KOKOMO, Ind. — Democrats predicted a political backlash for Republicans in December when the GOP pushed through a deeply unpopular tax cut that added more than $1 trillion to the federal deficit and disproportionately helped the wealthy.
But at the outset of the 2018 campaign season, Democrats’ early optimism appears less well founded here, where Democrat Joe Donnelly is facing a tough Senate reelection fight.
The new law is rising in popularity as businesses in Indiana and elsewhere trumpet bonuses and bigger paychecks. And while Donnelly and fellow Democrats struggle to craft a consistent attack on the law, Republicans — boosted by outside spending from groups backed by the billionaire Koch brothers and others — are united in touting the tax cuts and slamming moderate Democrats who voted against them.
The three Republicans vying to replace Donnelly hit that point repeatedly as they met on a debate stage last week.
“He said he would work for a tax plan that would help middle-class families,” said one of those candidates, Rep. Luke Messer. “We delivered a tax plan that helped middle-class families, and he was nowhere to be found.”
Americans have just started to see the tax cut show up in their paychecks this month, and along with those boosts in pay have come a spate of recent polls that show public opinion turning in favor of the tax legislation — leaving Democrats the unenviable task of trying to convince voters that a law increasing their paychecks now will be bad for the country later.
“That’s a great thing that people are getting some benefits,” the low-key Donnelly said in an interview at a coffee shop in downtown Indianapolis last week. But the first-term senator contended that if voters understood the full implications of the legislation, they might be inclined to turn down those $1,000 bonuses or retirement-account contributions from Midwestern businesses such as Anthem, a health insurance firm, and Fifth Third Bancorp.
“Here’s the proposition that they’re not saying but that’s the truth,” said Donnelly, 62. “We’ll have a thousand dollars out there. And you’ll get that. And in return — and this is the part that goes unspoken — we’re going to send your children and grandchildren and great-grandchildren the bill for that. They will pay it with interest, repeatedly, year after year after year, much of it going to the Chinese and others.
“If you laid that out and said, ‘Will you sign up for this?,’ not one person in my state would sign up for that,” Donnelly said. “Not one.”
Such arguments stand to be tested in Indiana and around the country in the next eight months as Democrats defend Senate seats in 10 states that Donald Trump won in 2016, including Indiana and four other states Trump won by double digits. The outcomes in Indiana, North Dakota, Missouri, West Virginia and elsewhere will determine whether Republicans can hang on to their slim 51-to-49 Senate majority or Democrats will regain the advantage they lost in 2014.
Tim Phillips, president of Americans for Prosperity, which is running ads against Donnelly and Sen. Claire McCaskill (D-Mo.), said the tax law will be the most important election issue for his group, which is backed by the Koch brothers.
Democrats who opposed it “chose partisan politics, and the price they pay is going to be extremely high,” Phillips said.
And while Republicans are united in promoting the tax law and attacking Democrats who opposed it, Democrats are juggling a range of responses.
The GOP law included cuts to income tax rates at all levels, although the benefits of those cuts are overwhelmingly tilted toward the wealthy. And while the massive corporate cut in the law is permanent, the income tax cuts are set to expire within a decade unless a future Congress takes action to extend them.
Activist groups on the left are clamoring for the law’s full repeal, putting pressure on liberal lawmakers who for the most part are stopping short of pushing to undo it entirely. Meanwhile, red-state Democrats such as Donnelly must craft an even more nuanced response. It is a communications challenge many Democrats appeared to have not foreseen when the tax bill passed late last year over their unanimous objection. It had polled abysmally amid forecasts that some voters would pay higher taxes in years to come.
The growing challenge for Democrats was clear in comments from voters last week in Kokomo, a central Indiana town hit hard by the recession but creeping back toward prosperity thanks to auto industry jobs. As rain fell one weekday, residents found refuge in the small but cheery Markland Mall, anchored by a Target on one end and a Carson’s department store on the other. Several spoke approvingly of the tax cuts and claimed that their paychecks had already gone up as a result.
