Budget Reconciliation Could Be the Beginning of the End of the Republican Party

“Presidential campaigns are like MRIs for the soul,” said David Axelrod, Barack Obama’s former campaign strategist. I believe a corollary is that the budget reconciliation process is like an MRI for the soul of a political party.  

The filibuster-proof process often begins with assumptions of party unity on major issues members and activists, only to discover fissures festering under the surface. 

In 2017, Republicans found out the hard way they were not united around repealing the Affordable Care Act. After that reconciliation bill dramatically failed on the Senate floor with John McCain’s famous thumbs down, Republicans recovered with passage of a different reconciliation bill on the issue that had long kept the GOP together: tax cuts. 

Eight years later, Donald Trump is again president, Republicans are again in control of both chambers, and they again struggle to reach a consensus around health care. The House budget resolution—nonbinding legislation but a necessary step in the reconciliation process—instructed the committee with jurisdiction over Medicaid to come up with $880 billion in spending cuts. But the Senate version did not follow suit, and several House Republicans signaled they wouldn’t vote for Medicaid cuts that large in the final bill.  

It is not surprising that Republicans still lack unity on health care. The Affordable Care Act remains popular, but improving health care is a complicated subject, and complexity is not a strong suit of the modern GOP. Trump ran in 2024 claiming to have only “concepts of a plan” regarding health care, an unintentionally farcical acknowledgment that there was little political upside in offering health care policy details.  

It is surprising that Republicans dove back into the health care thicket by making potentially unpopular Medicaid cuts a central focus of their budget reconciliation bill. And more surprising than that their other focus—taxes—is not uniting the party as it used to. 

The Washington Post reported earlier this week: 

President Donald Trump’s inner circle is weighing whether the White House should back raising taxes on Americans earning more than $1 million per year as part of the GOP’s 2025 tax legislation, according to two administration officials and three other people briefed on the matter.  

While the prospect of a tax hike has gotten a largely chilly reception among Republicans on Capitol Hill, Vice President JD Vance and budget director Russell Vought have expressed openness to the idea in internal administration deliberations and are viewed as supportive, said the people, who spoke on the condition of anonymity to describe private talks. Stephen K. Bannon, who served as the president’s chief strategist during his first term, has been publicly urging Trump to endorse the plan in part as a way to defang Democratic attacks on the GOP as the party of the rich. 

The Republican Party’s branding as the party of tax cuts has already been besmirched by Trump’s tariffs, which, in effect, are taxes on imported goods. But no Republican in Congress voted to impose those tariffs; Trump did it alone. The prospect of voting for an income tax hike is far more combustible for the Republican rank-and-file, so much so that Trump quickly put out the fire.  

Asked by a reporter on Wednesday if he supported a millionaire’s tax, Trump replied, “I think it would be very disruptive because a lot of the millionaires would leave the country.” This is a bogus excuse. The Wall Street Journal noted, “To escape taxation, wealthy Americans would need to renounce their citizenship and pay capital-gains taxes as if they sold their assets. Even if they did that and moved abroad, they would still pay U.S. taxes on U.S.-sourced income.” But Trump’s public rationale is less important than the position itself. He appears unwilling to instigate an intra-party confrontation over taxing the wealthy.  

However, the mere introduction of the idea may prove to be a fatal toxin injected into the party’s bloodstream. 

Low taxes are not just an issue for the Republican Party; it’s the defining issue. As I cited earlier this month, the late conservative commentator Robert Novak once declared, “God put the Republican Party on Earth to cut taxes. If they don’t do that, they have no useful function.”  

But Steve Bannon, the former Trump administration adviser and MAGA movement leader, has promoted a reorientation of the GOP away from the “donor class.” In January, Bannon told conservative New York Times columnist Ross Douthat, “I don’t want to increase taxes on the wealthy just because I believe in soak the rich. Maybe I do, but I would not want to be part of policy. I want to do that to get our financial house in order because we just can’t keep borrowing a trillion dollars every 100 days.”  

(Bannon also told Douthat that he supports “significant spending cuts, starting in defense.” In keeping with his supposed working-class allegiance, “Medicare and Social Security are off to the side.” On his podcast in February, Bannon offered a mixed message on Medicaid cuts: “Get into that discretionary spending. Get into the Pentagon. Get into Medicaid. You got to be careful because a lot of MAGAs on Medicaid … You just can’t take a meat axe to it though I would love to.”) 

