SPECTRUM: Trading the farm for ANWR

Barely anyone likes the tax reform package the U.S. Senate passed in the middle of the night last weekend. Even fewer know what the massive bill does – and that includes the lawmakers who voted it through. Senators received a 500-page revision of the legislation minutes before taking to the floor to give it an up or down. Late edits were scrawled in the margins, prompting Sen. Jon Tester (D-Montana) to angrily take to Twitter objecting to haphazardly handwritten late additions. “Can you tell me what that word is?” he said, visibly frustrated. “If you can you've got better eyes than me.”

I admit, I wear glasses. But I sure couldn't read it either. Because it was illegible. And yet, by the slimmest of margins and zero Democratic support, 51 senators gave it the go ahead anyway. Many the same politicians who lamented Obamacare's passage for the better part of a decade, objecting to comments from then-House Majority Leader Nancy Pelosi (D-California): “We have to pass the bill so that you can find out what is in it, away from the fog of the controversy.”

On Saturday morning, that fog was thick. A bill sold as a massive tax cut and a “great, big, beautiful Christmas present,” as President Donald Trump crooned, barely squeaked by – with Sen. Bob Corker defecting from the GOP. Alaska's two senators, Lisa Murkowski and Dan Sullivan, joined Rep. Don Young (R-Alaska) in support of it. It now heads to conference committee to iron out the major differences between the senate and house versions, which will also be a bit of a Herculean task. But if they can vote for a 500-page bill blind, I'm sure they're up for it.

Even had senators been given a few hours to read through the (legible) changes to the bill, that would take a hell of a lot of coffee and myriad sad-faced interns forced to wade through the literary swamp. Instead, the several Republicans going into the night still on the fence had to rely on their faith in sweeteners – the backroom pork added to curry their favor (or at least plug their nose). That was a lot of stink to get passed. The “Tax Cuts and Jobs Act,” as passed by the senate, flips progressive taxation on its head and hopes the rewards trickle down. This intended golden shower starts at the top one percent of households – those with incomes north of $750,000 – who will see their taxes lowered by about $28,000, according to the Tax Policy Center's analysis. Households with an annual income between $50,000 and $87,000 would save about $800, while households making $25,000 or less would save about $40. Over the next ten years, those savings will decrease incrementally due to individual tax income provisions, like state and local tax deductions, which are fully repealed in the senate version.

The $1.4 trillion dollar reform package represents the largest cut since President Obama ironed out a compromise to make the bulk of the Bush tax credits permanent in 2012, but it doesn't pay for itself. Beginning in 2019, the corporate tax rate (not the effective rate) will drop from its current rate of 35 percent down to twenty percent. The theory, says the Trump administration, is that large corporations will use the savings to expand and hire more workers. As the New York Times phrased it, the hope is based on the presumption that “when people in penthouses get relief, the benefits flow down to basement tenements.” Indeed, a rising tide can lift all boats, but it can also flood the bathroom.

Adding $1.4 trillion to the debt based on an expectation that companies will invest more in their workforce is hard to quantify, less count on. The last time this strategy was applied, back in 2004, multinational corporations with over $2.5 billion in cash abroad channeled the savings to investors. A Bank of America/Merrill Lynch survey taken last month showed that lowering the corporate tax rate would not go to investment, but instead into paying down debts, repurchasing stocks, and mergers and acquisitions – meaning, broadly, consolidation.

It's a giant bill that is going to drain a lot of money and likely fuel income inequality; not spur the next job boom. And that doesn't sound like a very good idea. Or, as Alaska's senior senator put it: “Tonight is a critical milestone in our efforts to secure Alaska’s future.”

Wait, what? Oh. Sweeteners.

Sullivan didn't take much coddling to get on board. He's voted in lockstep with the GOP. Murkowski, however, has recently become one of the more moderate voices in the senate and has been a deciding vote in opposition to legislation during the first year of Trump's tenure. But with wavering support for tax reform jutting up against a presidential promise to get the bill passed before the holidays, failure was not an option. Trump is all out of room for another embarrassing legislative loss. So he gave Murkowski, Sullivan, and Young (but, mostly, Murkowski) a golden calf to go along with the shower. A piece of legislation Murkowski successfully passed out of the Senate Energy and Natural Resources Committee was added to the tax reform bill. The amendment would allow for portions of the Alaska National Wildlife Refuge (ANWR), known as the 1002 Area, to be opened up for oil and natural gas drilling. And that's something every politician elected to statewide office in Alaska has been gunning for since it was first designated as a federally protected area back in 1960.

Other sweeteners, not aimed at Murkowski, include the repeal of a 1954 ban prohibiting political activism by tax exempt religious organizations. In the House version, fetuses are accorded new legal rights. Yet another House provision makes it more difficult for (legal) immigrants to claim refundable tax credits. You know, the normal stuff that goes into a tax reform package.

It took a spectacularly expensive and wrongheaded mangled mess of a bill to get it done, but at least now we know what it takes to get a senator – who railed against the “backroom dealing” she alleged was at play during the debate over Obamacare – to sign off on a 500-page greatest hits album of backroom deals. Oh, and a more-than-troubling overhaul of the nation's tax system that will hurt those already hurting, reward those already luxuriating, and force states to either pay more in taxes ot cut services in order to offset changes to state and local property tax deductions.

The ANWR measure was aimed directly at Murkowski, as well as an attempt to assuage budget hawks who one would presume might balk at a $1.4 trillion experiment in “voodoo economics,” as President George H. W. Bush once put it. An estimate from the Congressional Budget Office pegs investment in energy production in ANWR could generate $5 billion over the next decade. That's some impressive coinage, so long as one doesn't look at the rest of the bill.

But, in fairness, it seems readily apparent that no one looked at bill. Not with any logic or a calculator, evidently. It's a massive bill literally swept through in the dead of night, now headed to a conference committee (including Young, meaning that ANWR provision isn't going anywhere) where lawmakers will pick and choose which horrible things stay or go. I hope they argue a lot, get tired, and go home. Otherwise, this will cause long lasting effects on a generation of Americans, offered with a giant, shortsighted stamp of approval from Alaska.