So that’s what it’s come to: Dueling IQs on the White House lawn.
The president of the United States, the most powerful man on the planet, has challenged his secretary of State to match IQs because poor Rex Tillerson refuses to deny that he called his boss a “moron.” As they pace off, Trump has two advantages. He can choose seconds from his large staff, while Tillerson has none—the president having refused to allow him to select deputies to staff his budget-squeezed department. And if Trump loses he can fire the winner.
Trump’s shaky grip on his self-esteem would be comic, were it not for its serious policy implications. Bob Corker, a senator from Tennessee, has announced that he will not seek re-election in 2018. Corker is highly regarded and chair of the Foreign Relations committee.
Corker publicly worried aloud about the president’s competence, triggering a highly personal Twitter response—Trump called Corker “a fool . . . didn’t have the guts to run”—and a typically Trumpian attack on Corker’s physical characteristics (somehow being 5’7’’ is too short).
With just three defections from the 52-48 Republican majority in the Senate, down will go the Trump tax plan. With Rand Paul and John McCain already likely to defect, Corker can take his revenge by citing his antipathy to deficits and joining the dissenters. He will be torn only between a desire to vote against an increase in the national debt and a desire to prevent so many of his long-time Republican colleagues from being forced to earn their keep in the private sector.
Next week the Senate will vote on a budget that sets the framework for the tax bill that will follow later. The debate focuses on two issues. The first is whether, and by how much, the tax cuts will increase the deficit and the already-bloated national debt. Trump contends that the cuts will be self-financing: By stimulating economic growth, they will increase the flow of revenues to the Treasury.
His opponents argue that even if the cut in tax rates does produce some added growth, that growth and the tax revenues generated will be insufficient to offset the entirety of the revenue lost by lowering rates (in the case of corporate taxes to 20 percent from the current level of about twice that rate). My guess is that the opponents have it right.
The second issue concerns winners and losers.
To say economists disagree on this point is to put it mildly. Kevin Hassett, the newly confirmed chairman of the President’s Council of Economic Advisers and a former colleague of mine at a Washington think tax, estimates that much of the benefit of lower corporate taxes will flow through to higher wages. Larry Summers, the former Treasury secretary for whom I have equally high regard, says that idea is “ludicrous.”
Economist Paul Krugman, from his perch at the New York Times, says Hassett is “bone headed.” But Larry Lindsey, another former colleague and former governor of the Federal Reserve Board, is willing to bet $60,000—$30,000 against each of Summers and Krugman—that they are wrong, and that if the tax bill is passed growth will accelerate, real wages will rise, and inequality will decline. All four of these men are competent economists, and Hassett and both Larrys have been known until now for their respectful treatment of adversaries.
If the Senate fails to adopt the budget, probably ending the possibility of a major tax cut, then Republican chances of holding their majorities in both houses next year would go from reasonably-good to probably-nil. Voters would wonder why a party that controls the White House and both houses of Congress could not pass a health-care bill, could not restructure the nation’s labyrinthine, inefficient and unfair tax code, and could not deliver on promised tax cuts.
The result of the tax battle will be of importance to the immediate future of the American economy and the nation’s politics. But nowhere near as important in the longer term as the outcome of the battle within the Republican party.
Donald Trump engineered what can only be called a hostile takeover of the GOP. He defeated sixteen traditional Republicans for the nomination, after which he and the party negotiated a truce of sorts. That could not hold. Republican Trump voters are angry at the Republican establishment that stood idly by as the party chose to ignore them in favor of Wall Street billionaires. And the Democratic Trump voters (who turned Pennsylvania, Michigan, and Wisconsin) are angry at their party for choosing to ignore them in favor of minorities, environmentalists, immigrants (legal and otherwise), rabid secularists, LGBTs, and anti-gun liberals. Congress’s approval rating stands at 16 percent.
Trump, his years of success on reality television having honed his skills at appealing to this audience of the discontented out-of-sight, out-of-mind “deplorables” (to use Hillary Clinton’s famous description), converted these voters into a loyal core, unshakable by what Trump critics see as his antics, and the Trump core sees as serial thumbs in the eye of the hated Establishment. Add to that mix Steve Bannon, liberated from formal employment with the president to become a leader rather than a mere foot soldier in the war against the Republican establishment, and you have what Trump critics are calling “chaos” in the White House.
They are right that chaos reigns, but wrong that Trump or Bannon sees this as a criticism. Chaos is the stated goal of the president who, urged on by a well-financed Bannon, is threatening to mount primary challenges against any Republican candidates who want to retain the existing leadership and traditional direction of their party.
If Trump succeeds, the chaos will produce a party unrecognizable both to small “c” ideological conservatives—who are actively discussing mounting a third-party challenge in 2020—and its current establishment leadership. Combine this development with the socialist Bernie Sanders tugging the Democrats further and further to the left and we may never see the tame, civil campaigns of the sort to which we have grown accustomed.