THE MORNING PLUM:
Sen. Sherrod Brown (D-Ohio) engaged in extended sparring with committee chairman Orrin G. Hatch (R-Utah) over who would benefit from the Senate bill, with Brown insisting that it fundamentally represents a tax cut for the rich and not the middle class. This drew an enraged response from Hatch, even though Brown’s argument was 100 percent correct:
Brown’s reference to an amendment offered by Sen. Ron Wyden (D-Ore.) at the beginning of the exchange is crucial to what transpired. That amendment would undo the tax cuts on corporations if wages don’t grow. The Senate bill would cut the corporate tax rate from 35 percent to 20 percent — permanently — and one of President Trump’s and the GOP’s chief stated rationales is that the move will unleash massive wage growth. The amendment called the GOP’s bluff for messaging purposes.
And it worked. Indeed, Brown’s questioning of this Republican argument is exactly what ticked Hatch off. Brown claimed that “this tax cut really is not for the middle class, it’s for the rich,” and that the GOP argument about tax cuts on corporations leading to higher wages is just a “good selling point.” Brown pointed out: “Companies don’t just give away higher wages just because they have more money. Corporations are sitting on a lot of money now. They’re sitting on a lot of profits now. I don’t see wages going up. Just spare us the bank shots.”
All this made Hatch angry. “I come from the poor people,” Hatch said. “And I’ve been here working my whole stinkin’ career for people who don’t have a chance. And I really resent anybody saying that I’m just doing this for the rich. Give me a break. I think you guys overplay that all the time, and it gets old. And frankly, you ought to quit it.” When Brown pushed back by suggesting that previous tax cuts for the rich haven’t produced the results Republicans are once again predicting, Hatch silenced him.
Now, Hatch was probably angered by the questioning of his motive — the idea that Republicans are disingenuously packaging a tax cut for the wealthy and corporations as a tax cut for the middle class. But whatever is in Hatch’s heart, this is exactly what the Senate bill does. It front-loads the benefits for non-wealthy people by making its various tax preferences and its cuts to individual income tax rates temporary and subject to expiration while making the corporate rate cuts permanent. It also ties tax brackets to an alternative inflation measure in a way that will result in out-year tax increases for everyone but the top 1 percent. The nonpartisan Joint Committee on Taxation has concluded that in 2027, most poor and working-class people will see a tax hike, while upper-income earners (who win out with corporate tax cuts, since they benefit wealthy investors and CEOs) continue to pay less.
Hatch, as other Republicans, claims to have “no intention” of raising taxes on lower-income people, meaning Congress will renew their tax cuts later. The suggestion otherwise got Hatch angry. But there is zero guarantee that this will happen, and indeed, this claim actually ratifies the objections of Brown and Democrats. It reveals in a backdoor way that the whole reason for making all these provisions temporary is to pay for permanent tax cuts on corporations, which is necessary to comply with the procedural need to avoid raising the deficit later — enabling Republicans to pass the bill with no Democrats. Indeed, the bill’s repeal of the individual mandate is also designed to cut health spending on less-fortunate people precisely to fund those corporate tax cuts — which shows, as Brian Beutler points out, that this bill partly represents another version of the massively regressive Obamacare repeal efforts that have already been defeated, this one just in a new packaging of grift.
As it happens, there is good reason to doubt Hatch’s motives — or, at least, those of the GOP more broadly. Multiple Republicans have admitted on the record that if Republicans don’t pass these tax cuts, their donors will stop giving them money. If Republicans wanted to cut taxes for the middle class, they could cut taxes for the middle class and remain within deficit and procedural constraints by limiting the bill’s massive giveaway to their corporate donors, which would not necessitate hiking middle-class taxes later. Yet Republicans aren’t doing that. Hatch claimed that pointing this out “gets old.” But this week’s Quinnipiac poll finds that Americans say by 59 percent to 33 percent that the GOP plan favors the rich at the expense of the middle class, which means they are on to the GOP game.
The bottom line is that Brown engaged with Hatch’s substantive case for the cuts by insisting they aren’t going to produce the wage growth Republicans promise, which happens to be an argument supported by many economists. But Hatch angrily shut him down anyway with an outpouring of high dudgeon about his own background and a mighty swing of his little wooden gavel.
