In politics, the most cynical predictions can be the most accurate; if you say “The public is too smart to buy that line of bull,” you’re often going to be wrong. But not always. And right now, the Republican Party is facing a problem. It sold the public a bill of goods on its 2017 tax cut but didn’t do enough thinking about how the cut would be implemented and what the effects might be (hey, policymaking is hard). And as a result, a law that was already unpopular is going to get even more so. The real problem may be that Republicans bought their own baloney.
The immediate problem has to do with the relationship between withholding and tax refunds, namely that lots of people who were used to getting refunds every tax season are now finding out that either their refunds are smaller than they expected or they actually owe money. Since the bill made a bunch of complex changes affecting how much people should have withheld and how your federal taxes relate to your state taxes, it was impossible for most people to know whether they'd be paying more or less. And many people ended up with a small boost to every week's paycheck, only to find out that they'll have to give most or all of it back in a lump sum. Which is producing lots of news stories about horrified people getting unexpected tax bills. Arthur Delaney sums it up:
The vast majority of Americans got lower taxes from the new law, while only 5 percent or so should have seen a tax increase. Most people should have seen the changes in their paychecks last February.
But the way the Trump administration implemented the law has caused a separate problem ― one that the administration knew would result in something like 5 million fewer households receiving tax refunds this year. It’s still early in tax filing season, which opened at the end of January, but the average refund is down 8.7 percent so far.
You probably know the top line of the GOP’s tax bill: While many taxpayers got some kind of cut, the bulk of the benefits went to the wealthy and corporations. Republicans seemed to think that while there was nothing they could do about that — I mean, what were they going to do, not give most of the benefits to the wealthy and corporations? What are you, crazy? — in the end the law would still be popular because lots of ordinary people would get something.
So they didn’t put much thought into convincing the public to love the tax cut, beyond putting out the usual line about how cutting taxes for those at the top would cause an explosion of economic growth so overwhelming that it would deliver all of us to a future of limitless prosperity.
Perhaps they should have looked back at the past for a model. When President George W. Bush signed a tax cut aimed at the wealthy in 2001, he didn’t just throw in a tax cut for the proletariat in the form of a few extra bucks in their paychecks. He had the IRS send a letter to every household in America informing them that due to the beneficence of their heroic president, they’d soon be getting a check for $300. Then he sent them the check. Now that’s PR.
Nine years later, President Barack Obama did just the opposite: After economists convinced him that people would be more likely to spend a tax cut rather than save if it showed up in their paychecks than if they got it in a lump sum, he negotiated a tax cut that almost no one noticed. The idea was that getting the money quickly injected into the economy to help mitigate the Great Recession was the priority. Good policy, bad politics.
The 2017 tax cut, on the other hand, is looking more and more like both bad policy and bad politics. It hasn't delivered economic nirvana, it didn't pay for itself, it didn't trickle down to the masses, and corporations used their windfall mostly for stock buybacks. Somehow, the public never got the message of just how terrific the tax cuts were, and Republican hopes that in the midterm elections the voters' appreciation would overcome their disgruntlement with President Trump didn't quite pan out.
There’s an obvious analogy here with the Affordable Care Act. When the extraordinarily complex law was being debated and Republicans threw up a cloud of lies to discredit it (death panels!), Democrats held on to hope that once it was actually implemented the public would come to appreciate its benefits and it would become popular. When Nancy Pelosi famously said, “We have to pass the bill so that you can find out what is in it, away from the fog of the controversy,” she wasn’t concealing its true content, as Republicans have insisted ever since; the bill had been debated for a year, and its text was available for anyone to read. She was saying that once it became law, the debate would die down and the public would witness its actual impact.
That wasn’t exactly how things worked out — the debate, and Republican misinformation about the law, never stopped — but in the end she was vindicated. Support for the law did rise, and most importantly, many of the things the ACA did, such as protecting people with preexisting conditions, became so popular that Republicans now pretend to have supported them all along.
The difference with the 2017 tax cut is that Republicans weren't actually offering most Americans all that much. Yet they convinced themselves that they were. After all, aren't tax cuts for the rich great for everyone? Doesn't trickle-down economics work every time? Once all the benefits start raining down on them, won't the voters embrace their benefactors in the GOP, tears of gratitude pouring down their cheeks?
In other words, isn't this snake oil we've been selling actually the magical elixir we told those rubes it was?
Well, no. The tax cut didn’t do what they said it would, it didn’t help them in 2018, and it won’t help them in 2020. But that won’t stop them from trying to do it all over again with another tax cut for the wealthy the next time they get the chance.