Thoughts On Trump’s Tax Victory

Here are just a few thoughts on Trump’s tax victory.

  • This is what happens when you put a businessman in the White House. This is a complete victory for the President and the Democrats’ Waterloo moment.
  • The liberal base hates the President so much that there was no way that any Democrat could vote for this package, so they all voted in lockstep against it. That will be a significant problem for those Senate Democrats in Red States who are going to have to explain why they voted against a huge middle-class tax cut.
  • Democrats are making the gamble (and it is a gamble) that most of their voters won’t notice the extra money in their paychecks. After all, that is what happened when President Obama passed his minor tax cut as part of his stimulus plan.
  • The problem for President Obama is that he paired that tax cut with a regulatory plan that constricted economic growth and slowed job creation. To be fair, Mr. Obama had to contend with the financial crisis that increased unemployment of 10 percent. The Obama recovery was sluggish and slow, and many Americans didn’t have a paycheck from which to get their taxes cut.
  • Today, unemployment is historically low, which means more Americans pay taxes, which means that more Americans will notice that their paychecks are getting fatter with this pretty aggressive tax cut. Couple the Trump tax cuts with the Trump pro-business regulatory regime, and the result most likely will be brisker economic growth and higher wages.
  • This plan is unpopular now because most voters believe the rhetoric that this is a tax cut for the wealthy. And some richer Americans will get a tax cut, although many in New York and San Francisco (and in Washington DC) will get a slight tax increase. The American people do not want the wealthy to get a significant tax cut. So, for the time being, the polls numbers will continue to be bad for this legislation.
  • The centerpiece of this plan is the corporate tax rate cut. I worked on this issue as a consultant for a while, and I assure that this new law is far more generous to corporate America than they ever envisioned. Corporate America has a great opportunity to rebrand itself as being pro-worker by giving their employees a pay raise. If they don’t, this victory could prove to be short-lived. Bernie Sanders has already promised to repeal that provision should the Democrats take back the Senate. Giving senior executives and shareholders a bonus doesn’t count, sorry.
  • Republicans will need to market this plan and should spend some money educating the voters about it. If they can partner with H&R Block or other well-respected tax preparers and do workshops across the country (in each Congressional district) about how to get the most from this tax cut, that would be money well-spent, much better than any television advertising campaign.
  • Right now, Republicans are losing on the messaging war. According to the polls, voters don’t trust them on taxes and don’t give them any credit on the economy. Part of this is because the daily distractions that come from the Chief Executive. Part of this is because we live in a populist moment and people don’t trust the political class to do anything useful. That means they have to sell this plan like they have never sold anything else before.
  • Some in the media are likening this tax bill to Obamacare. You have a key Senator with brain cancer. You have the majority muscling through an unpopular bill in a partisan manner. You have the use of reconciliation. But in my mind, there is only one true commonality. The Democrats’ big lie. They lied when they said that if you like your health care you can keep it. And they are lying when they say that the Middle Class won’t get a tax cut. Both lies are easily disprovable, which is a huge problem for them. test
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