Republicans may regret this tax bill

Josh Barro has an interesting piece laying out in words a thesis that so far I've only heard in whispers and tweets: In some ways, Democrats might be better off if the GOP tax bill passes.

The logic is this: After the Affordable Care Act's passage, one path forward (emblematized by Barack Obama's "pivot to deficits" and the search for a grand bargain) was to declare the American welfare state substantially complete. But the pivot failed, the grand bargain failed, and the energy in the party shifted strongly to the left. Now Democrats have a vision of continued welfare state expansion that's basically not going to work if polling-friendly tax hikes on the superrich are the only thing on the table. In the new Demutopia, rich people will pay more — but the middle class will need to pay more too.


In one view, the GOP is basically doing Democrats' dirty work for them. By pairing unpopular tax hikes on the middle class with unpopular tax cuts for business and the rich, they have set the table for Democrats to pocket the GOP's revenue raisers, cancel their tax cuts, and move forward with a higher tax level than they'd have been willing to press for on their own.

To which I say ... maybe.

If I've learned anything from the past 15 years of American politics, it's that the future is hard to predict. What happens is going to hinge on the results of the 2018 and 2020 elections. And those elections will hinge on a million unpredictable things.

That said, the Barro scenario isn't crazy. And it is noteworthy that the GOP has plunged ahead with this plan despite a very hazy outlook for the equilibrium result.

They had another option: Instead of drafting a bill with these contours, they could have drafted the kind of bill they promised. A legislative text that cut taxes on the middle class while closing loopholes and avoiding giveaways to the rich would have put Democrats in a tough spot. The GOP would essentially have picked the low-hanging fruit of the revenue-raiser world (things like closing the carried interest loophole) and then expended it on something popular and hard to take away (middle-class tax cuts). That would have made it very difficult for the next Democratic administration to pursue aggressive welfare-state expansion.

Instead, Republicans essentially did the opposite. They picked some fairly difficult revenue fruit and are using it to try to create new, unpopular tax breaks for the rich that can be taken away in the future. It's an extremely risky gamble on their ability to hold on to power over the next couple of cycles.