Trump’s Money Woes: Taxes, Infrastructure, and a Government Shutdown

The President is trying to pass several pieces of legislation that require funding in a short amount of time. Can he get all of them through Congress?

Dec 07, 2017

December is turning into an enormous test of President Trump and the Congressional GOP majority’s governing ability. Three Washington Post articles, all published today, show the extent to which the White House is struggling to make progress on legislative priorities that conflict with one another. The first article announced the passage of a continuing resolution on the budget. A CR, as Washingtonians prefer to call it, simply funds the Federal Government for a short period at current levels.

The goal is to buy time to finalize a long-term budget deal, but recently the government has been kept open by stringing together a series of continuing resolutions rather than reaching an agreement on a long-term bill. The CR passed today will fund the government, which would have run out of money by midnight Friday, until December 22. Then, Congress would either need to reach a long-term budget deal, pass another CR, or shut down the government.

The second Washington Post article is about wealthy New York donors who backed Donald Trump and are now lobbying him to make changes to the GOP Tax Bill while it is in a conference committee.

The compromise bill between the House and Senate is poised to make large cuts to the State and Local Tax Deduction (SALT), which particularly benefits affluent tax payers in high-tax states such as New York. Other reporting indicates that the House Freedom Caucus would refuse to vote for the Tax Bill unless a number of provisions are removed that were put in to win over Senate moderates like Senator Susan Collins. If that were to happen, Senator Collins would likely change her support, imperiling the bill once again. This tug-o-war between Senate moderates and House radicals in the GOP parallels the ones that plagued Obamacare repeal over the summer.

The final article concerns Donald Trump’s popular but evasive campaign promise to generate $1 trillion on infrastructure spending over 10 years. With fiscal hawks in the House Freedom Caucus and a tax bill that will increase the deficit $1.5 trillion over 10 years, finding an extra trillion for roads and bridges is becoming difficult. That’s why, according to the Post’s reporting, the Trump administration is considering a proposal that would encourage states and localities to raise their taxes to pay for infrastructure.

The move would set aside $200 billion in federal dollars to match state and local funds that they raise through new or increased taxes to pay for local construction and renovation to airports, bridges, roadways, and tollways. However, fiscal hawks in Washington still complain about the reduced price tag, and local governments argue than any tax relief their citizens get from the GOP tax bill will be nullified if state taxes increase.

So here is the problem facing President Trump. The tax bill is teetering on the edge, but is still likely to pass. If it does pass, it will probably be over the objections of the House Freedom Caucus. Then the House Freedom Caucus will be less likely to help the President on the budget and infrastructure, risking a failed promise and the first government shutdown in U.S. history at a time of one-party control of government.

On the other hand, if the tax bill passes without significant change, slashes to the SALT deduction would place an extra burden on localities that want to raise taxes. But local governments raising taxes is how Trump wants to pay for his infrastructure bill. Either way, the House Freedom Caucus is going to make demands of the President in return for keeping the government open, and so will the Democrats in the Senate, where any budget will need 60 votes to pass.

I like to think of governing as a long, laborious game of whack-a-mole. This is especially true with budgets and government spending. Every time you think you’ve fixed the problem, it pops up again somewhere else. Incoming administrations are shocked to find out just how hard it is to draft a bill that achieves their legislative goals, without creating new or worse problems down the line, and has the political backing to pass Congress. This is especially true today for two reasons.

First is simply the hyper-partisan modern political landscape that makes getting 60, or even 50, votes for anything in the Senate nearly impossible. Second is the demonization of policy experts and experienced legislators that has taken place in the last few years. Policy wonks and legislators with a proven track record are being heaped together, summarily labeled as elitist, or self-interested, or – worst – insufficiently pure or radical. As a result, the difficult, technocratic process of painstakingly going over legislation to improve the country has given way to legislative flights of fancy and politically untenable policies that won’t have the outcomes their proponents claim.

I remember when the Obama Administration first realized that legislating is a game of whack-a-mole during the Affordable Care Act debates. Post-2016, people forget how close and bitterly-fought the 2008 Democratic Primary between Barack Obama and Hillary Clinton was. In all the debates they had, the most hotly contested topic was healthcare policy. Barack Obama wanted a healthcare overhaul that included a public option to compete with private insurance, and omit the individual mandate that made healthcare reform in the 90s politically unpopular.

Hillary Clinton, on the other hand, argued that it would be impossible to pass such a bill. A public option would be too politically radical to pass even a large Senate majority, and that it would be too expensive for government and private companies to provide healthcare to everyone without an individual mandate.

In 2009, the Obama Administration was working to put together the Affordable Care Act. Insurance companies and health policy experts did in fact tell the administration that an individual mandate would be the only way to insure everyone regardless of health status while remaining solvent.

Next, Democrat Joe Lieberman came out against a public option, dooming it in the Senate. The bill that passed ended up looking a lot more like Hillary Clinton’s vision than Barack Obama’s (I guess two decades of experience in the details of passing large and politically difficult pieces of legislations is useful – or something).

Now, the Trump administration is facing a similar legislative challenge. His party has unified control of government, but his majorities are smaller than Obama’s were in 2009. The Republican Caucus is more fractured than the Democrats were in 2009, and partisanship has made getting Democratic votes nearly impossible. Between taxes, infrastructure, and the budget – it’s unlikely that President Trump will be able to achieve all his legislative goals before 2018 midterm season.

The President will either have to compromise somewhere, or risk failing to pass any landmark legislation at all before his biannual performance review from voters. Every president has had a moment in their first year where the realize governing is hard. Governing is even harder if you’ve never done it before.