Trump’s first big win isn’t populist
Tax bill’s benefits flow to wealthy, not middle class voters
WASHINGTON — After eleven months in office, President Donald Trump on Wednesday got to celebrate the one thing he’s coveted most — a major legislative achievement — and on his party’s signature issue, tax cuts.
For a president who loves to tally wins and loathes losses, Congress’ final approval of the tax bill was an essential capstone to a year in which Trump rolled back scores of regulations, sharply limited a refugee program, seated a conservative Supreme Court justice and opened vast new lands for oil exploration.
Despite a Congress controlled by Republicans, however, Trump had signed none of his major legislative promises into law this year while suffering one spectacular failure, on repealing President Barack Obama’s health insurance law. Now he ends the year on a high note, though one that comes with a big caveat.
“We’re bringing the entrepreneur back into this country,” Trump declared at a triumphant White House gathering with Republican lawmakers, several of whom praised Trump effusively. “Ultimately what does it mean? It means jobs — jobs, jobs, jobs.”
The tax bill, which Trump will sign in coming days, comes with potential political costs. The legislation, which benefits corporations and wealthy Americans like himself, undermines Trump’s promises to govern as a populist and all but rules out a pledge to wipe out the national debt, by adding at least $1 trillion more in debt in the first 10 years.
Trump ceded drafting of many of the details to congressional Republicans, and the result was a plan that largely hews to GOP taxcutting orthodoxy: It mostly would benefit corporations and high-income individuals, on the bet that economic growth will mean more jobs and higher wages for lower-income Americans.
When Trump did weigh in, it was often with advice on the kind of branding for which he’s well known. He told staff and GOP lawmakers to use phrases like “tax cuts for Christmas,” “middle-class miracle,” and “rocket fuel for economy.”
Trump is banking on his salesmanship to overcome dismal poll numbers for the bill. An NBC-Wall Street Journal survey that found 63 percent believed the plan was designed primarily to help corporations and the wealthy. Just 7 percent agreed it is intended “mostly to help middleclass Americans” — as Trump and congressional Republicans contend.
The president opened the White House celebration by promoting an announcement on Wednesday by AT&T — which needs administration support ultimately for its merger with Time-Warner — that it would offer $1,000 bonuses to 200,000 employees and invest $1 billion in the U.S. after the bill becomes law.
Several other corporations, including Boeing, Fifth Third Bank and Wells Fargo, announced similar actions. Democrats countered with a list of 32 corporations — among them Home Depot, Pfizer, TMobile and Mastercard — that have announced billions in stock buybacks, which, along with higher dividends and executive bonuses, are more common responses than wage increases from companies with new cash.
The current perception that the bill is a gift to elites drives directly against Trump’s core message that he is a different kind of Republican who champions “the forgotten man and the forgotten woman.”
“I don’t mind paying a little more in taxes,” Trump told Bloomberg in August 2015, just after entering the presidential race. “The middle class is getting clobbered in this country.”
“The hedge fund people make a lot of money and they pay very little tax,” he added. “I want to lower taxes for the middle class.”
Back then Trump proposed to end a tax break benefiting hedge fund managers and private equity investors: the so-called “carried interest loophole” allowing them to pay taxes on much of their income at a lower capital gains rate, rather than at the higher rate for ordinary income. Yet that tax break survived.
Ann Coulter, the conservative commentator and sometime Trump ally, has led the backlash. “Despite @realDonaldTrump’s repeated promise to eliminate hedge fund managers’ totally unfair tax loophole, GOP tax bill preserves it,” she tweeted.
Trump continues to argue that he will take a personal hit. Independent analysts say he stands to benefit significantly.
The truth cannot be known, however, because the president refuses to release his tax returns as predecessors for four decades have done.