* TAX BILL FACES TOUGH ROAD IN SENATE: While the Senate Finance Committee passed the Senate version of the tax-cut bill last night, the legislation still faces a difficult path in the full upper chamber, as The Post reports:
The gap between the measure’s treatment of corporations and individuals has given moderates pause. … Sen. Susan Collins (R-Maine) this week reiterated her stance that it’s “a mistake” to attempt to alter the health-care law as part of the tax effort. Several other GOP senators, including Bob Corker (Tenn.), John McCain (Ariz.) and Lisa Murkowski (Alaska), have yet to declare their support for the bill.
The basic problem: If you make moderates happy by doing away with the expiration of the tax cuts for individuals, you blow up the deficit, and deficit hawks Corker and McCain probably won’t go for that.
* JONES LEADS IN POLL: A Fox News poll finds Democrat Doug Jones leading religious-right extremist Roy Moore among likely voters in Alabama by 50 to 42 percent. Note this:
Support from women is the key to the Democrat’s advantage in this red state, as Jones is their choice by 26 points (58-32 percent). The gap grows to 49 points among women under age 45 (69-20 percent), and he’s up by 11 among women ages 45 and over (51-40 percent). Jones even receives 19 percent support from Republican women (to Moore’s 68 percent).
* WHY REPUBLICANS ARE RUSHING THE TAX BILL THROUGH: The House passed its version of tax “reform” yesterday, and the New York Times comments on the breakneck speed of the process:
Lawmakers … want to push the bill through quickly to avoid giving lobbyists and Democrats time to mobilize, a strategy that seemed to be validated with the House approval, which came with little drama or consternation. The political uncertainty surrounding the Dec. 12 Alabama Senate race, which could result in Republicans losing a seat or gaining an uncertain ally, is also a factor in the swift pace.
Those are great reasons for rushing this through with so little debate, given its far reaching effects. By the way, if Republicans don’t get this through and Jones wins, it’s unclear what happens next.
* THE GOP TAX PLAN IS ONLY THE BEGINNING: Paul Krugman notes that the Senate version (which repeals the Affordable Care Act individual mandate) would do more than just result in 13 million uninsured; there would be a much broader set of consequences:
The move would also drive up premiums for those who keep their insurance because the dropouts would tend to be those with lower health costs. So that’s an additional, hidden indirect tax on the middle class. … Tax-cut-induced deficits would, by law, trigger cuts in Medicare, and this would just be the start of a G.O.P. assault on programs like disability insurance that provide a crucial safety net for millions of working-class Americans.
So really, we’re only seeing the very beginning of the massively regressive changes this process could set in motion.
* NEXT UP, ‘WELFARE REFORM’: The Post reports this interesting nugget from a meeting between Trump and House Republicans after the House tax-cut bill passed:
Trump thanked party leaders, expressed optimism about the Senate bill and said he believed that Congress ought to move to “welfare reform” after completing the tax bill, according to several members in the room.
Trump may have no idea what he means by that, but it’s at least possible it means he hopes to move to cuts to the safety net after deficit-busting tax “reform” passes.
* WHY TRUMP IS STAYING QUIET ON ROY MOORE: CNN reports that the White House says Trump finds the allegations against Moore disturbing but thinks Alabama voters should decide Moore’s fate. And:
Sources close to the White House told CNN … that Trump believes the allegations against Moore are bad for the party’s brand, but is reluctant to come out forcefully against Moore because of sexual misconduct allegations he himself has faced.
Also, the most likely way for Republicans to retain the seat is for Moore to win and be expelled and replaced, and a forceful denunciation of Moore could make that less likely.
* ALABAMA REPUBLICANS DIG IN BEHIND MOORE: The Washington Examiner reports that the latest signs are that Alabama Republicans are sticking with Moore. It explains what that means:
The Republicans empowered to push Moore out, those elected to state office in Alabama and in charge of the state GOP, are resisting pressure from their national colleagues. … The collective decision of leading Alabama Republicans to stick with Moore appears to have solidified his standing and removed doubt that he would represent his party in next month’s special election.
The die is cast. Democrats will just have to win this one.