Disdain for Beltway insiders and suspicion that the rich have the system rigged were at the heart of President-elect Donald Trump’s campaign. He correctly perceived how badly Hillary Clinton’s conflicts, courting of Wall Street and corruption (at least the appearance of such) would turn off voters. He may not realize he too can be the target of the pitchfork-armed mob.
Bloomberg reports: “Congressional Democrats say they’ll try to thwart Republican plans to overhaul the U.S. tax code by portraying them as a boon for the rich that betrays President-elect Donald Trump’s campaign promise to fight for working Americans.” That will be easy because both Trump’s plan and House Republicans’ plan would be a boon for the rich that betrays Trump’s campaign promise to fight for working Americans. Consider what is in the plans, which have yet to be merged into one acceptable to Trump and to Republicans on the Hill:
“An independent analysis of House Republicans’ ‘blueprint’ found that while households at all income levels would pay less tax, ‘the highest-income households would receive the largest cuts, both in dollars and as a percentage of income.’ The very rich – the top 0.1 percent of U.S. earners, or those with incomes over $3.7 million – would see after-tax incomes rise by almost 17 percent. At the same time, the bottom three-fifths of households would see average gains of 0.5 percent or less, according to the analysis by the Tax Policy Center, a Washington think tank that’s a joint venture of the Urban Institute and the Brookings Institution. Three quarters of the total tax cuts would go to the top 1 percent, that study found.
“Another study of the House Republicans’ plan, by the more conservative Tax Foundation, came to a similar, if less pronounced, conclusion: On a “static” basis – that means, without accounting for the tax plan’s effects on the larger economy – the bottom 80 percent of taxpayers would see an increase in after-tax income of no more than 0.5 percent, while the top 1 percent would see a 5.3 percent increase. After factoring in macro-economic effects, the Tax Foundation found that all taxpayers would see an increase in after-tax income of at least 8.4 percent – but the top 1 percent would see a jump of 13 percent.”
That’s a problem — and one that, if Republicans were less dominated by supply-side billionaires — could easily be avoided. Why not give — horrors! — no individual tax cut to the top bracket (beyond Obamacare’s repeal)? Democrats have an opening to propose a tax plan more in line with Trump’s pitch than Trump’s own plan — or that of House Democrats. That might be a middle-class tax cut only, a reduction in the payroll tax (which would benefit primarily the working and middle class) and/or an expansion of the earned-income tax credit to supplement the wages of the working poor.
Trump risks blowing his populist image in other ways as well — bringing in a fleet of billionaires, refusing to sell his business (which would cement in place the most egregious example of self-dealing in recent presidential history), repealing all of Dodd-Frank and failing to remedy with legislation a federal court ruling throwing out President Obama’s overtime regulation. (On the last point, CNBC explains, “The new legislation would have significantly raised the salary cap under which employees were eligible to earn overtime.” Some large companies already reclassified employees or raised their pay, but thousands of smaller employers would hew to the pre-regulation overtime rule. The result — the “Obama raise” would be wiped out.) Whatever the merits of these individual measures, collectively they look like stereotypical Republican reverse-Robin Hood policies (take from the poor and give to the rich). Allowing Wall Street to dominate the new administration (in the person of so many Cabinet officials and by zeroing out the consumer protection board) would make Trump into the quintessential Big Business president, not the defender of the little guy.
Democrats may not be able to stop the train, but they can begin to restore their image as the party of the little guy by highlighting the very un-populist polices that will be coming down the pike. If Trump insists on serving up 1980s-vintage economic policy, Trump may lose the affection of his white working-class base, whose members actually believed his populist rhetoric. For a president starting out with an approval rating below 45 percent, that could be a serious blow — and the beginning of a Democratic comeback.