Trump's Path to 218 House Votes
We learned last week that Congress will not be completely pliant to the new Administration on the topic of policy. This was certainly a surprise to the Administration - but also a surprise to me. In all of my thoughts, written and otherwise, I had put much weight behind a well-known rule: Presidents usually get what they want.
Now, it helps if you don't bring the least popular policy proposal in recent memory. And you can also question the tactics used by both the Administration and House Leadership. But the sheer size of the revolt was astounding - if Trumpcare had come up for a vote, I expected at least 50 Republican "No" votes. That is nearly 25% of all GOP House Members.
In Volume 10, I give my view: Trump and Ryan would have to be crazy to try major health reform again. Presumably they aren't crazy; hence it won't happen. Any reports to the contrary need to be taken with a lot of salt. But if Trump failed to get enough votes for an action his party had literally spent 7 years campaigning on, what does that mean for the rest of his agenda? Nobody knew healthcare was hard, but everybody knows that tax reform will be.
Normally, the House has 435 seats, meaning it takes 218 to pass any bill. Currently, Republicans control 237 seats, Democrats 193 and 5 are vacant. Using my crystal ball, I'm going to assign 3 of the vacant seats to the Republicans and 2 to the Democrats, making the eventual makeup 240-195. Therefore, any bill can only lose 22 GOP votes and still pass - unless it wins some Democratic votes. We are going to look at this problem through the lens of the House Caucuses. You've heard a lot about the House Freedom Caucus and Tuesday Group recently, but there are others.
House Caucuses - formally "Congressional Member Organizations" - are voluntary organizations that Representatives (and some Senators) join, usually in order to form blocs with specific policy goals. There are a lot of Caucuses; the official list has 32 pages, including the critical Congressional Bourbon Caucus. Yes, that's a real thing that an incredibly small amount of your tax dollars go to. Most caucuses are like the Bourbon Caucus - focused on a specific issue or interest group. There are also racial/ethnic/religious caucuses (e.g. Black, Hispanic, Sikh). But what we care about here are the Ideological Caucuses.
Today, both parties are informally sorted into groups based on their ideological orientation within their party. There are no rules about joining these groups; most Members are in one, but not all. Some are in more than one. So far as I know, none of these groups restrict membership, but I don't know what would happen if a Member tried to cross de facto party lines. The major Ideological Caucuses, in order from most liberal to most conservative, are:
Congressional Progressive Caucus: 75 members. Founded by Bernie Sanders, it began as the liberal wing of the Democratic Party. It has in the past produced the "People's Budget," the only major budget proposal which legitimately balances (i.e. without unspecified ending of deductions or spending cuts).
New Democrat Coalition: 46 members. Moderate Democrats. Loosely affiliated with the Democratic Leadership Council and from there to Bill Clinton.
Blue Dog Coalition: 18 members. Conservative Democrats, with an ideology fairly consistent with European center-right parties. Notably, they don't take a caucus-wide position on social issues.
Tuesday Group: 50 members. The most moderate of the GOP ideological caucuses. As the GOP caucus overall has moved further right, they have explicitly tried to counterbalance this change.
Main Street Partnership: 71 members. Slightly more conservative than the Tuesday Group, the two groups have significant membership overlap. For the below analysis, I'll treat these as a single group.
Republican Study Committee: 172 members. Very conservative Republicans. Its alliance with major outside groups like the NRA and the Heritage Foundation has been one factor in its membership group. It has become large enough to often be synonymous with GOP leadership or the GOP caucus as a whole.
House Freedom Caucus: 29 members. A smaller group for those who find the RSC to be too liberal; the two groups share significant membership. There are also Tea Party and Liberty Caucuses, which have a similar ideological bend. I'll again treat these as a single larger group.
This is part of a larger point - determining membership in the caucuses isn't trivial. I believe that only the RSC publishes a membership list, and even theirs can be quite fluid. But to a first order of magnitude, we'll say that the Congress consists of the following:
From this chart, there are two obvious statements worth making. First, if the GOP caucus holds together, it can pass what it wants. They can even afford a few defections. Second, holding just the RSC and either the moderates or the ultra-conservatives is not enough. This was the lesson of Trumpcare; moving the bill to the left or right would have caused the HFC or TG to balk respectively, killing the bill. In trying to thread this needle, they created a bill awful enough to lose both groups. With that out of the way, let's look at some ways to cobble together 218 votes.
