Great Idea Or Poison Pill?

The American Spectator posted an article today about the proposed tax reform bill working its way through Congress.

The article reports:

The Senate majority leader and the Senate finance committee endorsed Senator Tom Cotton’s proposal to include a repeal of Obamacare’s individual mandate alongside tax cuts.

This either kills two birds with one stone or that one stone sinks the tax plan because of its weight. If Senator Bob Corker issued his complaints last month regarding deficit reduction in earnest, one guesses that the former occurs. Aside from moving toward individual freedom and the Constitution, the repeal of the individual mandate makes sense fiscally, particularly with a $20 trillion debt hanging above our heads. The added dynamic alleviates, at least, the concerns regarding the deficit aired by Senators Corker, John McCain, and Susan Collins.

Adding the repeal of the ObamaCare Mandate to the tax bill makes good sense in terms of what is the right thing to do. The move has questionable value politically. The Democrats are complaining that repealing the mandate will mean that low-income people will not have health insurance. Wait a minute. That claim defies logic. Repealing the individual mandate means that low-income people will not have to pay a fine if they don’t have health insurance. If they can’t afford health insurance, how are they supposed to pay the fine? Since when did the government acquire the right to force you to purchase something you don’t want?

The article concludes:

In 1981, when Ronald Reagan slashed the top personal rates from 70 to 50 percent, the federal government imposed the heaviest burden on Americans. Now, the cost of the federal government and the cost of healthcare approaches parity. The former gobbles up the same portion of the GDP, more or less, that it has throughout our lifetimes. The latter has almost tripled in its proportion of the GDP in just a half century.

Donald Trump’s tax plan puts American businesses on a level playing field with their competitors abroad and sensibly allows citizens to keep more of what they earn. This undoubtedly helps the economy. But the Trump tax cut will not boost growth the way the Reagan or Kennedy or Coolidge cuts did because 2017’s economy faces a special health-care challenge that did not exist in the 1920s, 1960s, or 1980s.

Prosperity proves illusory in any economy in which the cost of one commodity outpaces growth. Who cares if a tax cut boosts GDP by one percent if medical inflation devours that increase in the economy?

Good for Republicans for recognizing that relief for citizens requires reforming not just the tax code but the healthcare system, as well. Bad for any of them to imagine the job done, or a boom around the corner, through a modest personal tax cut, a robust corporate rate reduction, and a repeal of the individual mandate.

Adding the repeal of the individual mandate to the tax plan will help low-income people. However, in watching this debate, remember that the Washington establishment does not want Donald Trump to be a successful President–he is an outsider and the establishment thoroughly resents that. My fear is that the tax reform will not pass because the repeal of the ObamaCare mandate will be a poison pill for much of the establishment. At that point, the Republican establishment will whine, “We tried, but the Democrats wouldn’t let us pass tax reform.” If that happens, it will be a long time before I vote for a Republican again.