Shortly before the 2018 midterm elections, Donald Trump announced that he and congressional Republicans were working “around the clock” on a new, “very major” tax cut, which would exclusively benefit the middle class, and which would be ready no later than Nov. 1. Even by his standards, the president’s claim was bizarre: lawmakers weren’t on Capitol Hill; there was no work being done on the issue; and even White House officials were “mystified” by Trump’s absurd rhetoric.
The whole endeavor, born of desperation, became an embarrassing fiasco for the president, but there was an underlying point of real significance: Trump and his allies realized that the American mainstream didn’t see the value of the regressive GOP tax plan, which disproportionately benefited the wealthy and big corporations.
Republican leaders were ready for a second tax cut, in large part because the first one didn’t produce the intended results.
While Trump’s pre-election scheme was quickly exposed as a joke, his goal of another round of tax breaks was real. A few weeks ago, he again said he’s determined to “approve a major middle income Tax Cut” – possibly in 2021.
As Politico reported, Treasury Secretary Steven Mnuchin is eyeing tax cuts even earlier than that.
“I think there’s no question the U.S. economy is in very good shape. As we look around the world, there’s no question that China is slowing, Europe is slowing – the U.S. is the bright spot of the world,” Mnuchin told reporters.
“And regards to a middle-class tax cut, you know, we’ll be looking at tax cuts 2.0, something that will be something we’ll consider next year,” he continued. “But right now, the economy is in very, very good shape.”
For now, let’s put aside the fact that every time top administration officials scramble to tell everyone how great the economy is, they sound a little less convincing. Let’s instead turn to the vague idea Mnuchin and his boss are excited about.
First, Team Trump’s credibility on the subject leaves much to be desired. The president and his Republican brethren made all kinds of predictions about what would happen if their tax plan passed, and each of those predictions – from job creation to growth rates to the fiscal impact – turned out to be wrong.
With a track record like that, it’s tough to take the same folks seriously when they say more of their failed idea will work wonders.
Second, I’m curious how, exactly, Team Trump intends to pursue “tax cuts 2.0.” The last time I checked, there’s a progressive House Democratic majority that probably won’t be too eager to go along with another dubious White House tax scheme. The president could try to unilaterally push a tax break by indexing the capital gains tax to inflation, but that would benefit the very wealthy – just like the “tax cuts 1.0.”
It’s a misguided plan, being pursued in a misguided way.