The stock market rockets ever-upward, as well it should, what with the president’s tax package destined to make corporate America great again. Sure thing.
The grassroots political support is overwhelming because the middle class knows that this tax package is all about them. It is not only the 5,460 rich people who will pay the estate tax, which is slated to be repealed. All of the poor and middle-class families with estates valued in excess of $5.49 million will no longer have to face this burden, either.
Then there is the proposed cut in the corporate tax rate, from close to 40 percent (though after deductions lurking in the tax code, usually translates to around 28 percent in practice) to 20 percent, which Trump says is the absolutely, positively the highest rate he will tolerate—never mind that Congress is having trouble figuring out how to get below 23 percent without blowing an even bigger hole in the budget than they are now planning on. This should solidify support from all lower- and middle-income families with large stock portfolios: They will see the flow of dividends to which they have grown accustomed skyrocket.
Of course we don’t know for sure what will be in the final bill. But middle-income families have nothing to worry about. The New York Times reckons that the people’s representatives on K Street are planning to roam through the weeds in the swamp that Trump will someday drain, raking in about $1 billion in fees to clear up any ambiguities that, misconstrued, might increase the burden on middle-income taxpayers. Bet on it.
With the voters behind the plan, Congress is sure to follow. In the House, the ever-hopeful speaker, Paul Ryan, commands (?) a majority of 46. But more than half of his Republicans come from the three high-tax states of California, New York, and New Jersey. It is not clear how many are prepared to campaign next year on a platform of “I helped to raise your federal income tax”, especially since many of those facing the prospect of writing a larger check to the Feds are likely to be the very same people who write the largest checks to congressional campaign funds.
Without the $1.25 trillion in added revenue that the end of deductibility of state taxes would produce over the 10-year budget period, the hole the Trump plan will blow in the budget would be large enough to drive the Freedom Caucus, and all of its friends, through.
That’s another 30 or so votes that Ryan, who has a long history of persuading Freedom Caucus to go along, can count on. So if you are betting on the sure thing of lower taxes, please seek odds equivalent to those you would ask for betting on the Giants to win the Super Bowl.
If Ryan can persuade his caucus to vote for a plan far less sensible than he originally favored, but abandoned because of presidential opposition (incomprehension might better describe Trump’s reaction to the border-adjustment tax that was the heart of the speaker’s tax-reform plan) then attention will focus on the Senate, where Mitch McConnell has demonstrated his skill at holding his slim majority together to pass important measures such as agreement on adjournment dates.
Surely McConnell can count on the support of Senator Bob Corker, who has announced that he will not seek re-election in 2018 lest he become that dreaded creature, a professional politician. Of course, Corker told NBC’s Meet the Press, If it looks to me . . . we’re adding one penny to the deficit, I am not going to be for it. . . . I’m sorry. It [national debt] is the greatest threat to our nation.” No problem.
All McConnell and the administration have to do is persuade Corker to sign on to the theory that the tax cuts will be self-financing, and identify the $4 trillion of “loophole closing” that Corker demands. It will have to be persuasion, since the retiring Corker need not fear a primary challenge, and even if that were a worry he would not find the primary record of the Trump-McConnell dynamic duo unduly daunting. One source allegedly close to the leadership says, “Corker untethered to the electorate is a dangerous Corker.” Or one looking to become tethered to a prominent K Street firm. We shall see soon enough.
Senator John McCain should be an easy “get” for Trump. Never mind that he shot down one of the health care bills because he objected to the reconciliation procedure being used by supporters of the tax cuts—a procedure that allows the bill pass with only 50 votes. McCain felt so strongly that excluding Democrats is bad policy that he even opposed his buddy Lindsey Graham’s version of “repeal and replace Obamacare.” The president can draw on the enormous well of goodwill he has built up with McCain, who had the bad taste to be captured by the Vietcong while Trump was piloting deferment on deferment, to win over the Arizona senator.
Then we have Rand Paul, who wants with all his heart and soul to support the tax bill because he is by nature a team player. To keep him on the team, manager McConnell will have to persuade Paul that the data he has seen that suggest that 30 percent of the middle class will actually get a tax hike are wrong. And that all the reasons the senator will find between now and the time to vote are also without merit. Chances of such a managerial coup are rather small, forcing a reluctant Paul to abandon his natural inclination to play ball with the Republican Establishment team, and vote “no” on any tax bill.
If appeals to that team spirit fail, the president might try to win Dr. Paul (an ophthalmologist) over by offering him the job at Health and Human Services recently vacated by the high-flying Dr. Tom Price. But Senate confirmation might prove a stumbling block as his former teammates remember his inattention to their political needs.
If not these three, then perhaps some deficit hawks will regain the lost fervor for the prevention of still another downgrade in America’s credit rating. Or perhaps Trump’s new best friends, Chuck and Nancy, will trade their party’s votes for serious changes in the president’s proposals, or at least for another mess of Chinese food at the White House.
So with the backing of the many Republicans who have no fear of antagonizing constituents in high-tax states, the masses of voters who feel they will benefit from repeal of the estate tax and lower corporate taxes, the skills demonstrated by Republican leaders in the House and Senate, and the help of ever-cooperative Senators Corker, McCain and Paul, the tax bill is a sure winner.
And the stock market will proceed on its path, in defiance of the old saw that no tree grows to the sky.