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Inside the GOP’s Health Care Debacle

Donald Trump had heard enough about policy and process. It was Thursday afternoon and members of the House Freedom Caucus were peppering the president with wonkish concerns about the American Health Care Act—the language that would leave Obamacare’s “essential health benefits” in place, the community rating provision that limited what insurers could charge certain patients, and whether the next two steps of Speaker Paul Ryan’s master plan were even feasible—when Trump decided to cut them off.

"Forget about the little shit," Trump said, according to multiple sources in the room. "Let's focus on the big picture here."

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The group of roughly 30 House conservatives, gathered around a mammoth, oval-shaped conference table in the Cabinet Room of the White House, exchanged disapproving looks. Trump wanted to emphasize the political ramifications of the bill's defeat; specifically, he said, it would derail his first-term agenda and imperil his prospects for reelection in 2020. The lawmakers nodded and said they understood. And yet they were disturbed by his dismissiveness. For many of the members, the "little shit" meant the policy details that could make or break their support for the bill—and have far-reaching implications for their constituents and the country.

"We’re talking about one-fifth of our economy," a member told me afterward.

Ultimately, the meeting failed to move any votes. Two Freedom Caucus members—Brian Babin and Ted Poe, both of Texas—told the president that they had switched to yes, but their decisions had already been registered with White House vote-counters prior to sitting down with Trump. (Their colleagues didn't appreciate the gesture, feeling that Babin and Poe were trying to score points with the president at their expense.) Upon returning to Capitol Hill, the Freedom Caucus gathered in a meeting room inside the Rayburn office building, discussed Trump's admonitions to them and took another vote. The tally had not changed: Of the group’s roughly three dozen members, two-thirds remained opposed, with only five or six of those saying they were "soft" in that stance.

The president had been working on many of them individually in recent days, typically with what members described as "colorful" phone calls, littered with exaggerations and foul language and hilariously off-topic anecdotes. In some cases, the pressure worked. Jim Bridenstine, a Freedom Caucus member and longtime problem for the Republican leadership, agreed to back the bill after conversations with Trump and other administration officials. (It wasn't necessary to remind Bridenstine that he was a leading candidate to become NASA administrator, and would likely hurt his chances by voting against the president.)

But by and large, Trump's first attempt to corral the Republican-controlled Congress—and particularly the Freedom Caucus, a rambunctious, ideologically charged collection of GOP legislators who have long refused to fall in line behind the party's leadership—failed miserably. That failure played a major role in the collapse of the American Health Care Act almost exactly 24 hours after their meeting at the White House, and now, as Trump warned, threatens to paralyze the president's first-year policy agenda

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Trump full remarks on the Obamacare repeal failure

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White House launches damage control after health bill collapses

White House

‘This is 100 percent a Ryan failure,’ one senior administration official said after the Obamacare repeal bill was pulled on Friday.

By Matthew Nussbaum and Tara Palmeri

03/24/17 02:58 PM EDT

Updated 03/24/17 06:07 PM EDT

President Donald Trump did “everything” he could to repeal and replace Obamacare, the White House said again and again on Friday.

Apparently everything was not enough.

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Damage control was underway at the White House even before the Obamacare repeal bill was pulled from the House floor Friday afternoon, an effective waving of the white flag on one of Republicans’ top priorities. And as the White House sought to prevent any blame from landing on Trump, House Speaker Paul Ryan emerged as a prime target.

Press secretary Sean Spicer, who on Thursday expressed complete confidence in the bill’s passage, sounded a different tune early Friday afternoon, as Ryan huddled at the White House with Trump to discuss a way forward hours before the decision was made to call off the vote.

“The president has been working the phones and having in-person meetings since the American Health Care Act was introduced,” Spicer said. “He’s left everything on the field when it comes to this bill.”

And even while Spicer said Ryan, too, had done his best, others in the White House were ready to see the conservative speaker take the blame for the humiliating defeat.

“This is 100 percent a Ryan failure. His plan and Tom Price is his guy,” one senior administration official said after the bill was pulled.

Others in the White House sought to downplay any signs of Trump-Ryan tension, saying the White House merely underestimated the animosity between factions within the Republican conference, specifically the hardline Freedom Caucus and moderate Tuesday Group.

“Trump feels like Ryan did everything right,” one senior administration official said. “He has no ax to grind with Paul Ryan. … He’s ready to move on to other things.”

Speaking to reporters in the Oval Office, Trump hewed to a message, saying the failure was the fault of the Democrats, an odd claim given the Republicans control Congress. He thanked Ryan for his work, and said he remained confident in Ryan’s ability to lead the House.

“Paul really worked hard,” Trump said, but was also quick to tout his own efforts.

“I worked as a team player,” he said.

And he added that he did not consider the bill perfect.

"Well I think we could have had things that I would have liked more, and if we had bipartisan [support], I really think we could have a health care bill that would be the ultimate,” he said.

When asked if he felt “betrayed” by the Freedom Caucus, Trump responded: "No, I'm not betrayed. They're friends of mine. I'm disappointed because we could have had it, so I'm disappointed. I'm a little surprised, to be honest with you. We really had it. It was pretty much there within grasp. But I'll tell you what is

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Tax reform next? Maybe not.

