It Turns Out Legislating Is Really Hard. Maybe That’s Good for Now.

It’s been 38 days since Donald Trump was declared the winner of the presidential election. On the campaign trail, Trump promised to make his “massive tax cuts, the biggest ever, permanent.” Beyond expanding the Kool-Aid-Man-sized hole in federal coffers the Tax Cuts and Jobs Act (TCJA) left in its wake, he vowed “we will have no tax on tips . . . and also no tax on Social Security benefits.” In addition to these individual income tax cuts, on the corporate side, Trump called for expanded tax incentives for research and development, new capital investments, and a second slash to the corporate tax rate—but only for companies that make their products in America. The president-elect is now facing the reality all presidents must face as they transition from campaigning to governing: You can’t simply just say things, clack your ruby red slippers together, and make them law. Instead, Congress has to get to work.

On the Senate side, Lindsay Graham, incoming chair of the Budget Committee (which holds the keys to the reconciliation process that allows Republicans to bypass the filibuster) says the tax agenda will be on hold until the border is secured. A border security bill, he says, will go before spending restrictions and tax cuts. Incoming majority leader John Thune has echoed a similar two-step agenda: a quick and early package focused on border, energy, and defense, and a second “big and complex” tax bill. On the House side, Ways and Means Committee chair Jason Smith has pushed back, arguing that going that route would sacrifice taxes. “If you look at history over the last 25 years, there’s not been two reconciliations that have been signed into law in the same year,” he noted.

Jason Smith is right. And the last time Congress attempted two transformative reconciliation packages in a short period offers a perfect example of the risks.

In 2021, immediately after clinching a slim Senate majority after two runoff elections in Georgia on January 5, Democrats got to work on recovery legislation. Hours after being sworn in, President Biden released the American Rescue Plan (ARP). It was, he said, “the first step of an aggressive two-step plan” for rescue from the ongoing pandemic and economic crises and for recovery. Facing a ticking time bomb on expiring unemployment insurance benefits, Congress worked quickly, and the ARP was signed into law on March 11, 2021. A few weeks later, Biden released the American Jobs Plan, and a few weeks after that, the American Families Plan. Within his first 100 days, he’d passed landmark recovery legislation—that led to the swiftest recovery from one of the deepest recessions—and laid out an agenda to reform the tax code, invest in American workers and families, and rebuild our country after decades of disinvestment.

Democrats vowed to work on two tracks to enact the president’s agenda: bipartisan negotiations on infrastructure and a partisan reconciliation package on the rest. The Congressional Progressive Caucus warned against this approach. Rep. Pramila Jayapal cautioned that separating the two pieces of legislation could threaten the comprehensive agenda: “There is too much at stake for working families and our communities to settle for something that can be later misunderstood, amended, or abandoned altogether.” Democrats ignored these warnings.

The Bipartisan Infrastructure Law, signed into law on November 15, 2021, committed historic and necessary investments in our nation’s roads and bridges but fell short of the needs (for example, the law’s landmark broadband affordability program has since lapsed). The House passed the Build Back Better Act (BBB)—a $2.1 trillion package of clean energy and social safety net investments—on November 19, 2021. The latter was more complicated. Two then-members of the Democratic Party ultimately derailed the ambitions of the second track’s second track, and in fall of 2021, progress on BBB stalled.

Without a pressing deadline like 11 million workers facing an unemployment benefits cliff, Democrats flailed. Party leaders and White House staff spent months trying to court 50 votes to get a once-in-a-generation package of economic investments and tax reforms enacted. Even when the ARP’s Child Tax Credit expansion expired, thrusting millions of children back into poverty after temporary reprieve, Congress failed to act. For nearly a year, two key Senate votes moved the goalpost for their support, waffling over who Democrats could increase taxes on, how much they could spend, what investments were inflationary, what could be permanent versus temporary, etc. Ultimately, the Inflation Reduction Act was enacted on August 16, 2022.

The IRA is the largest public investment in clean energy in American history. It’s a transformative bill, and it’s delivering for the American people and the planet. It did not, however, make generational investments in health care, childcare, elder care, or housing. It did not provide a pathway to citizenship for undocumented workers. It did not extend the Child Tax Credit expansion that cut child poverty in half, and it only temporarily extended Affordable Care Act subsidy expansions. It offered many carrots but few sticks for the clean energy transition. And while it included important offsets, like Medicare prescription drug cost negotiation, a 15 percent corporate minimum tax, and IRS enforcement funding, it did not meaningfully raise taxes on the wealthy. And passing it a year after it was supposed to be enacted is perhaps why the American people did not feel all of its benefits by the time they entered the voting booths last month.

Some Republicans have apparently not learned the consequences of dithering. Though it worked out to the detriment of the American people in 2021 and 2022, perhaps this time it could work out in their favor.

The tax policies Trump proposed on the campaign trail, the conservative Tax Foundation estimates, will cost trillions: $4 trillion for TCJA permanence, $2 trillion for exempting income from overtime, tips, and Social Security, plus another $2.5 trillion for odds and ends like a tax deduction for auto loan interest, a 15 percent corporate tax rate for domestic production, and removal of the State and Local Tax (SALT) deduction cap. Those trillions, by and large, will flow to wealthy individuals and large profitable corporations. If the expiring provisions of the TCJA are made permanent, the poorest 20 percent of Americans would see a tax benefit of $110, compared to a nearly $46,000 windfall for the richest 1 percent.

The sprinklings for the middle class—extending TCJA’s increases in the Child Tax Credit and standard deduction, exempting from taxes some income that largely flows to low-income households—aren’t trivial, but they don’t begin to rebalance the fairness of the tax system. Few can say that’s surprising; Republicans aren’t exactly committed to that mission. Their problem, however, is that their commitment to extremely unpopular tax cuts for the wealthy is already being tested.

After passing a border security bill (and potentially repealing the Inflation Reduction Act) in the first couple of months of their trifecta, Republicans will be faced with the fact that passing a tax bill is hard—and harder when their tax agenda is deeply unpopular for anyone but the ultrawealthy. They’ll have to find agreement within their slim majority to extend the parts that do actually, though modestly, deliver for the majority of Americans who do not meet the threshold for the estate tax or have pass-through business profits. If they run out the clock, middle-class families will face a small tax increase. That’s not ideal, but on the whole, the tax system will be fairer.

It looks like Republicans haven’t learned from what I’ve affectionately referred to as the Build Back Never period. Doing the “easy” stuff in a legislative package right out of the gate hoping you can resolve the hard stuff quickly is never as seamless as it sounds. And if John Thune and Thom Tillis’s takeaway from the last four years was the success story of the two-track approach, I’m fine to let them rewrite history temporarily for the sake of our tax code.

If you ask Eleanor

“Any assurance in the next year that the Senate and the House will actually pass an adequate tax reform bill that will close up the loopholes and reduce the inequities is completely non-existent.”

– Eleanor Roosevelt, My Day (July 20, 1962)