Reagan Would Tell Republicans To Take the Win, Pass the Tax Bill

The Senate has passed the President’s tax and budget bill and sent it back to the House for final approval. Not every member of the House is happy with the Senate bill, and a number are threatening to vote against it.  It’s not perfect, but the House should take the win, pass the bill, and send it to the President for his signature.

The bill before the House is a monumental achievement, the product of months of work and innumerable compromises to meet the competing needs and demands of every Republican in the House and Senate. Like every major tax bill, the final bill has its flaws. Not everyone is getting everything they want. Some say the bill has too many provisions they cannot support. Many say the bill does not cut spending enough. Others say it cuts spending too much. And many believe the bill does not reduce the deficit enough.

These are valid concerns. But the bill as a whole is a major accomplishment for the House and the Senate, advancing a significant portion of the President’s legislative agenda, and giving him an historic win. The bill provides a permanent extension of the lower individual tax rates enacted in 2017, extending the across-the-board rate reductions for all taxpayers. The bill preserves  the competitive 21% corporate tax rate, and makes permanent other pro-growth  business tax cuts.

There is a valid argument that extending the tax cuts should not be treated as an increase in the deficit. Most spending programs are built into the baseline and not treated as an increase in the deficit when extended. If the bill is not passed, taxpayers would face a $4.5 trillion tax increase, giving Washington that much more money to spend, and likely leading to bigger deficits. What’s more, Republicans should not base major policy decisions on a CBO budget forecast. CBO has been issuing cost estimates for fifty years, and the record shows that their deficit forecasts are almost always inaccurate.

James Baker, President Reagan’s first Chief of Staff and later Treasury Secretary, always emphasized the importance of achieving major legislative victories for the President. Reagan did not get everything he wanted in his 1981 tax cuts and the Tax Reform Act of 1986. But he was willing to accept changes he did not like to achieve historic victories. Baker, who I worked for at Treasury, always said politics was the art of the possible. He said Reagan told him it was better to get 80% of what he wanted than “go over the cliff with my flag flying.” This is the decision facing many House Republicans. Reagan would have told them to vote for the bill.