership (Ryan, McConnell, Pence, McCarthy, and most "normal" Republicans in Congress)

3. The vulnerable GOP Members of Congress worried about 2018 & 2020 elections (around 3-7 in the Senate, 30-40 in the House)

4. The House Freedom Caucus (32 in the House, plus allies like Rand Paul and Ted Cruz in the Senate)

On some issues, these factions will be happily aligned: trashing Obama, beating Hillary, confirming Gorsuch, deregulation, cutting taxes, etc. But there's a big issue where they don't align: spending priorities. 

The Trumpies' goal is pure power politics for personal gain and for white patriarchy. Making deep cuts to "entitlement" programs like Medicare, Social Security, and Medicaid is not only not a priority, but it hurts their base (old whites) and gets in their way of expanding spending on the military, on the police, on deportation, on the wall, on infrastructure, and all the things they use to reward their high-testosterone, retrograde loyalists. They can offer jobs, please their racist supporters, and point to things that are "getting done." But this all blows up the deficit (especially when coupled with big tax cuts) and protects the entitlement programs Ryan and the House Freedom Caucus so fanatically want to destroy.

The vulnerable GOP Members of Congress, meanwhile, don't have the same goals as the Trumpies, but they share the same strategy of avoiding anything too politically toxic that would ruin their reelection chances--things like taking away health insurance from their constituents to pay for tax cuts for the rich.

The task for the GOP leadership is crafting a plan that simultaneously  keeps the Trumpies happy, keeps the radicals happy, and doesn't scare off the skittish members worried about reelection (they can only lose 3 in the Senate!). What has become clear is there is no plan that does all these things. Someone is going to have to give in. These divisions seem to be growing, which is what always happens in politics the further away the winning party gets away from the last election and the closer they get to the next one. 

4. The Debt Ceiling is about to be breached unless the GOP votes to raise it

In a few weeks, Republicans will have to raise the debt ceiling or risk blowing up the world economy. In the past, and by all indications going forward, the House Freedom Caucus wing won't agree to raise the debt ceiling without demanding major, major policy concessions related to spending cuts. But who's going to agree to that? Not the Trumpies, not the skittish Republicans. Who gives in?

GOP leadership could try to convince Democrats to help them out, ignoring the radicals--but this risks the relationship with those radicals needed for their entire legislative strategy. Uh oh!

...

I don't have any specific predictions of how all this will play out. It's too combustible with too many moving parts. I will say that Medicare & Social Security are secure, and Medicaid and Obamacare are probably secure too. There will be big tax cuts, but maybe not nearly as big as they hoped and maybe only in effect for a temporary 10-year span (like the Bush cuts). Politically, I think this process will severely weaken the GOP coalition and weaken Trump's public support--which then has the effect of increasing the odds that a handful Republicans in Congress go along with Democrats and pursue Congressional investigations of Trump's corruption and scandals.