Bannon could be discounted as just a loud guy with a podcast. But as the Washington Post story suggests, he appears to have a sympathetic ear with Vice President Vance, who is positioned to shape the post-Trump GOP. The Post reported: “Vance’s openness to higher taxes in some circumstances has provoked alarm among some conservatives given his strong position to claim the GOP presidential nomination in 2028. In 2023, Vance said he opposes further cuts to the corporate tax rate, which the president’s 2017 tax law lowered from 35 percent to 21 percent. While in the Senate, Vance also explored bipartisan measures to close tax loopholes for large businesses.” 

And a few members of the House suggested they were willing to raise taxes on the wealthy. NBC News reported that Freedom Caucus member Chip Roy of Texas said in an interview, “he’s open to any policies that prevent new deficits, including allowing higher tax rates.” Representative Andy Harris, the Freedom Caucus chair, told Fox News, “Before the Tax Cuts and Jobs Act, the highest tax bracket was 39.6%; it was less than $1 million. Ideally, what we could do – again, if we can’t find spending reductions – we say, ‘OK, let’s restore that higher bracket, let’s set it at maybe $2 million income and above’ to help pay for the rest of the president’s agenda.” 

These voices don’t come close to representing most of the House Republican Conference. Speaker Mike Johnson surely was speaking for the majority when he told Fox News on Wednesday, “I don’t think we’re raising taxes on anybody. What we’re trying to do is prevent the largest tax increase in U.S. history.”  

The second sentence was likely a passive-aggressive shot at Trump’s tariffs, revealing the intra-party tensions and intellectual incoherence, threatening the party’s fundamental identity. Bannon argues for higher taxes on the wealthy to reorient the party away from the “donor class” and toward the “working class.” But Bannon is a huge supporter of Trump’s tariffs, which are regressive tax hikes that are disliked by a majority of all Americans.  

Both sides of the GOP tax divide are trying to do the impossible. Bannon’s populists want to balance the budget, but, as Bannon told Douthat, “we’re not going to do it on the back of the little guy.” So he supports spending cuts and tax increases on the wealthy, but also tariffs and, to some degree, Medicaid cuts.” Traditional Republicans like Johnson want to balance the budget, but they refuse to raise taxes on the wealthy, which pushes them towards politically dangerous, draconian spending cuts for popular programs like Medicaid and (for some) Social Security and Medicare. On Wednesday Bannon, recognizing that he has likely lost the argument for a tax increase on the wealthy, vented on his podcast, “The simple math is: Unless you raise the taxes at the upper bracket, the math doesn’t work.” 

Both camps seem to have forgotten the politically astute lesson from former Vice President Dick Cheney: “Deficits don’t matter.” Cheney’s running mate, George W. Bush, didn’t worry about deficits, pushed through traditionally conservative tax cuts, and tacked on a not-so-conservative expansion of Medicare to cover prescription drug costs en route to a re-election victory in 2004—the only time a Republican presidential candidate won an outright majority of the popular vote since 1988. (Then, in his second term, Bush tried to privatize Social Security, and his popularity sank.)  

Prioritizing extreme deficit reduction forces Republicans to take positions that in one way or another threaten their coalition of business-class and working-class voters. This is why a budget reconciliation bill isn’t quickly and neatly falling into place.  

In the worst-case scenario, Republicans’ reconciliation bill effort will collapse, and in the ugly aftermath, their intra-party rifts will harden into existential schisms. More likely, a reconciliation bill with tax cuts of some sort will be stitched together, and a veneer of unity will remain for the time being. But Republicans will have to worry about how long that unity can last.  

The last major party to disintegrate was the Whig Party, which formed in opposition to Andrew Jackson’s aggressive exertions of executive power. Once Jackson was long gone and slavery became the dominant political issue, the Whigs no longer had a reason to exist, and so they didn’t.  

Since the Civil War, Republicans and Democrats have found ways to adapt to changing political circumstances—hot wars, cold wars, economic crashes, civil rights movements—and stay relevant. Today’s Republican Party is in a delicate position because the changing political circumstances are its own president and his allies violating its longstanding principles and losing public support in the process.  

In recent years, the GOP coalition has been held up by trust in Trump’s economic know-how, devotion to tax cuts, and culture war fearmongering. The faction of “Never Trumpers” during the first Trump administration wasn’t significant enough to prevent Trump’s takeover of the GOP. But the first Trump administration delivered a significant tax cut package and a few Supreme Court justices, to boot. This time, Trump’s tariffs have undermined the first two pillars, and the open discussion of tax hikes on the wealthy further destabilizes the second.  

Is culture war fearmongering enough to justify and sustain a party’s existence? If not, then it won’t. 

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