We often find it difficult to tell whether the administration is entirely clueless about how Washington works or entirely disingenuous, saying things that bear no relation to reality but seek to distract or shift blame. We see this phenomenon on tax reform.
Treasury Secretary Steven Mnuchin on Tuesday said that if the president cannot get 60 votes for his plan, he will need to use the reconciliation process. C’mon. If he thought 60 votes were possible, he’d actually be talking to Democrats. He’d figure out that there is no way the Democrats are going to vote for something that, for example, eliminates the estate tax or entails outsize tax cuts for the rich. However, the plan the administration is contemplating is so unacceptable to so many people (whether on the basis of income inequality or on ballooning the debt or both) that it’s not certain he can get 50 +1 Republicans to support it (and also meet the Byrd rule that prohibits deficits in years outside the 10-year budget window).
In a conference call with reporters on Tuesday, Minority Leader Sen. Charles E. Schumer (D-N.Y.) observed: “Secretary Mnuchin and Gary Cohn are slated to discuss their tax plan behind closed doors with Senate Republicans. Now, we Democrats want to actually achieve tax reform in this country, but we can do so in a way that doesn’t sacrifice our principles or sell out working and middle-class families to accomplish it.”
He then outlined three principles that only in an era when Republicans have lost their minds would seem controversial:
First, we believe that tax reform shouldn’t increase the tax burden on the middle class, and there should not be a tax cut for the wealthiest one percent of Americans — period. That means not one penny of tax cuts should go to that top one percent. . . .
Second, we believe that tax reform should go through Regular Order so both Democrats and Republicans have an opportunity to craft a bipartisan package that’s good for the American people.
And third, tax reform should not add to the deficit.
This is not radical stuff. In fact, it is such tame stuff that it sounds like the Committee for a Responsible Budget, which urges: “Ideally, comprehensive tax reform should broaden the tax base, lower the rates, grow the economy, and reduce deficits. As an absolute minimum standard, tax reform should not add to the debt.”
Those three principles don’t sound that different from what you hear from sober conservatives who have been warning for years that the idea of big tax cuts for the rich is politically unsellable and of dubious economic value. This is from the American Enterprise Institute: “The GOP should continue to back tax cuts for the middle class, and in particular for middle-class parents. But until the country sees large and sustained budget surpluses, there should be no tax cuts for households earning $250,000 or more.”
Michael Strain of AEI recently advocated:
To benefit the economy, the revenue lost from the lower corporate rate needs to be replaced by broadening the tax base, and not financed through larger budget deficits. Republicans in Congress should champion fiscal responsibility to strengthen economic growth, and adding to the already troublesome long-term national debt is imprudent. . . .
But no matter the final package, conservatives should welcome tax reform as a chance to design policies that champion and illustrate core values of opportunity, empowerment, earned success, prudence, responsibility and dynamism. All these will be on display in a tax reform done right. In today’s political climate, this will be very hard to achieve. Given how the last eight months have gone, that’s all the more reason for conservatives to welcome the challenge.
You don’t see “big tax breaks for rich people who can form an S corporation” or “lower the overall tax burden for big companies” on his wish list.
Listen, when Chuck Schumer and AEI are in the same ballpark and the “populist” president’s treasury secretary is selling rewarmed supply-side economics, it’s time to take a step back. If President Trump really wants a bipartisan bill and really wants to remain populist, he’ll listen to Schumer and AEI, not to his Goldman Sachs advisers.