Desperate for a major policy victory that would salvage a first year pockmarked with scandals, firings, and legislative strikeouts, Donald Trump is pushing hard for major tax cuts. Sort of.
One might imagine a typical strategy for passing tax reform would include making prime-time speeches, focusing public attention on the plan’s necessity, and leaning on key lawmakers to iron out the details. But Trump is not a typical president, and his strategy has been the opposite of everything in that previous sentence. His few speeches on tax policy have been vague and rambling. His recent public statements on Twitter have focused national attention on NFL protests and NBC reporting, rather than tax rates or benefits. And he has personally attacked (and sustained personal attacks from) GOP Senator Bob Corker, putting Senate Republican cooperation in jeopardy.
But the most bewildering aspect of Trump’s sales pitch might be the fact that he consistently undercuts his own case for tax cuts.
A popular argument for tax cuts is that they boost a sluggish economy. When Ronald Reagan passed his first tax cut in 1981, he said it was to stimulate a depressed economy. When George W. Bush passed his first tax cut in 2001, he said it was to stimulate a recessed economy. When Barack Obama passed his stimulus act, which included tax benefits, he said it was to stimulate an obliterated economy.
But when Donald Trump argues for tax cuts in 2017, he says it is to stimulate an economy that is, by his own reckoning, already swinging (thanks to him).
Stock Market has increased by 5.2 Trillion dollars since the election on November 8th, a 25% increase. Lowest unemployment in 16 years and..— Donald J. Trump (@realDonaldTrump) October 11, 2017
It would be really nice if the Fake News Media would report the virtually unprecedented Stock Market growth since the election.Need tax cuts— Donald J. Trump (@realDonaldTrump) October 11, 2017
This is another example of Trump struggling to move beyond the habits that served him so well as a candidate. His dual instincts for superlatives and self-glorification have muddled his message on American greatness: Everything is greater than ever—all me, by the way—and only one thing will make it great, again: tax cuts.
As a matter of economics, Trump’s tax pitch is also nonsensical. “Virtually unprecedented stock market growth” is not a problem for tax cuts to solve. This is particularly true of the plan that the Trump administration proposed, which delivers about half of its benefits to the richest percentile that already owns about half of private stock.
As Trump has said, the right tax cut can improve an already-improving economy. But Trump’s plan seems exquisitely designed to ignore America’s economic challenges and accentuate its unequal returns. Record corporate profits and unprecedented stock valuations, juxtaposed with weak median income growth this century, together make a strong case for a completely different law, one that would direct tax benefits toward the middle class. But that plan isn’t coming from the White House. Just as Trump couldn’t sell health care reform because, by Republicans’ own estimation, he refused to learn the details, Trump can’t sell tax reform for the same reason.
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