Think tax reform will be easy for Trump? Ha, ha.

“The rich will pay their fair share,” Trump the populist promised his supporters during the campaign, when he often railed against upper-class greed and special-interest tax breaks.

.. Treasury Secretary Steven Mnuchin has repeatedly pledged that the administration would offer life-changing, economy-transforming tax cuts for the working class. Any tax-rate cuts for the wealthy, on the other hand, would be fully canceled out by closing deductions, credits and other loopholes. On net, the wealthy would pay the same amount they are now — hey, maybe more!

.. Sen. Ron Wyden (D-Ore.) dubbed it the “Mnuchin rule.”

.. Trump’s plan would give rich people the biggest tax cuts of any income group.

That’s true however you slice it. The top 1 percent of taxpayers get the biggest cut in raw dollar terms, as a percentage of their incomes and as a percentage of total tax cuts. They’d receive nearly half the total tax cuts under Trump’s plan (and three-quarters of all the cuts under the House GOP plan).

.. owners of pass-through businesses (which include sole proprietorships, partnerships and S-corporations) to be taxed at a flat rate of 15 percent rather than the regular individual income-tax rates.

.. Just as all of Trump’s health-care promises proved impossible to square, so too will his tax populism collide with the plutocratic reality of his true priorities.

What Does Your Party Want?

Securing the loyalty of the millions of white working-class Americans who lined up behind Trump will require that all three wings of the Republican Party — its business faction, its ideological purists and its cultural traditionalists — abandon any idea of strict adherence to core conservative principles on fiscal and social policy.

“Just as Reagan converted the G.O.P. into a conservative party, with his victory this year, Trump has converted the G.O.P. into a populist, America First party,”

.. Trade and immigration are in my view unambiguously good for the country — but new policies on these issues will have to be done in ways that are supported by the American people, not shoved down their throats by the elites. In this regard, I am a populist. The elites in both parties have not understood Trumpism and have often been contemptuous of the intellect and lifestyle of the Trump loyalists.

.. These voters have shunned Republicans because they disagree with the party’s focus on low taxes, small government, and pro-business policies. They benefit enormously from middle-class entitlement programs; their children get what they consider to be good educations from public schools and state universities. They have no problem with redistribution so long as it is focused on either people who can’t work or people who do.

.. Where movement conservatives see many social programs and the high taxes that fund them as threats to liberty, these voters see them as giving decent, hard-working people a hand up to live decent, dignified lives. Where business conservatives see free trade or immigration as helping people and increasing growth, these voters see those policies as favoring foreigners over themselves and as just another way that their bosses try to pay them less without justification.

.. newly recruited white working-class converts to Trump’s Republican Party do not consider conservative dogma on gay rights, abortion, gender identity, or traditional marriage their priority.=

.. Bannon described the goal of the “entirely new political movement” he believes Trump is leading:

It’s everything related to jobs. The conservatives are going to go crazy. I’m the guy pushing a trillion-dollar infrastructure plan. With negative interest rates throughout the world, it’s the greatest opportunity to rebuild everything. Shipyards, ironworks, get them all jacked up. We’re just going to throw it up against the wall and see if it sticks. It will be as exciting as the 1930s, greater than the Reagan revolution — conservatives, plus populists, in an economic nationalist movement.

.. Bannon is explicit in his identification of the enemy:

The globalists gutted the American working class and created a middle class in Asia. The issue now is about Americans looking to not get f—ed over. If we deliver, we’ll get 60 percent of the white vote, and 40 percent of the black and Hispanic vote and we’ll govern for 50 years.

.. This ad was part and parcel of an election that has put some of the most vocal House Republicans, including the vaunted Freedom Caucus, on notice that defying Trump’s right-populist orientation could put their political future at risk.

.. “Trump dominated — in the primary and general elections — those districts represented by Congress’s most conservative members,” Tim Alberta wrote in National Review (he is now at Politico):

They once believed they were elected to advance a narrowly ideological agenda, but Trump’s success has given them reason to question that belief.

.. Even if they support Trump nine times of ten, voting against him once could trigger a tweetstorm or the threat of a visit to their district. It’s a chilling thought for members who know that the Republican National Committee, the National Republican Congressional Committee, and the House GOP leadership already want them gone.

Kevin McCarthy, the House majority leader, plans to make full use of Trump’s leverage to keep recalcitrant members of the Freedom Caucus in line.

The Conventional Threat to Trump

Republican orthodoxy might co-opt him.

His candidacy combined utterly conventional Republican positions with a few signature policy heterodoxies and a flame-throwing populist message. If it’s comforting that he doesn’t seem intent on waging war on his own party in Washington, the opposite risk is that he loses some of his political distinctiveness in the grinding legislative wars to come.

.. This is why the Democratic approach to Trump so far, besides being insane, is wrongheaded. The Democrats are preparing to fight what they consider a kleptocratic handmaiden of Vladimir Putin, an unprecedented threat to the American republic that justifies cockamamie schemes like calling for the Electoral College to ignore the results of the election.

.. There is no doubt that Trump is unlike any prior president. But Democrats will in all likelihood find their opposition to Trump running in a familiar rut — Republicans are heartless tools of corporations and the wealthy. They don’t care if people lose their health insurance. They are cutting taxes for the rich. They are deregulating bankers. Etc., etc. This is the critique that Hillary Clinton didn’t make of Trump, opting instead to emphasize his outlandishness.

.. The candidate who issued thunderous jeremiads during the campaign against a globalized elite that had literally stolen from small-town America has assembled a Cabinet that by and large could have been put together by Ted Cruz or, for that matter, Mitt Romney.

.. What’s the point in having a populist Republican in the White House if congressional Republicans can’t find a way to couple some replacement measures with their Obamacare repeal to give people other options for getting health insurance? Or if congressional Republicans can’t make their tax plan more oriented toward the middle class, perhaps including a cut in payroll taxes?

Read more at: http://www.nationalreview.com/article/443307/donald-trump-republican-normalizing

Trump can’t repeal the laws of economics

Investors have, on balance, concluded that the combination of a shift to very expansionary fiscal policy and major reductions in regulation in sectors ranging from energy to finance to drug pricing will raise demand and reflate the U.S. economy.

.. over the medium- and long-term they were catastrophic for the working class in whose name they were launched. This could be the fate of the Trump program given its design errors, implausible assumptions and reckless disregard for global economics.

.. an approach based on tax credits for equity investment and total private-sector participation that will not cover the most important projects, not reach many of the most important investors and involve substantial mis-targeting of public resources.

.. Many of the highest-return infrastructure investments — such as improving roads, repairing 60,000 structurally deficient bridges, upgrading schools or modernizing the air traffic control system — do not generate a commercial return and so are excluded from his plan. Nor can the non-taxable pension funds, endowments and sovereign wealth funds that are the most promising sources of capital for infrastructure take advantage of the program.

.. I am optimistic regarding the efficacy of fiscal expansion. But any responsible economist has to recognize that, past a point, it can lead to some combination of excessive foreign borrowing, inflation and even financial crisis.

.. Many, such as the proposed abolition of the estate tax, will benefit only the high-saving wealthy.

.. The same cannot be said of Trump’s global plan, which rests on a misunderstanding of how the world economy operates.

Consider the immediate effects of Trump’s victory. The Mexican peso has depreciated about 10 percent relative to the dollar over fears of new protectionist policies, and many other emerging market currencies have also fallen sharply. The impact of this change is to raise the cost of anything the U.S. exports to Mexico and to lower the cost of anything Mexico exports to the United States.

.. The plan seems to assume that we can pressure countries not to let their currencies depreciate