gotchanewsdaily.com 
CNN
—
As they try to enact President Donald Trump’s agenda, congressional Republicans face the same political risk as a generation ago: that tying together tax cuts and spending cuts will backfire.
They are reprising the legislative strategy that sent the party to a stinging defeat in the defining political showdown over the federal budget during the 1990s.
This year, under pressure from conservative House Republicans, the GOP is planning to include substantial cuts in federal spending to the legislation to extend the tax cuts passed during Trump’s first term.
That marks a stark departure from the party’s strategy when initially passing Trump’s tax cuts in 2017, as well as the two big tax reductions approved in 2001 and 2003 under George W. Bush. In each of those cases, the Republican-controlled Congress approved major tax cuts without tying them to spending cuts, which are invariably much more controversial.
The last time congressional Republicans directly linked spending cuts to tax cuts was in 1995, when party leaders led by Newt Gingrich precipitated an extended budget battle with then Democratic President Bill Clinton. Eventually, Republicans were forced to abandon that effort after Clinton turned public opinion against their plan by arguing the GOP was cutting programs for middle- and working-class families to fund tax cuts for the rich.
Republicans today don’t face the danger that Trump will veto a bill that simultaneously cuts spending and taxes, as Clinton did in 1995. But, congressional Democrats are already echoing Clinton’s arguments: that the tax reductions are tilted toward the wealthy, while the spending cuts would rollback popular programs that mostly benefit families of more modest means, such as Medicaid.
House Republicans are structuring their budget plans to minimize their exposure to that political risk, according to reports about their emerging legislative strategy. The party is contemplating a plan that would assert, in a break from traditional budgeting rules, there is no fiscal cost to extending the Trump tax cuts because that amounts to continuing existing policy. Simultaneously, according to The Washington Post, they want to set relatively modest targets for spending reductions in the initial budget resolution that they hope to begin advancing soon.
But it’s unclear whether that approach will satisfy the House conservatives demanding substantial deficit reduction. And even if it does, it will still leave the GOP defending hundreds of billions in spending cuts in legislation that also provides big tax savings for the most affluent.
If Republicans persist with an agenda that links tax cuts with spending cuts, “I think it’s a huge opportunity” for Democrats to regain momentum, said Doug Sosnik, Clinton’s top White House political adviser during his 1996 reelection campaign.
In fact, many signs suggest Democrats are banking on the upcoming fight over spending and taxes more heavily than any other issue to reverse their sagging fortunes and break Trump’s momentum. “From the numbers we’re seeing, it is the kind of issue that has the power to tip the scales in the midterm elections,” said Geoff Garin, a longtime Democratic pollster.
Republicans followed a common approach for each of the two large tax cuts they passed under Bush and the sweeping tax reductions Trump signed in late 2017. Each time, the GOP passed the legislation through the so-called reconciliation process, which allows a bill to clear both chambers with a simple majority vote and thus prevented Democrats from using the Senate filibuster. And each time, Republicans focused on sugar, not spinach –passing the tax cuts without attaching to the bill any offsetting cuts in federal spending programs. (The 2017 bill saved some money by repealing the mandate for individuals to purchase health insurance included in the Affordable Care Act.)
Bobby Kogan, senior director of federal budget policy at the liberal Center for American Progress, says that history suggests that after the bruising 1995 fight with Clinton, Republicans decided they would emphasize tax cuts while they held the White House and then escalate their pressure for spending cuts when a Democrat did. The deficits precipitated by the Bush tax cuts, he argued, directly led to the demands that Republicans pressed on President Barack Obama for big spending cuts after they won the House in 2010.
“I think they learned their lesson about connecting tax cuts to spending cuts to say instead, ‘We’ll do the popular stuff under the Republican administration and then we’ll force the unpopular cuts under a Democratic administration,’” said Kogan, who previously served as a senior Democratic aide on the Senate Budget Committee.
But some conservatives in the House have taken a different lesson from the three major GOP tax cuts of the 21st century. For them, the lesson from the GOP’s recent experience has been that if tax cuts pass alone, spending cuts never follow.
Rep. Chip Roy of Texas, a leader in the House Freedom Caucus, has been one of the most vocal critics of the GOP’s approach under Bush and the first Trump term. In an interview with a San Antonio television station last month, he complained that it has become “very typical of Republicans” to “jam through a tax cut bill without spending restraint and without the serious policy changes that we know we need to put in place.” Roy called any reconciliation bill that cuts taxes but not spending “the traditional kind of swamp game” and said that his “message to my Republican colleagues” was to “cut spending or get put in the ashbin of history.”
In a lengthy statement on the House floor around the same time, Roy made arguments usually heard more from Democrats. He dismissed claims from other Republicans that extending the Trump tax cuts would pay for themselves by generating so much economic growth, or that their impact on the deficit could be erased by changing the methods the Congressional Budget Office uses to calculate their cost.
