Republicans' last-ditch effort to repeal Obamacare is really all about tax cuts

When Republicans say healthcare reform, they really mean tax cuts, predominantly for wealthy Americans and corporations.

That’s the key takeaway from President Donald Trump and Congressional Republicans’ frantic, behind-closed-doors attempt to slash healthcare expenditures by repealing Obamacare and denying coverage to millions of Americans.

The move also suggests Trump’s vaunted plan to slash corporate and individual taxes, the age-old trickled-down secret sauce he plans to deploy to goose economic growth to his 3% to 4% target, is in serious jeopardy.

Trump and his team argue their tax cuts, which independent think tanks have shown would largely favour the rich, are crucial to getting the US economy out of the slow-moving 2% growth rate that has marked much of the economic expansion following the Great Recession of 2007-2009.

Already, the top political figures who are supposed to lead the tax cut effort “remain a long way apart on the details, including the size of corporate tax cuts, how much high earners should benefit from income tax cuts, and what type of base broadening and revenue raising measures, if any, should be included,” writes Jeremy Lawson, chief economist at Aberdeen Standard Investments, in a research note.

One of the reasons Trump decided to act on healthcare first is that not only did he make it a key campaign promise, but the cuts were also expected to reduce Medicaid expenditures by some $US800 billion. This would allow Republicans to cut taxes while satisfying the party’s fiscal hawks.

After two high-profile failed attempts to repeal President Barack Obama’s healthcare law, which broadened coverage to millions of Americans, failed miserably amid extreme public pressure, Republicans are again at it, this time citing a September 30 Congressional deadline as a reason for reviving the zombie legislative effort.

But the real reason is surely taxes, which has always been the central tenet, and point of commonality, between Donald Trump and the Republican Party.

Trump already appears to be abandoning, after just modest political pressure, initial proposals for a reduction of the corporate tax rate to 15% and the elimination of the estate tax, which were key to his plan.

The president’s personal fallout with top economic adviser Gary Cohn, once slated to become Federal Reserve Chair, also appears to have compromised the chances of a coherent tax initiative.

Apparently, the stealth Republican healthcare overhaul has some chance of passing despite the past two failures, and even though opposition is raging both in Washington and among consumer and public interest groups.

Many political commentators have argued tax cuts are what Republicans do best, and thus the policy should be a slam dunk for a Republican president with a Congressional majority. However, there is sufficient discord among the Republican ranks, just as there has been in healthcare, ensuring they need Democratic support for any major bill. The president’s alienating stance has made such support nearly impossible, even if his recent flirtation with Chuck Schumer and Nancy Pelosi raised hopes for cooperative action in some areas.

More likely, the rapprochement with Democrats will simply exacerbate the intra-Republican divide, making significant changes to the tax code even more of a pipe dream.

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