For the last seven-plus years, Republicans ran on repealing and replacing Obamacare. It was a winning platform, demonstrated by their gaining seats in Congress in almost every election since Obama was elected in 2008—achieving a majority in the House in 2010, a majority in the Senate in 2014, and finally the White House in 2016. And with President Trump stating that he is anxious to sign a “repeal” or a “repeal and replace” bill into law, passage seemed like a sure thing. Yet so far the Senate has failed to pass a bill. But there is still a way forward.
The legislative priorities of the new administration started with repealing Obamacare because of the need to eliminate the complexity and burden of its 20-odd new taxes on business, families and small businesses—a total of some $500+ billion in additional taxes—and to abolish and reduce costly regulations on small businesses.
Meaningful tax reform that includes major simplification and reduction in rates is the key to spurring new economic growth and the repatriation of 2+ trillion of corporate dollars held overseas. But comprehensive tax reform is nearly impossible with Obamacare in place—like trying to build a new structure on a fundamentally flawed foundation. Additionally, we can’t get to a key area of regulatory reform—those that apply to small business, which generate 70 percent of the new jobs in America—with Obamacare’s regulatory burdens that kick in at 50 or more employees.
A successful strategy has to include tactics that deliver votes on the margin. Donald Trump has the bully pulpit and the pen to sign executive orders to deliver those critical votes in the Senate. He has already stated that neither Republicans nor Democrats should contemplate bailing out the insurance companies, which without repeal, remains part of the Obamacare law. With widespread bipartisan support among voters, that point should continue to be driven home.
Then the President should stress the outrageous unfairness of members of Congress and their staff being exempt from paying the same high premiums that the people pay under Obamacare.
In point of fact, the Obamacare law was so onerous upon implementation that President Obama had to respond to complaints for relief from Congress, directing his Office of Personnel Management to exempt congressional staffers from Obamacare mandates and to provide taxpayer reimbursement for up to 75 percent of the cost of their premiums—subsidies not available to the American people forced to live under the Obamacare law.
If President Trump reminds people of these facts through Twitter and the bully pulpit, and then signs an executive order rescinding the Office of Personnel Management’s provisional loopholes and taxpayer subsidization, thus forcing every member of Congress and every staffer into the failing Obamacare exchanges and forcing them to pay the full price of insurance under Obamacare—just like the people stuck with it are forced to do—he would likely win additional votes.
And finally and most important, President Trump needs to address the subject of the financial health of the United States. Six years ago this month—August 2011—Standard and Poor’s downgraded the U.S. credit rating, specifically citing at the time that “reforming and preserving U.S. entitlement programs is the key to long-term fiscal sustainability.”
During the following years under Obama, the financial health of America deteriorated dramatically—a story the press ignored. Since that warning from S & P, U.S. Treasury debt increased 47 percent, while the economy grew only 21 percent. Total U.S. federal government indebtedness grew to 105 percent of GDP. But a more accurate picture of the nation’s true financial health is found in the ratio of a government’s debt to the actual tax revenue collected, as this provides a clearer picture of the country’s debt burden and the capacity to pay. On that basis the U.S. is now the second weakest among the OECD nations, even ranking below Greece, Portugal, Spain and Italy, and exceeded by only Japan.
Given the resistance to entitlement reform, the path of least political resistance to avoid insolvency is to dramatically revitalize growth in the U.S. economy. That is why the Trump administration’s tax and regulatory relief are so desperately needed. Hastening business formation and creating new jobs, which expand the tax base, is the key to eliminating the deficit and stabilizing the level of U.S. debt.
But what is first required is the repeal of Obamacare. And to get the necessary votes in the Senate, President Trump needs to pull out all the stops.
Then we can get on with tax reform, accelerated economic growth and increased tax revenues that will follow, enabling the achievement of a balanced budget in Washington. In fact everything we hold dear as a people and nation depends on restoring the nation’s financial health, which is after all the foundation for making America great again.
Scott Powell is a senior fellow at Discovery Institute in Seattle.