Did The Tax Cuts Sink The Republican House Majority?

Up until November 6th, Republicans claimed the Tax Cuts and Jobs Act of 2017 would provide the party a message of success to run on in the era of Donald Trump.  Instead, the evidence suggests Donald Trump actually did more for his party (at least in the Senate) than the tax cuts did. The proof is in where Democrats made their gains.

Even with solid majorities in Congress and a President of the same party, nationwide legislative sausage-making is messy.  The Tax Cuts and Jobs Act is no different.  While the law did result in a majority of Americans seeing their taxes drop (businesses a whopping 40%), not every American benefited.

The reason is because of what is known as the SALT (State and Local Tax Deduction).  The tax law, because of the way it was passed (see rules for budget reconciliation) was only able to add a specific amount of debt over 10 years ($1.5 trillion).  Thus, certain trade-offs had to be made to allow for this.  The biggest was certainly the State and Local Tax Deduction.  Specifically, the deduction is now capped at $10,000 under the new law.

For most Americans this did not have a significant impact.  But, in high tax (ie. blue states) a lot of wealthy Independent and Republican voters felt the impact of these tax changes.  Again, the proof is in where Democrats made gains.  In New Jersey (a state with one of the highest property tax rates in the country), Democrats went from a 7D-5R Congressional delegation to an 11D-1R delegation.  In high tax New York state, Democrats gained three seats.  In dark blue California, Democrats out-performed expectations and won a likely seven seats.  For the first time since 1940, Orange County will not send a single Republican to Congress (the GOP lost all four seats in the county they held).

Now, this is not to say the only reason Republicans lost Congress is because of the Tax Cuts and Jobs Act.  Certainly, a number of other variables played a major part.  Democrats recruited solid candidates, they raised a ton of dough and they played on voters (particularly suburban voters) uncomfortableness with Trump’s behavior and temperament.  In red Senate seats these factors were muted but in the purple. suburban districts in which the new House Democratic majority resides it is not a stretch to say it gave them some pretty big bonus points.

Still, the results, even in middle America, have to be considered pretty disappointing for Team Red.  I mean, when you are winning deeply red seats by less than ten points that says a lot about how exciting your policy agenda was.

By contrast, Trump seemed to drive his base to the polls in a number of red states resulting in the GOP adding to their Senate majority.  With the political landscape, such as it is, likely to ride into 2020, the GOP’s new power-base might reside in the upper chamber where smaller states have equal say to the California’s and New York’s of the world.

The saving grace for the GOP might be in state legislatures.  Sure, the party lost some blue legislatures but for the most part their majorities, aided by 2010 census redistricting, held their majorities strong.  As a result, the Democrats base of power still mainly resides in the House.

That said, if anything, it suggests the 2020 elections will not be fought over economic policies but rather the cultural (and economic) fault lines apparent in our system.  This shrinks GOP opportunities for gains.  At least in the Trump era where the cultural issues are not the bread and butter ones that have traditionally benefited Republicans.




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