Republicans’ spectacular failure to repeal and replace Obamacare threatens to sabotage another cornerstone of their agenda, tax reform — because of simple math.

The GOP was counting on wiping out nearly $1 trillion in Obamacare taxes to help finance the sweeping tax cuts they’ve got planned for their next legislative act. And now it’s unclear where all that money will come from.

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“This does make tax reform more difficult, but it does not in any way make it impossible,” House Speaker Paul Ryan said at a news conference on Friday. “We will proceed with tax reform.”

While Obamacare taxes will remain, he said, “We’re going to fix the rest of the tax code.”

But losing the revenue from Obamacare repeal is fueling speculation that Republicans will settle for just tax cuts rather than sweeping reform.

President Donald Trump on Friday seemed to lament not taking up tax reform first.

"Right now we'll be going for tax reform, which we could have done earlier, but this really would have worked out better if we could have had some Democrats' support. Remember this, we had no Democrats' support. So now we'll go for tax reform, which I have always liked," he said.

But now Republicans will have to look elsewhere for money to meet their top targets: bringing the corporate tax rate down to 20 percent from 35 percent, cutting the top individual tax rate to 33 percent from 39.6 percent, and generous new writeoffs for business investments.

“We’re going to analyze the complete impacts here. But clearly it makes a big challenge even more challenging," said House Ways and Means Chairman Kevin Brady (R-Texas).

Even if the Republican health care plan had succeeded, tax reform wasn't going to be a cakewalk. The House, Senate and businesses are already clashing over key elements of a House GOP plan, notably a provision known as "border adjustability" that would tax imports but not exports.

Ultimately the issue centers on House Republicans’ desire to pass a tax overhaul that would raise the same amount of money as the current tax code. Eliminating taxes tied to the Affordable Care Act would have made reform cheaper by pulling down the budget baseline of how much money was expected to come in to the federal government.

About $43 trillion in revenue is expected from the 2018 federal fiscal year through fiscal 2027, according to projections from the CBO, a sum that includes money raised by ACA taxes.

“That is a huge issue,” a corporate tax adviser and ex-House staffer said on condition of anonymity to protect client sensitivities.

But Republicans may have to trim their sails. Rather than dramatically rewriting the tax code, they might fall back on their bedrock policy of tax cuts, perhaps with a smattering of policy changes and money raisers to offset some of the cost.

Earlier this week, analysts at Goldman Sachs put the odds of a tax cut at 80 percent, even if the Obamacare replacement plans collapsed.

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Trump gets tamed by Washington

Donald Trump crowed for months he would strike a "terrific" deal on health care. His ambitions ended in a brief phone call Friday afternoon, in which Speaker Paul Ryan told him the truth: He was nowhere close.

The businessman president, who sold himself to tens of millions of disillusioned voters last year as the only outsider who could tame a broken capital , ended his first confrontation with lawmakers overmatched, outmaneuvered and ultimately empty-handed.

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“We learned a lot about some very arcane rules,” Trump said in the Oval Office soon after the defeat of his effort to undo President Obama’s health care law.

It was actually the most basic fact of Congress that set Trump back: the majority rules. And despite a 22-seat margin for error in the House, Trump had proved unable to corral support for a plan to repeal the law, one of Trump’s key campaign pledges.

His failure to advance legislation through a single chamber of Congress controlled by members of his own party — despite it being a cornerstone of the Republican agenda for more than half-decade — casts doubt both on Trump’s much-bragged-about dealmaking skills and the GOP’s path forward.

“It's a black eye for the speaker and the president,” said Scott Reed, the top strategist of the U.S. Chamber of Commerce, which supported the measure.

The setback, described in interviews with multiple senior administration and congressional officials, was especially humiliating because Trump was sunk not by Democrats but by his inability to ride herd over the same rebellious element of the Republican conference that previously bucked Speaker Paul Ryan’s predecessor John Boehner out of his job. Most House Republicans have never served in the majority under a Republican president and it’s unclear how in the future they will cobble together a governing coalition.

“The Republican Party is still operating as an opposition party,” said Josh Holmes, a former chief of staff to Senate Majority Leader Mitch McConnell, who added, “If they can't break the fever…it says an enormous amount about the prospects of tax reform, infrastructure and some sort of immigration proposal.”

Trump himself seemed almost relieved to move on from the health care fight, even as other White House officials were fretting about the long-term implications of what one senior White House official called a "clear embarrassment for us."

The president himself wasn’t nearly as upset about the health care defeat as he was about the size of his inauguration crowds, Attorney General Jeff Sessions’ decision to recuse himself from the investigation into Russia’s meddling in the 2016 election or the repeated legal setbacks on his travel-ban executive order, which has been blocked by multiple courts. “No bullshit, I think he's actually pretty comfortable with the outcome. He wants to move ahead and do taxes,” another senior White House official said.

But tax reform — which no president or Congress has been able to tackle successfully for more than three decades — is no easy task, especially as Republicans had

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