Why Trump has spared Pelosi from his personal vitriol — so far

The president genuinely respects the incoming speaker, and needs her if he’s going to get anything done in the next two years. But the government shutdown is about to test his restraint.

When President Donald Trump took to Twitter last weekend to blame Democrats for the government shutdown, he notably bypassed his party’s favorite foil: Nancy Pelosi.

And when Fox News teed up a chance for the president to unload on Pelosi in a New Year’s Eve interview, noting that the Democratic leader was vacationing in Hawaii during the shutdown while Trump stayed in Washington, he didn’t take the bait.

His decision so far not to go after Pelosi personally, even as his top aides have blamed her for the shutdown, hasn’t gone unnoticed in the Capitol. Pelosi’s allies have viewed Trump’s restraint toward the incoming speaker as a sign that he’s looking beyond the shutdown in hopes of notching some bipartisan wins this year — on infrastructure, perhaps, or prescription drug pricing.

Of course, Trump’s tone toward Pelosi could change on a dime given his penchant for pummeling adversaries and the likelihood Pelosi will refuse his demand for billions in border wall funding. But the relative peace between the chief lightning rods of their respective parties, at least to this point, is pretty remarkable.

Trump’s allies told POLITICO his tack represents not some grand negotiating strategy but a sign of genuine regard for her.

“I think the president respects Nancy Pelosi and understands that she represents voters that would never vote for him but also that if she’s serious about getting things done, he’s willing to really negotiate in good faith with her,” said Rep. Mark Meadows (R-N.C.), a Trump confidant on Capitol Hill. The president, he added, views her as a “worthy adversary.”

Added Rep. Debbie Dingell (D-Mich.), “His base is not enough to get him reelected. The American people want to see him get something done. And he needs Nancy Pelosi to get things done.”

Though she, too, has avoided public name-calling, it’s clear Pelosi doesn’t feel the same admiration for Trump. After a recent meeting at the White House, Pelosi returned to the Hill and questioned his manhood before a room full of House Democrats. She likened negotiating with him to getting sprayed by a skunk, and expressed exasperation that he is even president.

Pelosi’s allies say she doesn’t trust him, pointing to

  • a tentative immigration compromise they reached in 2017 that she believes Trump backed out of. She’s noticed how
  • he’s blamed Republican congressional leaders when his base decries spending bills, and
  • upended their legislative plans with surprise tweets.

“Speaker Pelosi has a history of bipartisan accomplishments. … But the test for this president is figuring where he stands on issues from one day to the next,” said Nadeam Elshami, Pelosi’s former chief of staff.

Pelosi is also uncomfortable with Trump’s handling of facts — a big obstacle, in her mind, to cutting deals with him — and has occasionally called him out. During their first meeting after his inauguration, when Trump opened the gathering by bragging that he’d won more votes than Hillary Clinton, Pelosi was the only person in the room to correct him, noting that his statement was false and he’d lost the popular vote.

Since then, Pelosi has tried to correct Trump privately, her allies say. She doesn’t like fighting in public, they added, and it was one of the main reasons she tried, in vain, to end the sparring match over border wall funding that unfolded on TV live from the West Wing last month.

Sources close to Pelosi say she’s willing to work with Trump despite her party’s total rejection of him. Her confidants note that when Pelosi first became speaker in 2007, some Democrats were calling for the impeachment of President George W. Bush over the invasion in Iraq. Pelosi ignored them and went on to strike major deals with Bush, including a bank bailout and stimulus package in response to the 2008 financial meltdown.

“They became friends,” said Rep. Rosa DeLauro (D-Conn.), a Pelosi confidant. For the incoming speaker, “It’s always about: Can you get things done? There are always going to be different points of view. How do we overcome them to get to a conclusion?”

Pelosi allies say as long as Trump is willing to compromise on Democratic priorities, she’ll work with him, too. But with the shutdown dragging into Pelosi’s takeover on Jan. 3, there’s a serious question about whether the two can make any headway.

On New Year’s Day, Trump and Pelosi exchanged words on Twitter over the shutdown — relatively mild ones, especially by Trump’s standards — in a sign of the tense days and weeks ahead.

“I think the president respects her and wants to work with her … Their personalities would lend themselves to strike deals,” Short said. “But I don’t know if Democrats will allow it. … She’s going to have so many members who will object to any transaction or communication with the president, that it puts her in a tight spot.”

It’s just as unclear whether Trump is willing to risk the wrath of his base by compromising with Pelosi. Just as he did on immigration, promising a “bill of love” to protect Dreamers from deportation, Trump privately told Pelosi after their contentious televised negotiation session that he wants to make a deal with her. Even after news that she’d questioned his masculinity went viral, he called her that afternoon to reiterate: We can work together to avert a shutdown.

