The Trump-Republican Tax Cut: What Were They Thinking?

As a mental exercise, let’s ask the following question: what if Trump and the Republicans, instead of tilting their tax-cut legislation heavily towards corporations and the rich, had come up with a bill that truly favored white middle class voters, their biggest constituency?

One wonders, indeed, how politicians interested in their own survival could have done otherwise. Devising a less extreme bill would have fulfilled promises by candidate Trump to provide for his base voters and energized them for the next election. It would, meanwhile, have given the wider electorate at least some reason to believe the Republicans were governing competently. Democratic counter-attacks against the tax-cut bill based on claims of unfairness would have been blunted even if the Republicans had tucked some plums for corporations into the bill.

Instead, the Republicans, in league with Trump, produced a heavy-handed pro-corporate bill with just minor window dressing for  the majority of Americans. The process has been well documented. Trump let it be known early on that he wanted a big reduction in the corporate tax because of the apparent higher rates suffered by American corporations in comparison with their overseas competitors (ignoring the fact that because of loopholes in the tax code, the Americans were easily circumventing the higher rates). At the same time, billionaire lobbyists, viewing the bill as a unique opportunity, were applying maximum pressure on the Republican Congress to endorse the lower rates, threatening to defund non-compliant legislators in the coming elections if they did not come around. The current bill is the result.

It is important to remember that in the pre-Trump era, all this might have been politically feasible given the party’s past success in championing the interests of the rich while keeping white middle class voters happy by throwing culture-war rhetoric and paeans to liberty in their direction. Thomas Frank’s What’s the Matter with Kansas discusses the phenomenon.

In today’s Trumpian world, however, those old tricks can no longer be counted on. Trump altered the political environment by stoking class warfare against America’s elites. Significantly, in that warfare he targeted not just the liberal ones of past campaigns, but the Republican Old Guard itself, which tends to favor globalism, free trade, and liberal immigration policies that ensure an ample work force and low wages. In the process, the base moved to the right, reminded of its unaddressed class grievances and feeling newly empowered. The donor class in the meantime stood still.

With the passing of the tax bill, Trump and the Republicans clearly saddled themselves with a problem of their own making. On the one hand, Trump muddled his political brand. Often a captive of his own incoherent propaganda, Trump seemed to think that he could, at one and the same time, be two largely incompatible things: a populist voice for the marginalized white middle class and a proponent of corporate behemoths like himself. The conflict put at odds, as never before, the rabble-rousing Bannon wing of the party and the corporatist wing associated with Goldman Sachs players like Gary Cohen and Mnuchin.

To make things worse for the Republicans, their elected officials have been unable to shed their long-standing association with the wealthy elites, a fact amplified by Paul Ryan’s unrelenting advocacy for libertarian policy. The growing populism of the Republican base has put such Republicans in an increasingly untenable position. If anything, their dependence on the big donors has deepened as their repute with the middle and lower class Americans has dwindled.

Trump and elected Republicans thus have their work cut out for them as they prepare to face the voters in 2018. They must defend corporatist legislation that gives mere crumbs to the white middle class and knocks a huge hole in the federal deficit. Calls by Ryan and others for a “reform” of programs like Medicaid and Medicare to make up for lost revenue can already be heard backstage. As the great messaging campaign begins, it will be interesting to watch the Republicans try to square the circle. Good luck, guys.

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