In politics pretty much everyone shades the truth and engages in some convenient spin now and again. But if you saw a candidate standing on a dais pointing at his pet dog and telling you it was a cat, you’d think something pretty odd was going on.
By the same token, both citizens watching the tax reform debate in Washington and reporters covering it ought to ask themselves: Why, if this plan is so good, do its authors keep lying about what the bill does?
There’s a lot that’s controversial about tax policy, after all, but not everything is controversial. It’s obvious that if you cut a tax that’s only paid by married couples who’ve amassed at least $11 million that you are helping rich people. It’s obvious that if you enact a special discount tax rate for people who own LLCs then you are helping Donald Trump, who owns a ton of them. And it’s obvious that if part of your plan is permanent and part of it is temporary, and the part you made temporary is the part that helps the middle class, then helping the middle class wasn’t your priority.
And yet here we are. After a lead-up of more than a year — in which everyone who’s anyone in the Republican Party said they wanted to cut taxes for the middle class, and not for rich people in general or Donald Trump in particular — the Senate’s coalesced around a bill whose long-term distributional impact looks like this.
If that’s such a good idea, why did its proponents invest so much time and energy in pretending they were going to do the opposite?
Republicans promised a middle-class tax cut
The case Republicans are making for their proposal is simple, straightforward, and perfectly reasonable — while Democrats want to have the government give people a lot of new social services, Republicans want to just give them more money instead.
The difference is that while Democratic programs may or may not be a good idea, the bills they write that they say will expand the provision of social services in the United States really do expand the provision of social services.
Not so much with the Republican plan. As Vox’s Dylan Matthews has written, this hypothetical family of four that Paul Ryan cooked up and has instructed his caucus to meme about does get a one-year $1,182 tax cut. But under the bill the House passed last week, that tax cut shrinks over time and within a few years turns into a tax increase.
As a candidate for office, Trump ran on promising a middle-class tax cut. At a meeting with business leaders at the beginning of the month, Trump was on the same page, saying, “It's a tax bill for middle class.”
But it’s not. Neither the House bill nor the Senate bill are good for the middle class. It’s also telling that though neither bill is good for the middle class, the two bills’ treatment of middle-class tax issues is actually quite different. Where they’re very similar is in providing large tax cuts to business owners and heirs to large estates. That’s because, obviously, the main intellectual and emotional core of the effort is an attempt to provide large tax cuts to business owners and heirs to large estates. The middle-class provisions are afterthoughts, scrounged together to meet messaging goals.
Trump pretended he wouldn’t cut taxes for the rich
At his confirmation hearing, Treasury Secretary Steve Mnuchin made an unambiguous promise that there would be “no absolute tax cut for the upper class” in the Trump administration’s vision of tax reform.
- Trump promised on September 13 that rich people wouldn’t benefit “at all” from his tax plan.
- On July 26, he went further and suggested he wanted to raise taxes on the rich.
- Back in May of 2016 as a candidate, he went on Meet the Press and backed tax increases on the rich. “For the wealthy, I think, frankly, it’s going to go up,” he said. “And you know what? It really should go up.”
One way Trump frequently likes to make this point is to cast himself as a selfless champion of the people, willing to raise his own taxes for the sake of the country. Trump went so far as to phone up a group of Senate Democrats to tell them, “My accountant called me and said, 'You're going to get killed in this bill.’”
This is all a bunch of lies. As Mark Murray writes for NBC News, “Trump and his heirs potentially could save more than $1 billion overall under the GOP tax proposal.”
Rather than own up to the reversal and defend it on the merits, Trump’s team is now engaging in bizarre deflections. When Andrea Murray asked Office of Management and Budget Director Mick Mulvaney about why Trump flip-flopped on the question of whether tax reform should provide a windfall to the president, Mulvaney replied curtly, “I can’t speak to the president’s taxes. I think that was sort of litigated by the American public during the election.”
It was litigated. But the terms of the litigation were that Trump said he would release his tax returns in the future and Trump said he would put forth a tax cut bill that was bad for him, bad in general for the wealthy, and good in general for the middle class. If Mulvaney’s position is that voters should have realized Trump was lying, then that’s fair enough. But the fact is Trump lied about tax policy during the campaign, and his team is now covering for those lies with new lies.
The looting of America
A telling thing about the cavalcade of lies Republicans are telling about taxes is the party can’t quite get its story straight as to what the policy agenda even is here. They are telling deficit hawks that the bill is fiscally responsible, adding a large but manageable $1.5 trillion to the debt over 10 years but revenue-neutral in the long term. They're telling others that statutory “pay-as-you-go,” or PAYGO, rules will be suspended, and the bill won’t really lead to the automatic cuts in Medicare and other programs that, by law, will result from its passage.
They’re telling some people the middle-class tax hikes written into the Senate bill will never be enacted, so there’s no need to worry. That’s the opposite of what they’re telling deficit hawks. So then some Republicans are telling some deficit hawks that the follow-up to the tax bill will be a return to entitlement reform.
Of course, that’s the opposite of what Trump promised his voters during the campaign (and the opposite of what they are saying about the PAYGO issue). But the good news — if you’re inclined to see it as good news — is that Trump is a huge liar, so you can always hope it’s someone other than you who’s going to get betrayed.
The reality is that the future is inherently uncertain, and promises made by the likes of Trump, Ryan, and Mitch McConnell are basically worthless. A bill passed on a party-line vote based on contradictory promises and false pretenses will have no long-term political sustainability and thus no positive impact on investment — even if you believe a permanent shift to lower taxes would. All we really know for sure is that for as long as Republicans manage to hold onto federal political power, the owners of highly profitable businesses and heirs to large fortunes will get to further enrich themselves — gorging on tax cuts while the rest of us end up holding the bag.