THE MORNING PLUM:
In reality, what we will actually hear at this speech is the death rattle of whatever pretensions to genuine economic populism Trump has ever harbored, if any. Trump will make it official that this rhetoric is merely a disguise for the same old trickle-down economics we have heard for decades — confirming that his economic agenda is in sync with the very same GOP economic orthodoxy that he so effectively used as a foil to get elected.
Trump will not release details of his plan today. But we already know that the most recent version of his plan would shower most of their benefits on the wealthy and corporations. And the Wall Street Journal reports that this is what his plan is expected to do, quoting officials who say he will sell this as pro-worker, by claiming it will end the “rigged” economy he railed against during the campaign:
One of the officials said Mr. Trump would make a “very bipartisan speech” that would reflect Americans’ frustration that a well-connected few are reaping economic gains.“We’re going to end the rigged system,” said the official, echoing language used by groups backed by billionaire industrialists Charles and David Koch and contending that Americans understand how they would benefit if businesses prosper. “We’re going to build a tax code that really allows all Americans to have access to the American dream.”
Trump’s plan, then, will be sold as targeting the well-connected few. But Axios reports on a remarkable quote about this from another White House official, who was pressed on how exactly Trump’s plan will target the well-connected few, given that it is expected to slash the top rate and corporate rate and repeal the estate tax.
“How I would look at this, from an American worker’s perspective, it’s basically a ‘made in America tax,'” the official said of the business tax rate, adding that it would benefit workers to bring it down to “level the playing field” with the “rest of the world.” Officials added that Trump’s plan would “un-rig” the economy by ending “special interest loopholes that have only benefited the wealthy and powerful few.”
But the broad strokes of that formulation, despite its packaging in the rhetoric of economic nationalism, actually constitute trickle-down economics.
“That’s trickle down,” Steven Rosenthal, a senior fellow at the Urban-Brookings Tax Policy Center, told me today. “This whole notion that cutting taxes on rich guys and corporations is going to stimulate capital investment — that’s trickle down warmed over once again. We’ve seen this movie before. It always turns out badly.”
As the Journal notes, there are important unknowns about the plan, which is mostly being written by congressional Republicans. We don’t know how large the net tax cuts will be, because the plan could end various loopholes, though how and whether it would do this is another big question mark. (In this narrow sense, one could perhaps say the plan might produce a species of “un-rigging,” but the details will matter, and at any rate, it can do this while still massively benefiting corporations and top earners.) We also don’t know how the plan will impact the deficit, though you can bet it will blow it up bigly, or whether it will also cut taxes for the middle class, and if so, by how much.
But we do know what Trump’s previous plans have done. The Tax Policy Center analyzed his final plan during the campaign, by estimating the combined distributive impacts of both the individual and business tax cuts on households. The results were summed up by TPC’s Howard Gleckman in an email to me:
The Tax Policy Center estimates that half the benefit of Trump’s final campaign tax plan, including both the business and individual tax cuts, would go to the top 1 percent, who make $700,000 or more. Middle-income households would get about 6 percent of the benefits. To put it another way, the average tax cut for the top 1 percent would be $214,000 or 13 percent of their after-tax income while the average tax cut for a middle-income household would be about $1,000 or 2 percent of their after-tax income.
An analysis of the most recent White House plan yielded similar findings.
Rosenthal added that Trump’s planned sales pitch for the plan — that it would benefit American workers to make business tax rates more “competitive” with other countries — was built upon the same faulty assumptions that have long undergirded previous iterations of trickle down economics.
“The basic fallacy is that rich guys and corporations are paying too much,” Rosenthal told me. “But actually we tax capital lightly, and we tax corporations ineffectively. We have a top statutory rate of 35 percent. But our corporations pay a much lower rate — maybe half of that, depending on how you estimate it. They are paying an effective tax rate that is pretty competitive with our international competitors.”
Now, if Trump wants to make the case that huge high-end tax cuts will actually help workers, fine — let’s have that debate. But the point is that Trump is revealing once again that his populist economic nationalism — as he himself defined it — was largely a scam all along. It had several main components. Trump signaled he’d break from Paul Ryan-style limited-government conservatism by protecting social insurance programs and by pushing for massive infrastructure spending. He’d break with the GOP economic orthodoxy that has reigned since Ronald Reagan, by taking on economic elites and getting them to “pay more,” and by pursuing protectionist trade deals in the interests of American workers. He’d also protect their interests (or pretend to, anyway) by deporting undocumented immigrants and building a wall on the Mexican border.
Trump sold out the first with his failed health plan. The big-spending infrastructure scheme is nowhere in sight. And today he will use that same rhetoric to sell a tax plan that lavishes most of its benefits on the top. Sure, maybe Trump’s trade agenda will end up benefiting workers — we’ll see. But for now, his populist economic nationalism is pretty much dead, effective today. Just about all that’s left of it are the stepped-up deportations and the frantic bellowing about his Mexican wall to cheering rally crowds.
