How Donald Trump will win with a tax cut — and Democratic support

The repeal of the Affordable Care Act has gone down to defeat. Democrats are cheering. Trump and Republicans have now failed at everything significant they’ve attempted, except for confirming a single Supreme Court Justice. Trump will now find success with a middle-class tax cut, an effort that will remake the political framework of Washington.

Let’s review what we’ve learned.

• Donald Trump wants “wins.” He needs to get something through Congress to prove he can govern.
• He doesn’t care about details. His comments on health care — for example, that a young person can get it for $12 a year — demonstrated a lack of interest or knowledge of the details. (“Nobody knew that health care could be so complicated.”)
• Trump perceives that the path to success is through his base, which is middle-class working people with conservative values. Think auto worker, construction worker, farmer, store owner, factory owner. These are his people, and he’s comfortable with them.
• For Trump, loyalty is a one-way street. While he demands loyalty from others, his own loyalty extends to his family only. Loyalty to anybody else has limits. Ask Jeff Sessions, Sean Spicer, or Chris Christie.

Trump is capable of learning from events. He has likely learned two things from the health care failure. First, while his base ostensibly cares about health care, the details aren’t as relevant for them as they were for Republican ideologues. And second, trying to pass anything controversial or complex with only Republican votes in this Congress is virtually impossible.

Taxes are a winning issue for Trump

As he has hinted, Trump’s next move will be to push for a tax cut on the middle class. Tax reform is brutally difficult because the tax code is filled with deductions, exclusions, and incentives, each of which has a lobby bent on preserving it. But a tax cut could win over some Democrats, if it benefits enough middle-class and working poor people. Based on what he and we have learned from the health care failure, here’s what I expect will happen:

• Trump will care that the tax cut reduces middle-class tax rates and rates on business. He won’t care about any of the other details.
• He will throw Republican priorities under the bus if he can win with Democrats.
• He will use Twitter to reveal and shame lobbying interests and senators and representatives from either party who aren’t backing him.
• He won’t care if the tax cut adds to the deficit. That’s the congressional leadership’s problem. If he can get 60 votes in the Senate, the bill doesn’t have to be “revenue neutral.” He’ll promise to make it back with cuts in wasteful programs later.

Any plan that can pass the congressional gauntlet will be chock full of nasty stuff. For example, taxing businesses at lower rates than individuals creates a perverse incentive for people to create “pass-through” business structures to shelter their money from taxes. That’s a detail that Trump won’t care about. He cares about a win, and about feeding his base. This type of tax cut delivers both.

Why this will happen

What I’ve described is far from certain.

But for Trump, there is no other path forward. A narrow tax plan that mostly benefits rich people might pass Congress with all Republican votes, but it won’t help Trump’s cause or elect more Republicans in 2018. If the legacy of Trump is infighting, nastiness, and lack of legislative accomplishment, his support will continue to erode. His key staff — Communications Director Anthony Scaramucci and advisors Steve Bannon and Jared Kushner will all see the logic in this; Chief of Staff Reince Priebus will go along or lose influence (or get booted altogether).

Another potential scenario involves impeachment, but that’s a very slow process that’s unlikely to come to a head until 2019. Dangling a tax cut for Democrats could slow it further. If Trump dumps Special Prosecutor Robert Mueller, then all bets are off.

What happens next?

If Trump can accomplish this tax cut by the end of 2017, the political world will look very different.

1. With an actual legislative win, Trump will shift the news cycle off of relentless criticism of his campaign’s Russian entanglements, political infighting at the White House, foreign policy that has ostracized America, and his outrageous and provocative tweets and speeches. While the Wall Street Journal‘s editorial page may find the tax cuts less generous to rich folks than they’d like, CNN, The New York Times, and left-leaning outlets will have to admit that he’s accomplished something that benefits their audiences.
2. The tax cut may be a win for Trump, but not necessarily for Republicans in Congress. Congressional Republicans will enter the 2018 midterm elections in turmoil. Republicans who failed to vote for the package because of lobbyists’ pressure will face challenges from Trump-wing Republicans in primaries, and then from populist Democrats in the general election.  A middle-class-backing coalition will form on economic issues with members of both parties. This populist caucus will hold the balance of power in both houses of Congress.
3. Trump’s staff, Democrats, and moderate Republicans will revisit health care. They’ll announce a plan to fix the problems with the Affordable Care Act. That plan may actually succeed. (Trump will call this solution “Repeal and Replace II” even if it doesn’t actually repeal much.) The populist caucus’s biggest obstacles will be Paul Ryan in the House and Mitch McConnell in the Senate, because neither of these Republican leaders wants to see solutions that are engineered by Democrats and prop up Obamacare.
4. Democrats and Republicans will continue to retreat to their respective corners on social issues like transgender bathroom policies and Black Lives Matter. But economics is where Trump can win, and he won’t care who his dance partners are.