Brent Duff, 54, dismissed Democratic complaints that the majority of benefits would go to the wealthy while the middle class would make do with “crumbs,” in the words of House Minority Leader Nancy Pelosi (D-Calif.).
“I could be handing out hundred-dollar bills at the front of this building and someone would complain about it,” scoffed Duff, who works at Aptiv, an automotive-parts technology company. The tax bill “has been a huge advantage,” he said.
Another local resident, Joe Griffin, 32, stopped to chat as his 5-year-old daughter played on one of the small coin-operated rides in the mall. Griffin said he had noticed a $40 increase in his biweekly take-home pay from his factory job. He said the money would not make a huge difference, but it would allow him to treat his family of five to a few extra pizza dinners.
“This is a step in the right direction,” Griffin said. “Businesses are spending money.”
Some Democrats play down evidence that public sentiment has moved in favor of the tax bill.
Although several surveys have shown that supporters of the tax law now outnumber opponents, a Quinnipiac University poll released Feb. 20 found that voters say they still trust Democrats more than Republicans to handle the issue of taxes, by a slim margin of 46 percent to 41 percent.
But others acknowledge concerns. Since the measure passed, congressional Democrats have been largely focused on the issue of immigration, forcing the government into a three-day partial shutdown last month in an unsuccessful attempt to gain protections for the young undocumented immigrants known as “dreamers,” who were brought to the country as children.
Meanwhile, Republicans have relentlessly promoted the benefits of the tax law.
The No. 2 House Democrat, Rep. Steny H. Hoyer (Md.), traveled through Rust Belt states including Ohio, Pennsylvania and Indiana last week in what he billed as the “Make It in America” listening tour. His mission was to craft an economic argument for Democrats in their bid to pick up the 24 seats they will need to retake control of the House.
While in Indianapolis, between a fundraiser for a Democratic House candidate and a tour of the airport, Hoyer acknowledged that his party has a “tough” argument to make against the tax law.
“I don’t know whether we can make that case, but we’re sure going to try,” Hoyer said. “It wasn’t so much that you got a tax cut. It was that you got such a small percentage when your need is higher.”
Republicans structured the law so that withholding tables have already been adjusted, so many Americans have seen their paychecks go up. But accountants warn that when it comes time to file their taxes next year, voters might get an unpleasant surprise when they realize they are getting a smaller refund than expected or none at all.
By then, however, the 2018 midterms will have come and gone, a point Hoyer ruefully acknowledged.
“They’re not going to pay their taxes for ’18 until ’19, so they won’t really see what it did, how much it did, how much it didn’t do,” Hoyer said. “And I think that was smart timing.”
He argued that benefits for regular voters could end up being something of a mirage, likening it to Trump’s deal with Carrier, a heating and air-conditioning company with a plant in Indiana. Shortly after the 2016 election, Trump said he had helped persuade the company not to move all of its Indiana operations to Mexico. But hundreds of workers were still eventually laid off.
“We will see, maybe not soon enough, whether or not the corporations use this in fact to create more jobs, or, like Trump’s Carrier example, it looked good the first month until Carrier laid off 500 people. So we will see,” Hoyer said.
As for Pelosi’s comment criticizing the tax law’s benefit for the middle class as “crumbs,” Hoyer contended that Pelosi’s point was accurate even though it has become central to GOP attacks against Democrats. Still, “I don’t say it,” Hoyer said.
For Donnelly, even though Trump has lost popularity in Indiana, the senator still must win over some of his voters to secure a second term.
He repeatedly references meetings he had with Trump administration officials, including a dinner with other senators and Trump, where he says he laid out the criteria that would have been necessary for him to support a tax bill — that it would encourage companies to keep jobs in the United States, be focused on the middle class and not increase the deficit.
He says Trump agreed to all that and even claimed that he and his rich friends would be hurt by the legislation.
“They said this is what the bill’s going to be. And it was the complete opposite. The complete opposite,” Donnelly said. “My job is to make sure we set the record straight and tell the truth.”