“I believe that we should make permanent the Trump tax cuts from 2017,” the Texas Republican said flatly. “What I do not believe in is making up numbers. What I do not believe in is magic fairy dust that says the budget will magically balance if you cut taxes and never cut spending. Because that is simply not true.”
The cost of the GOP’s tax agenda this year could be enormous. Their plan includes extending the tax cuts for individuals passed under Trump in 2017, which will otherwise expire at the end of this year, as well as writing into law some portion of the many further tax cuts Trump pledged during the campaign, particularly ending the taxation of tips, overtime and Social Security benefits. The Congressional Budget Office has put the price tag for extending all the Trump tax cuts at around $4.6 trillion for the next decade (including interest costs), while the non-partisan Committee for a Responsible Federal Budget has projected that implementing all of Trump’s other promised tax cuts would raise the total bill to around $10 trillion.
Though Roy has repeatedly insisted that any tax cut bill should be revenue neutral, no Republican leader appears interested in offsetting that entire cost. Echoing Trump’s claims, the congressional GOP will likely project that a substantial portion of the lost revenue will be offset by receipts from higher tariffs on a variety of imports. And they may lowball their projected cuts in the initial budget resolution they must pass to trigger the reconciliation process.
But even with those limitations and qualifications, the pressure from House conservatives has the GOP contemplating tying their tax cut bill to much bigger spending reductions than the party risked in their tax plans under Bush or Trump. Budget experts point out that any cuts identified in the initial budget resolution represent only a floor designed to hold the party together through this initial stage of the process: Congress can cut more than the resolution authorizes, and likely will need to cut much more to hold support from the conservative budget hawks in the House GOP. In addition, many budget experts believe there is no chance the Senate parliamentarian will allow the GOP to use the streamlined reconciliation process for a package that claims no cost for extending the Trump tax cuts; such a ruling would intensify the pressure for greater spending reductions.
Trump has emphatically ruled out cuts to Social Security or Medicare. As a result, in the options House Republicans have circulated, their largest potential targets include the clean energy subsidies Congress approved under President Joe Biden and an assortment of aid programs for working- and low-income families, such as federal food assistance.
The single biggest pot of money the House GOP has focused on is Medicaid, the joint federal-state program that provides health care for 72 million recipients, primarily the poor, low-income working families and seniors. Republicans are exploring options to block grant the program, shift more of Medicaid’s cost to the states (particularly for recipients added through the program’s expansion under the Affordable Care Act), or to impose work requirements on those receiving benefits.
Last Friday, Trump disavowed any intention to cut Medicaid either. But he left open a large loophole by indicating he would accept reductions that address waste or abuse — a rhetorical cover that could be stretched over any of the House GOP’s proposed options. During his first term, Trump backed proposals to convert Medicaid into a block grant and severely cut its funding.
Attaching any of these big spending cuts to the tax cut bill could present the GOP with many of the same challenges they confronted in their epic fiscal showdown with Clinton.
The GOP’s landslide victory in the 1994 midterm election swept the party into control of the Senate, provided them their first House majority in 40 years and left Clinton reeling just two years into his presidency. Gingrich, the new speaker, became the dynamic and bombastic face of the “Republican revolution.” Steamrolling over concerns from more traditional Republicans – led by then-Senate Majority Leader Bob Dole – Gingrich steered the new GOP majority toward an explosive budget confrontation with Clinton.
In November 1995, both the Republican-controlled House and Senate passed a reconciliation bill that simultaneously cut taxes by $245 billion and spending by nearly $900 billion over the next seven years. Gingrich engineered a government shutdown that he expected would force Clinton to accept the package.
Instead, Clinton vetoed the plan in December and accused Republicans of funding tax cuts for the rich by slashing four core programs that benefited average families – Medicare, Medicaid, education and the environment. (Or, as White House aides dubbed it at the time, “M2E2.”) The extended struggle through January 1996 reversed Clinton’s political decline: his approval rating in Gallup polling consistently moved back past 50% for the first time since early 1994. And in trial heat polling, he established a lead over Dole, the eventual GOP nominee, that he never relinquished. Dole eventually forced Gingrich to back down and reach a deal with Clinton, but the damage was done: Left virtually for dead after the GOP’s 1994 rout, Clinton cruised to a comfortable reelection victory in 1996.
“If you look, the polling in January ‘96 was the results in November,” said Sosnik, the White House political adviser at the time. “Nothing changed. The whole election, I think, was decided by that fight at the end of ‘95.”
Democrats’ best hope for recovery?
Few Republicans seem much concerned about the history of this decisive political defeat. But many Democrats believe that precedent could provide the party its best chance to recover before the 2026 midterm election.