* TRUMP PROBABLY WON’T GET HIS WALL — AGAIN: ABC News reports that Rep. Mark Meadows (R-N.C.), the chair of the House Freedom Caucus, is now pushing for passage of a “continuing resolution” keeping the government open through 2017, due to the hurricane:
Meadows said he prefers a solution where government funding will continue through the rest of 2017, with a possible shutdown showdown involving the border wall not coming until December or January. He cited, in part, the need to keep government operations running in the wake of Hurricane Harvey.
This looks likely. Trump drew great roars of approval in Arizona when he vowed a government shutdown to get his wall. Will his base be able to bear the sight of Trump losing yet again?
* TRUMP PROBABLY CAN’T END NAFTA: Trump has been threatening to exit NAFTA, but Bloomberg Politics reports that he may not be able to do this without Congress and will find it’s much more difficult than he thought:
There’s no legal consensus whether the U.S. president can act on his own to end the tariff-free benefits of NAFTA without lawmakers’ approval. …The process would require giving Mexico and Canada six-months notice of America’s intent to withdraw … But the exit clause is an untested provision of NAFTA, so it’s unclear exactly what would happen after the clock runs down if there’s still no new deal. …withdrawal undoubtedly would trigger some serious pushback from lawmakers and lobby groups for farmers and car makers.
Trump may be threatening to pull out to increase pressure on Mexico and Canada to make concessions as part of a renegotiated NAFTA, but it’s not clear even that will work.
* DURING HURRICANE, TRUMP KEEPS FOCUS ON HIMSELF: Jenna Johnson observes that Trump has mostly discussed the power of the storm and his administration’s response, with little mention of the victims:
He has talked favorably about the higher television ratings that come with hurricane coverage, predicted that he will soon be congratulating himself and used 16 exclamation points in 22 often breathless tweets about the storm. But as of late Tuesday afternoon, the president had yet to mention those killed, call on other Americans to help or directly encourage donations to relief organizations.
So no “reset,” then?
* TRANSGENDER BAN HELD IN LIMBO: USA Today reports that Defense Secretary Jim Mattis is keeping the current policy (which allows transgender troops to serve) in place, pending a study by a panel of experts:
Mattis’ move buys time for the Pentagon to determine how and if it will allow thousands of transgender troops to continue to serve, whether they will receive medical treatment, or how they will be discharged.
It’s hard to say what this will mean in the long run, though it does appear to delay Trump’s directive and could ultimately result in Mattis advising against it.
* TRUMP, ARPAIO LIE ABOUT PARDON: Trump blames Barack Obama’s Justice Department for targeting Arpaio just before his reelection, and Arpaio calls that a “witch hunt.” Michelle Ye Hee Lee lays out the facts, showing there was likely little impact on his reelection. And:
It’s clear that the conviction was not tied to the ideologies of Obama’s political appointees at DOJ. Instead, the decisions to convict Arpaio of civil and criminal contempt came from the judiciary — two U.S. District Court judges.
The real victim here is the guy who serially abused inmates and violated the constitutional rights of Latino immigrants. But thanks to Trump, justice has now been done, by God!
* TRUMP VOTERS SOURING ON HIM: Democratic pollster Peter Hart conducted a focus group of Pittsburgh-area voters. NBC’s First Read crew reports on the results:
Asked to describe the president in a single word, participants called Trump “outrageous,” “dishonest,” “disappointing” “narcissistic,” “an abject disappointment,” “unique,” “not ready to be president,” “off the scale,” “crazy,” “unbelievable” and “contemptible.” Five of the group’s 12 members voted for Trump, and each expressed concern about his failure to dislodge D.C. gridlock – plus his habit of punching down on Twitter.
As Hart concludes: “What everybody said, either directly or indirectly, was that his presidency is about him and it’s not about us.” Sounds about right.
* AND BEHOLD THE INCREDIBLE SHRINKING PRESIDENT: Axios summarizes all the ways in which Trump is not getting his way:
- Speaker Ryan and Senate Majority Leader Mitch McConnell are going their own way on tax reform. Hill sources believe his original targets, including a 15% corporate rate, are dead.
- SecDef Mattis didn’t immediately embrace his full ban on transgender troops.
- His Justice Department won’t drop the Russia probe.
- Courts won’t allow his full Muslim ban.
- Mexico won’t pay for his wall.
- Congress won’t pay for his wall.
- The Senate won’t pass his promised health-care reform.
- Gary Cohn and Sec State Tillerson won’t tolerate his Charlottesville response.
- North Korea won’t heed his warnings.
- China doesn’t fear his trade threats.
- CEOs won’t sit on his councils.
- Mexico and Canada won’t bend to his will on NAFTA.
Now wait a minute. Trump is jailing more undocumented immigrants; might still succeed in keeping out desperate refugees; will likely rescind deportation protections for the “dreamers”; is busy shredding environmental protections; and pardoned a racist birther ally and rogue law enforcement officer because it thrilled people at a rally. Who says he isn’t winning?