Well, the midterms are all but over and the results were predictable.  Democrats flipped 35 Republican seats in the House, with more likely to go blue as results are certified, easily eclipsing the 23 seats required to seize control of the lower chamber.  So with firm control, what is the House Democrat agenda? How will that play out with a Republican Senate and White House? Let us examine three key areas: taxes, health care and immigration.

Taxes

It’s no secret that Democrats believe that President Trump’s tax reform package – the Tax Cuts and Jobs Act – is bad policy.  They clamor that the majority of the cuts go to corporations and the wealthy.  Of course, they fail to acknowledge that the top 10% of income earners pay 70 percent of taxes and the bottom 45 percent pay zero income taxes.  Thus, it stands to mathematical logic that any tax cuts would of course benefit those who actually pay taxes.  Democrats also fail to discuss that the TCJA increased the standard deduction and the child-care credit, while adjusting marginal tax rates, resulting in an overall decrease in taxes for lower income levels.  What Democrats (relentlessly) seek is a tax structure where only the top sliver of the population fund the entire government, increasing further the rolls of those who pay no taxes.

Under current House rules, a 3/5 majority is required to pass any legislation that increases tax rates.  Democrats want to modify that rule to require a supermajority only for any increase in taxes on the bottom 80 percent of taxpayers.  That leaves the door open to raise rates on the top 20 percent with only a simple majority. However, such a rules maneuver could be detrimental to the Democrat dream of Medicare for All, which would require significant increase of payroll (Social Security and Medicare) taxes on all wage earners.  When asked at a recent press conference about the notion of raising taxes on the wealthy and corporations to offset further decreases on lower incomes, the president remarked that he was open to an “adjustment.”

It will be interesting to see if the Senate, with a narrow majority, will adhere to the conservative principle of not raising taxes, or if they will capitulate to moderate Republicans and Democrats who want to continue to shift more of the tax burden to the most successful in society.  For perspective, about 15 million of a total 320 million Americans foot 70 percent of the total tax tab.

Health Care

In a previous column, I predicted that health care would take the stage front and center after the midterms.  Premiums continue to rise, and will likely increase even further when the individual mandate ends (part of the TCJA) January 1, 2019.  Democrats, after their decisive victory to reclaim the House, are feeling emboldened and intend to “make ObamaCare better” by putting Medicare for All legislation to a vote.  In fact, many Democrats were swept into office by solely focusing on health care.  Moderate Democrats promised to protect ObamaCare while the Bernie Sanders and Democrat darling Alexandrea Ocasio-Cortez ilk want to implement all-in socialized medicine.

Even Mississippi’s own Republican Senator Cindy Hyde-Smith is sponsoring legislation to protect a key provision of ObamaCare, which prohibits insurers from denying coverage for pre-existing conditions – guarding Republican attempts to either change or repeal the prior president’s signature legislation.   Many Republicans and President Trump support this and another key provision of ObamaCare, restricting insurers from charging older, sicker people more than young, healthy people (community rating). This is an interesting pivot, as the promise to fully repeal ObamaCare was key to electing many current Republicans to office.  Once the legislative and the executive branches were in Republican hands, the expectation was that the prior president’s signature legislation would be repealed.  But numerous attempts to repeal/replace failed.  Now, ironically, seems many Republicans are working to protect at least part of the entrenched law.

Might we see some sort of compromise where the ObamaCare “goodies” are maintained, but the approach to funding Medicaid is changed – as a compromise?

Immigration

Arguably the most polarizing issue of all.   Democrats want fully open borders and amnesty for all illegals in country.  Republicans in Congress are *generally* aligned on building a wall and requiring illegals, including DREAMers (children who were granted renewable 2-year deferred action from deportation), to earn citizenship through the full legal process.

However, even throughout the campaign for the midterms President Trump promised a wall.  Who can forget the rally cry on the campaign trail, “Build that wall!”  The Democrat House isn’t likely to pass legislation to fund the wall – unless they get something in return.  Maybe they sign-off on wall funding if they get some form of amnesty, at least for DREAMers.

Should the House pass some sort of bipartisan package, sixty votes in the Senate would then be required to send such a bill to the President’s desk.  I would take a bet that a bill that includes at least limited amnesty plus funds for the wall has a chance to pass along bipartisan lines and find its way to the White House for signature. Will President Trump sign it or veto?

Politics, as they say, makes strange bedfellows. Well, one thing is for sure.  We are likely to test that pithy expression over the next two years. Hang on!