Senate Republicans released a revised tax-reform bill yesterday. Our concerns with the first draft of the bill were with its changes to the individual tax code, and the new bill makes key improvements on that end. The most significant change is to repeal Obamacare’s individual mandate, a good idea that will require careful implementation.
Repealing the mandate will save the government money that it would have otherwise paid out in the form of health-insurance subsidies. That should reduce the amount by which tax reform will widen the deficit, but it almost certainly won’t save the more than $300 billion the Congressional Budget Office estimates it will. The CBO analysis relies on the faulty assumption that 13 million people would drop insurance coverage if the mandate were eliminated, and the agency itself has said it will soon be revising this estimate downward. Republicans should not pretend all the CBO’s projected savings will materialize while denying the coverage losses will happen; they should make sure their proposal sticks to their budget constraints even if savings from the repeal of the mandate are modest.
As it stands now, Senate Republicans have reportedly committed to passing the Alexander-Murray compromise alongside the tax-reform bill. When Alexander-Murray was first floated, it was a one-sided bill that was not worth conservative support, funding Obamacare’s cost-sharing-reduction payments and securing little in exchange. It may be worth including if it somehow helps wrangle the last few GOP votes for tax reform. But Alexander-Murray still does not do enough in the way of deregulation, and it should either relax the Obamacare regulations at the federal level or allow states more power to determine their own health-care systems. House Republicans, who are not bound by Senate deals, should accordingly propose a version of the bill with more aggressive deregulation.
Elsewhere, the tax bill expands the child tax credit to a proposed $2,000. Previous iterations of the House and Senate bills have merely restructured existing pro-parent features of the tax code, but this change actually expands them. That will provide most middle-class families with significant tax relief, and it assuages one of our chief concerns with the initial version of the bill.
Conservatives should not ignore the importance of keeping the federal deficit under control, nor the risks of repealing the mandate without broad-based health-care reform. But Republicans are taking important steps toward achieving a worthwhile goal, and their efforts are worth conservative support.
— Get insight from the best conservative writers delivered to your inbox; sign up for National Review Online’s newsletters today.