Tom Daschle, who served as the Democratic Senate leader during the 1995-96 budget confrontation, told me that Republicans today are forgetting the lessons of that fight at their own risk. “Without question it complicates the situation dramatically” to try to sell the public on tax cuts if they are explicitly linked to spending reductions, Daschle said. “There’s a reason why they didn’t do it before.”
Daschle said the best argument Republicans have in the coming fight is to convince the public that extending the 2017 Trump tax reductions isn’t a further tax cut, but merely a means of avoiding a tax increase. Against that case, Daschle said, Democrats will need to prove creative and consistent in portraying the Republican blueprint as a plan to redistribute income upward by cutting programs for working families to fund tax cuts that primarily benefit the wealthy and corporations.
“It’s really going to be who is more disciplined on building the narrative that is most compelling, and I think it’s an open question,” Daschle said. “But I think Democrats have some real potential here to make a good case.”
Republican pollster Kristen Soltis Anderson said that the public response to the coming fiscal battle will probably turn less on general attitudes toward balancing the budget or cutting taxes than on voters’ perception of how the ultimate decisions affect them personally.
“‘Diffuse benefits, acute costs’ is key to understanding this,” Anderson, a CNN contributor, wrote in an email. “The fiscal health of the country is an important issue, but one that most people don’t think they feel day to day. (A notable exception is the way voters connected government spending with inflation toward the end of the Biden administration.) The taxes someone personally pays, or the benefits they personally receive, are what will drive public opinion.”
One key dynamic shaping those attitudes will be the public perception of Medicaid.
During the 1995-96 budget fight, Republicans generally felt confident they could portray Medicaid as a welfare program for the poor — a posture many in the party continue today through their demands for imposing work requirements on recipients. But since the ACA expanded eligibility for Medicaid to those earning up to 138% of the federal poverty level (about $22,000 annually for an individual), the program has grown to cover far more people who are already working in low-income jobs that don’t provide health insurance.
Over 21 million people now receive coverage through the Medicaid expansion and, especially in states between the coasts, many of those are Whites without a college degree — the cornerstone of the GOP electoral coalition in the Trump era. Medicaid funding has also become indispensable to hospitals and other health care providers in ruby-red rural areas, where fewer people than in metropolitan communities receive health insurance through their employers.
All of this means that any meaningful cuts in Medicaid will inevitably hurt core Republican constituencies. In recent national polling by KFF, a nonpartisan health care think tank, over three-fourths of all Americans expressed a favorable view of Medicaid; Democrats (87%) or independents (81%) viewed the program most favorably, but even so, so did 63% of GOP partisans. Over three-fifths of all Americans in the poll expressed resistance to reducing Medicaid funding.
Cutting Medicaid “is a different calculation politically than it was 10 years ago,” Daschle said.
Garin, the Democratic pollster, says that in his polling for the liberal advocacy group Protect Our Care, a significant majority of voters specifically reject the claim that Medicaid is a hand-out to the poor. “Voters don’t see Medicaid as a kind of welfare program or for somebody else,” Garin said. “They see it as health care for people who need it and deserve it.”
That view of Medicaid as a program that benefits seniors and the working- and middle-class underscores the peril for Republicans if they squeeze it to fund Trump tax cuts that analysts have consistently found provide greater benefits to the rich and corporations. “Americans do not want to give additional tax cuts to millionaires and billionaires, period,” Garin argues. “But the opposition to that becomes much more explosive when cutting taxes for rich people is part of a package with cutting health care and other programs for working families and seniors.”
Trump may intuitively understand this more than most congressional Republicans: As he has shifted the GOP coalition more toward lower-income voters who rely on government programs, he’s never shown real enthusiasm for reducing them. Looking over that history, Sosnik thinks that Trump eventually will knock the legs out from congressional Republicans if they tie too many spending cuts to the extension of his tax plan. “Is he prepared to pursue a set of policies that are not in his own political self-interest?” Sosnik said. “The next time Trump does something from a policy standpoint that hurts him politically will be the first time.” Trump may also remember that apart from the January 6, 2021, insurrection, his lowest job approval ratings during his first term came when he supported Republicans’ attempt to repeal the ACA in 2017.
The swift backlash last week when Trump’s short-lived freeze on federal spending disrupted Medicaid payments may have offered the GOP a preview of the turmoil ahead. Protect Our Care is already airing television ads against 10 House Republicans, warning that Congress intends to revoke health care for “veterans, seniors, kids with disabilities, everyday working people” while passing “another tax break for billionaires.”
That closely follows the playbook Democrats used in 2018 when they recaptured the House while stressing the effort by Trump and the GOP to repeal the ACA, specifically its protections for the millions of Americans with preexisting health conditions. In key respects, the Democrats’ position is weaker now than then: Amid the widespread public disappointment with the outcomes of Biden’s presidency, the party is facing highly unfavorable ratings from many voters. A battle with the GOP over health care spending and taxes may be the best chance for Democrats themselves to get healthy before the midterm election in 2026.
