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The Republican Congress Is Courting a Major Crisis

Obamacare might be safe for now, but an economic calamity is looming.

SAUL LOEB / Getty Images

This was supposed to be the week that liberals determined the fate of Obamacare. The President’s Day congressional recess left members of Congress vulnerable in their districts to protests and confrontations, reminiscent in some ways of the Tea Party town halls of 2009 that nearly smothered the Affordable Care Act in its crib. A strong showing of the law’s supporters might deter Republicans from taking drastic action.

Depending on their levels of indifference, Republican senators and representatives have listened patiently to their constituents, cut events short, or canceled them altogether, while millions have seen the images of people whose lives will be destroyed if Republicans repeal the ACA. The activists have done what they needed to do.

But it is possible—even likely—that the organized opposition to repeal succeeded long before this week. Obamacare supporters won’t rest until the law is undisputedly safe, but the dangers facing it shrank significantly earlier this month, when Republicans abandoned their initial “repeal and delay” plan: To repeal the law without a replacement, and time its benefits to sunset two or three years into the future.

By relenting—to Trump, industry stakeholders, and political reality—and agreeing to advance repeal and replace measures simultaneously or in rapid-fire sequence, Republicans inverted the procedural steps that would have allowed them to enact their agenda too quickly for activists to stop them. But by reordering the agenda, they have unwittingly rendered largely useless the legislative tools that made the whole thing possible—like firing a gun before loading it.

Since the election, the threat of Obamacare repeal has never appeared more distant. But even if the entire effort falls apart, the dysfunction Republicans have invited into the legislative process leaves the country vulnerable to other calamities. Through sheer incompetence and avarice, Republicans could both squander their chance to eliminate the ACA and plunge the economy into chaos. This outcome isn’t inevitable, but unless Republicans recalibrate their agenda to match the reality of their political weaknesses, the chain reaction could easily end explosively.

Federal budget expert Stan Collender noticed the structural infirmity of the GOP’s legislative strategy almost two weeks ago. He offers a detailed technical explanation here, but for laymen, it makes more sense to look back to 2001, when Republicans last took power after losing the popular vote, and set about passing large, permanent tax cuts.

The arcane rules of the Senate gave them two ways to do this: Either with enough bipartisan support to overcome a filibuster, or through a complex budget process that would allow them to circumvent the filibuster. This second option, though, was only available if the tax plan didn’t create structural deficits in the long term. If they use the process to pass a straight-up deficit-financed tax cut it would automatically sunset after 10 years. Not permanent at all.

Figuring a trillion-or-so dollars of upward redistribution was better than none, Republicans picked option two, and 10 years later, President Barack Obama allowed the most regressive of those tax cuts to expire.

In 2017, Republicans want to avoid the trap of reducing tax rates only to see them spring back up in a decade. That means their tax bill will have to be revenue neutral, and that’s why they settled on repeal-and-delay without thinking through future complications. By ending the ACA’s benefits three years in the future, but zeroing out its taxes immediately, Republicans would lower the revenue baseline enough to make a separate, revenue-neutral tax bill feasible. The combination of the two would amount to a revenue-neutral tax bill, plus a massive, regressive tax cut financed by eliminating insurance subsidies for millions of poor and working class people. The reckoning (what to do when their insurance subsidies expired) wouldn’t come until after midterm elections.

When political support for this plan failed to materialize—when insurers threatened to leave the market, and beneficiaries became outraged—Republicans agreed to repeal the law and replace it in tandem. But that reordering of objectives knocked the foundation out from under the larger plan. They won’t have the votes they need to replace Obamacare unless they finance an alternative with similar benefits, which means they can’t eliminate the ACA’s tax increases by fiat, which means the revenue baseline will remain in place, which means any future tax reform package can’t be a boon to millionaires unless it expires in 10 years.

It is possible, as Brookings Institution congressional expert Sarah Binder told reporters Wednesday, to imagine Republicans abandoning ACA repeal in favor of a large, temporary tax cut, just like they did in 2001. That would come as a huge relief to the people turning congressional town halls into standing-room only affairs. But it would come with a huge risk: That Republicans, at the height of dysfunction, will find themselves unable to increase the debt limit.

Had the original plan worked perfectly, Republicans would most likely have increased the debt limit as a rider to their tax bill or their repeal of the ACA, circumventing the filibuster altogether. The collapse of that agenda would leave them with two terrible choices: They could increase the debt limit on their own, in conjunction with a tax cut bill that increases the debt itself by trillions. Or they could turn to Democrats, at least eight of whom would have to help them increase the debt limit as a standalone measure through the regular, filibustery order.

Either option entails a huge risk of failure. With a two-vote margin of error, Republicans going at it on their own could find themselves up against the summer deadline to increase the debt limit, but without enough votes to execute—particularly if the debt limit hike is part of a regressive tax cut bill that increases deficits dramatically.

Option two creates the potential for another debt-limit standoff. The difference is that in 2011 and 2013, Republicans had a majority in one house of Congress. Their obligation to help increase the debt limit stemmed from their partial control of government. Democrats have no such obvious buy in. If Republicans turn to them for help, Democrats will at least demand that the debt limit increase be large, and free of partisan policy riders. That might well send conservative Republicans scurrying to the exits, requiring more Democratic participation and increasing Democratic leverage.

But what if Democrats won’t help unless Republicans concede something? What if Democrats demand that the legislation eliminate the debt limit for all time? Or that Republicans create a bipartisan commission to investigate Trump’s ties to Russia and other conflicts of interest? Or an end to ICE raids and the defunding of the border wall? Or simply that Trump’s Department of Health and Human Services take steps to re-stabilize the ACA insurance markets?

In the political climate Democrats currently inhabit—in a climate of outrage over Trump’s racism, corruption, and viciousness—it’s very hard to imagine them saying “let bygones be bygones” and bailing out the GOP with an unreciprocated debt limit increase. They’re likelier to say, “Right yourselves, govern in the center, or raise the debt limit on your own.”

Neither of these scenarios guarantees a breach, and a default on the debt. But it increases the already-uncomfortable risk of both to a higher level than ever before, at a time when the onus to govern has passed from Barack Obama to Donald Trump, leaving basic competence at a historical nadir.

If Obamacare survives the next few months, liberals will have cause to celebrate. Then, just as quickly, they’ll have an even larger crisis to confront.