Trump Retreat on Health Care Deals Body Blow to His Agenda

(Bloomberg) -- The gambit was straight out of a corporate deal-maker’s playbook: President Donald Trump told House Republicans that it was now or never to repeal and replace Obamacare and demanded a vote by Friday. No more negotiations.

It was a bluff, and a stubborn band of Republican lawmakers called him on it. Now Trump’s been struck with a humiliating defeat on his first major legislative test, and it’s a body blow that calls into question whether he can move his agenda through Congress, including proposals on tax reform and infrastructure spending that helped propel a stock market rally since his election.

The disintegration of the Republican healthcare plan also undermines Trump’s deal-making reputation and emboldens factions in Congress to challenge him at every turn.

“Failure is a very damaging thing politically,” Douglas Holtz-Eakin, president of the conservative American Action Forum and a veteran Republican policy adviser, said in an interview before a vote on Republican healthcare legislation was canceled. “I don’t see how you recover.”

The White House had staked its success on Trump playing the role of “closer.”

Earlier Friday, with the vote still on the congressional calendar, White House spokesman Sean Spicer told reporters that the president had been working the phone aggressively with lawmakers. He said the media were being “so negative” for asking about the measure’s prospects.

Nothing Withheld

“He has left everything on the field when it comes to this bill,” Spicer said. “The president and his team have committed everything they can to making this happen.”

But the billionaire Manhattan property mogul, celebrated in his election campaign as a genius deal maker, met his match in a former small-town real estate agent, Representative Mark Meadows. Although Trump tried to lay some of the blame for failure on a lack of support from Democrats, it was the North Carolina Republican who held together a group of House conservatives. Their demands for concessions were what ultimately scuttled a Trump-backed plan to replace President Barack Obama’s signature health care law.

A week that began with FBI Director James Comey placing Trump administration under a cloud by confirming an investigation into ties between his campaign officials and Russia ended with a dramatic rebuke from a Congress his own party controls. And the losses are piling up for a president whose candidacy was based above all on success: his travel ban is stymied in the courts, his budget was declared dead on arrival even by leading Republicans and protests overshadowed his inauguration.

No recent president has lost in Congress on a key agenda item so early in his term. Congressional Democrats backed President Bill Clinton on his 1993 budget reduction act despite politically dangerous tax increases. President George W. Bush won passage of his No Child Behind education law and tax cuts in 2001. Obama prevailed on his economic stimulus and later the health care law Trump tried to repeal.

“We all learned a lot,” Trump told reporters in the Oval Office after the bill was pulled for lack of support. “We learned a lot about loyalty. We learned a lot about the vote-counting process.”

‘Totally Open’

After relying solely on Republicans in Congress to draw up and shepherd the healthcare legislation, Trump said it couldn’t pass without any support from Democrats. He said he is now “totally open” to working with Democrats to refashion healthcare changes. Trump said they will be forced to negotiate as Obamacare withers.

Trump and his Republican allies may yet revive the health care legislation if they can assemble a coalition around a new plan. But the unraveling of the House bill demonstrates the daunting challenge in simultaneously satisfying enough of the competing factions in the health care debate, a task that is only harder in the Senate, where there is a smaller Republican majority and more procedural obstacles.

Presidential Momentum

“The presidency is like a freight train,” said David Kochel, a 30-year veteran Republican political operative who was chief strategist for Jeb Bush’s presidential campaign. “It’s big and heavy and has a lot of power. When it has momentum, it’s hard to stop. When it’s stopped, it’s hard to get going again.”

The benchmark S&P stock index has surged more than 9 percent since Trump’s election fueled by expectations Trump will deliver deregulation, infrastructure spending and corporate tax cuts. Most of that program requires overcoming powerful opposition in Congress.

The White House scrambled to save the healthcare legislation for days. Trump, Vice President Mike Pence and top White House officials met with dozens of members of Congress and conservative groups to try to broker a deal throughout the two weeks since the bill was introduced. They tried last-minute policy concessions and offering perks. Trump turned to Twitter to try to rally followers to pressure lawmakers.

Spicer declared Wednesday that the administration had no “Plan B” for the legislation’s failure: the House bill would be the only opportunity to repeal Obamacare.

Yet well in advance the Trump camp was already laying groundwork for a political contingency plan: Blame House Speaker Paul Ryan.

Blaming Ryan

“I think Paul Ryan did a major disservice to President Trump, I think the president was extremely courageous in taking on health care and trusted others to come through with a program he could sign off on,” Chris Ruddy, CEO of Newsmax and a long time friend of Trump’s, said in an interview last week. “The president had confidence Paul Ryan would come up with a good plan and to me, it is disappointing.”

Ryan has long been unpopular among Trump’s core group of supporters who during the campaign viewed him at best as unimportant and at worst the poster child of the kind of establishment, scripted politician they were fighting against. But in public, Trump had only words of appreciation and praise for the speaker.

“I want to thank Paul Ryan,” Trump said at the White House after the speaker canceled the vote on the healthcare bill. “He worked very, very hard.”

Trump, Pence and top White House aides had been working closely with Ryan on the health bill since the election and were heavily involved in negotiations to try to come up with a deal, according to a senior Republican aide. That leaves questions about whether they will be able to pull the Republican party together on other tough issues.

In many ways, Trump is experiencing early in his presidency a lesson eventually learned by his predecessor Barack Obama, also a relative newcomer to the capital who came into office confident of changing the political climate: In a closely divided country, Washington gridlock doesn’t break easily.

To contact the reporters on this story: Shannon Pettypiece in New York at spettypiece@bloomberg.net, Jennifer Jacobs in Washington at jjacobs68@bloomberg.net.

To contact the editors responsible for this story: Alex Wayne at awayne3@bloomberg.net, Mike Dorning, Joe Sobczyk