For at least the fourth time in the past six months, Donald Trump is openly promising to deliver a middle-income tax cut on one condition: That you re-elect him and help Republicans take back the House.
We know, it’s laughable. You’re not supposed to make campaign promises conditional on certain outcomes – that is, you don’t generally want to be seen as blackmailing voters. For one thing, it’s understood that if you don’t win, the promises are void. So, if you’re Trump, you don’t have to keep reiterating that any tax relief for lower- and middle-income families in a hypothetical second term is contingent upon re-election. It’s understood.
It’s also generally understood that Republican gains in the House would help the administration push through additional tax cuts, but because Democrats (not Republicans) are the party of the middle-class, explicitly tying middle-class tax relief to GOP gains in the House makes it sound as though there’s a quid pro quo: “You give me back the House and I’ll give you a tax cut”. Of course, a hypothetical middle-class tax cut isn’t the reason Trump wants the House back. Rather, he wants the House back to avoid things like impeachment, and other “nuisances”.
But this is Trump we’re talking about, so he once again framed things in “if you give me this, I’ll give you that” terms in an interview with the Wall Street Journal from Davos.
The new proposed middle-class tax cut package will be released in the next 90 days, Trump said, and it will be “fairly substantial”.
(That’s as opposed to the corporate tax cut, which was very substantial.)
As the Journal writes, “it would be subject to his re-election and GOP gains in the House, where Democrats currently hold a several-dozen seat majority”.
The plan (which nobody has seen, and may not exist as far as anyone knows) is “very much of a workers’ tax cut”, he claimed. The Journal reiterates Trump’s contention that “its passage would come after the 2020 election and would depend on his winning a second term and Republicans holding the Senate and retaking the House”.
Back in August, when the economy suddenly looked shaky, the president was said to be “rattled” and quite a bit of digital ink was spilled documenting the administration’s internal discussions around more tax cuts, whether in the form of a payroll tax break aimed at helping middle-earners, or a move to index capital gains to inflation, a strategy that would ultimately hand some $100 billion to the wealthy.
The notion of a tax break for working families presents a rather vexing PR quandary for Trump. First, tailoring a tax cut specifically to the middle-class is a tacit admission that the original tax cuts primarily benefited the wealthy and corporations. Second, discussing more fiscal stimulus suggests Trump’s characterization of the US economy as a kind of bulletproof locomotive may not be accurate. And third, there is no room for more fiscal stimulus unless Trump wants to balloon the deficit even wider.
In November, the president teased the proposal again during an event convened to discuss healthcare pricing. “We’re gonna be doing a major middle-income tax cut, if we take back the House”, he promised. “And we’ll be talking about that sometime later”.
According to what Trump told the Journal on Tuesday, “sometime later” will be sometime in the next 90 days.
Trump used his address in Davos to tout what he called a “blue collar boom”. “[I’ve] created the most inclusive US economy ever”, Trump told the crowd.
Over the last two years, the tax cuts have handed a total of $32.4 billion in savings to Wall Street’s largest banks.
As Bloomberg wrote last week, loan growth for the banks mentioned in the chart fell to 1% last year from 3% in 2018, and their combined workforce shrank by a net 1,200 people over the period.
At the same time, those six banks declared their intention to return a total of $21.5 billion to stockholders. Thanks to the tax cuts, profits at the largest banks hit $120 billion in 2019. Prior to Trump, they had never risen above $100 billion.
Larry Kudlow on Tuesday said “tax cuts 2.0” will not be in the budget proposal.