Hold together the GOP caucus. This is what everybody expected Trump and Ryan to do, and it remains the path of least resistance. But, we've already seen the pitfalls of this approach for complex legislation. There is often a price to pay for one-party bills. Just as the attack ads for Trumpcare supporters put fear in GOP Members, there are equally tough votes ahead on tax reform, trade and immigration policy.
Put Blue Dogs in a tough spot. The RSC, TG and BDC add up to exactly 218 votes between them. The Blue Dogs are fairly conservative; could they be won in exchange for concessions?
Move to the center. Build a "working coalition" of around 100 Democrats and 150 Republicans. In this setup, there would be a lot of air cover as virtually all bills would be bi-partisan. However, this would require either House Dem leadership on board, or more than half of their caucus bolting.
Move to the left. Start working on the Democrats' agenda and dare moderate Republicans to vote against it. This would require Democratic leadership to be on board. Maybe he should have hurled fewer personal insults at their leaders - even if he didn't plan to do actually govern as a Democrat, he lost the ability to use this strategy even for leverage.
For what types of legislation could Trump hold together his entire caucus? I actually think the list of major items is fairly limited. Real tax reform - i.e. including some type of border tax adjustment - would be hard to pass with only GOP votes. To start with, four GOP Members from Arkansas, representing the world's largest importer, are presumably against it. Other GOP Reps also have importers in their district too. Without a border tax adjustment, the next choice direct rate cuts going mostly to top earners (similar to Bush tax cuts of 2001 and 2003). Tax cuts for the top 0.01%-0.1% should bring the entire GOP together, but his Treasury Secretary has specifically said this won't happen. Border walls, infrastructure spending, cuts to important programs like the NIH - all of these have members on the record in opposition, and they haven't even been proposed yet.
And in the current political climate, Trump is going to have a difficult time winning any Democratic votes. With the AHCA, he didn't even try. His approval rating among Democrats is less than 10%, maybe less than 5%. There are a few Democratic House members in districts that Trump won, but I doubt there are many in districts where he is above 45% overall approval today. [Note: I don't have by-district Trump favorability data, this is a guess]. Attacks on President Obama and other Democratic leaders don't help either. There is just no incentive to co-operate unless it is really an item from their agenda. One possibility: small steps to strengthen Obamacare. Trump has threatened to destabilize the system, and is actively working to do so. The plan is to blame it on the Democrats in order to bring them to the table. This is basically just blackmail - it's unlikely to work. Republicans control the government, they will be blamed for problems. If Trump realizes this, one could see him supporting measures to strengthen the healthcare system. These measures might pass on a bare majority consisting of all Democratic and a few GOP votes.
There are two critical upcoming items that we know will be hard to pass. First, funding for the Federal Government runs out on April 29th. The spending bill to prevent a shutdown will likely total over $1 trillion - a headline many GOP representatives will not like. One would think large spending cuts on necessary programs could pass the House on party lines. Unfortunately these cuts fall disproportionately on the Trumpy parts of the country; West Virginia reps won't like end the Appalachain Regional Commission. It was easy to vote to kill these programs under Obama when it was purely symbolic; it will be more difficult now. Failing to fund pass spending bills would be bad; that is a "government shutdown." But if it were only for a few days, the damage would be contained - a small drag on the economy (not to lessen the difficulty for furloughed Federal workers or others who depend on them).
Worse, we will reach the Debt Ceiling towards the end of the year, when extraordinary measure have run their course. We will talk more about the Debt Ceiling in later pieces, but start with a simple premise. We've never breached the Debt Ceiling, so we don't know if it would be really, really bad - or way worse. I am a Debt Ceiling alarmist; I think it comes from my time trading. A critical assumption of financial markets is that the United States will always repay its debts. If it failed to do so, even for one day, I think it would lead to an unraveling of short-term debt products. Banks rely on this type of funding - less so than before the crisis, but still in very large amounts. A Debt Ceiling breach could easily cause bank defaults as bad or worse than we saw in 2008. Non-bank companies also rely on this type of funding for their day-to-day operations; without them, they can't do those operations. That includes the companies that deliver the food to your grocery store, operate your local hospital, and generate electricity for your home. I don't want to put a probability on it, but a debt ceiling breach could lead to you living in the 21st century with 18th century infrastructure. Overnight.
There are those who think the Debt Ceiling is no big deal. And they could be right, I don't say that my scenario is a certainty in a Ceiling breach. But it is certainly plausible - so I'd rather not play with fire.