Obtaining support for the legislation was extremely difficult. It required a huge partisan push to ensure that nobody in the party defected. It cost one Democrat, Marjorie Margolies-Mezvinksy, her seat. Republicans chanted “Bye-bye, Margie” when the freshwoman switched her vote to save the bill. But the legislation stood as a major achievement for the new administration. “After all, after 12 years of the most rapid increase in deficits in our country’s history,” the president said when signing the bill, “the national debt went from $1 trillion to $4 trillion in only 12 years. This is the largest deficit-reduction plan in history, with $255 billion in real enforceable spending cuts in very specific areas, not generalized hot air and tomorrow’s promises but specific cuts.”
In January 2013, President Obama allowed the Bush-era tax cuts on the top income bracket to expire, which imposed an effective tax hike on wealthier Americans, as part of a deficit-reduction agreement with the Republican House of Representatives. The highest income tax bracket went back up to 39.6 percent. While Obama’s back had been to the wall politically since the Tea Party came to town in the 2010 midterm elections, the president found the political room that he needed to maneuver to take this step with the nation obsessed about the rising costs of government. He achieved this goal and won reelection at the end of the year. As the Princeton sociologist Paul Starr explains in my forthcoming edited collection, President Barack Obama: A First Historical Assessment, the tax increase had hugely progressive effects and was part of a broader agenda that reduced economic inequality.
To be sure, it is true that the full impact of massive slashes in the tax rates is hard to reverse. Over time, we don’t really get back to where we once were. We now live in the post-Reagan era where the corporate and individual rates will never return to the historic highs of the early Cold War era in the 1950s, with top rates over 90 percent.
But it is incorrect to say that large federal deficits only move politics rightward When it comes to taxes, the truth is that deficits have often been the basis for government to do one of the most liberal things possible: raise taxes to pay for government.
The impact of the Trump tax cuts can very easily be the same. Right now, if Democrats play their cards right, they are looking at a rosy future. The polls indicate that the 2018 midterms could be a good year for the party, with the possibility of flipping control of both branches of government, while the outlook for 2020 also looks good if President Trump keeps up with his current antics. If the deficits reach the level some expect as a result of this hugely unpopular tax package, the image of the GOP as a party incapable of governance, which has already taken huge blows as a result of the Tea Party and the current administration, will only get worse, giving Democrats a chance to show that they can do a better job balancing the books—even if that requires more sacrifice from the nation.
Although Democrats certainly have a great deal to be unhappy about with the first major legislative achievement from the Trump presidency, they would be foolish to give up on restoring a more robust and progressive tax system. Ironically, the tax cuts that just moved through Congress might be the very reason they can make the case for the need on higher taxes once again in the coming future.