But that was more than three weeks ago. The two haven’t spoken since.

Elizabeth Warren’s generic drugs plan: More placebo than cure

In theory, generic markets should be the Walmart of the health-care world, where everything is dirt cheap and readily available. In practice, the makers of branded drugs often display a malevolent ingenuity at keeping generic competition at bay. And even when they play fair, a number of factors, including tighter safety regulation and more complex formulas, often means that too few firms enter the market.

.. Lots of drugs, especially those used by only a smaller number of patients, have at best a handful of firms producing them. So if one company has production problems — or decides to withdraw from the market entirely — supply contracts dangerously, as prices shoot skyward.

..  you don’t get to be president by saying “The FDA is working on it.” No, you call for action! Specifically, Warren wants the federal government to get into the business of manufacturing drugs or contracting with third parties to do the production.

.. One can describe all sorts of reasons that state-owned firms ought to be better than the profit-grubbing variety. Freed from the incessant demands of greedy investors, state-directed firms can invest for the long term, pursuing innovation and social welfare rather than profit.

One can describe it easily enough; what’s hard is finding one of these creatures in the wild. Rather than providing a shining rebuke to free-market fundamentalists, state-owned enterprises (SOEs) often seem to have a secret mandate to prove their skeptics right about everything.

.. There are examples of well-run SOEs, but they’re suspiciously concentrated in one tiny patch of northern Europe where government institutions more generally outperform counterparts in the rest of the world. And even high-performing SOEs are vulnerable to a change in administration. PDVSA, Venezuela’s state-run oil company, used to be regarded as one of the best in its class. Then Hugo Chávez decided that he would rather use the company’s investment funds for social spending than for stodgy old petroleum extraction, and rather have the firm managed by cronies than professionals. Venezuela’s disastrous economic collapse can be traced directly to those decisions.

.. President Trump’s election has finally nullified the conservative shibboleth that Washington could be fixed if only we could get a businessman into the Oval Office to show all those government chair-warmers how a real organization does things. Unfortunately, the left is busy reviving its own shibboleth, the mirror image of the conservative mistake: that whenever markets frustrate us, the government can and should step in and do it better. Nationalize the health-care system, bring back public housing development … and if you don’t like the price or availability of various drugs, then have the feds become drug-makers, too.

.. This idea is particularly silly given that so many of the problems that make it harder for generic drug-makers to enter the market are created by government regulations in the first place. Unless the government enterprise bypasses the regulatory hurdles constraining supply, it will face much the same difficulties that private firms do.

And if the government is going to relax regulatory requirements, wouldn’t it make more sense to just retool the way the market works for everyone?

Well, yes, it would, if what you wanted to do was actually fix the problem. But that involves a lot of fiddly, boring, regulatory tweaks and can’t possibly happen fast enough to aid Warren’s run for president. It’s unsurprising that Warren has instead hit upon what I call a “Washington issue” — a proposal with little policy merit that nonetheless retains great political charm because it can be explained to voters in under two sentences. Which may be good enough for a presidential candidate. But it’s not nearly good enough for the country.

Could an Amy Klobuchar Solve Democrats’ Dilemma?

They seek a presidential candidate who appeals to both their liberal coastal base and to Midwestern working- and middle-class voters

When asked recently who Republicans should fear most in the 2020 presidential campaign, two prominent GOP figures, both women speaking independently of each other, gave the same response: Sen. Amy Klobuchar of Minnesota.

A third Republican, a male, asked which kind of candidate Democrats should want, replied: “They need a boring white guy from the Midwest.”

So, there you have it: The dream ticket of Amy Klobuchar and Sen. Sherrod Brown of Ohio. Case closed, cancel the primaries, on to the general election.

So if all that creates an opportunity for Democrats in 2020, here’s their dilemma: Can they pick a candidate who can blend the party’s conflicting impulses?

This may seem a long ways off, but the reality is that most Democrats thinking of running for president—and the number probably runs into the 20s—plan to make their decision over the next several weeks, so they can move out starting in early 2019.

As this drama begins, the key question is whether the party will find somebody who appeals both to its coastal base dominated by progressives, upscale college graduates, millennials and minorities, or choose someone who is more appealing to traditional working- and middle-class voters in industrial Midwest states such as Pennsylvania, Wisconsin and Michigan, all of which helped Democrats reclaim the House in this year’s mid-term elections.

.. The winning lottery ticket, of course, goes to somebody who can appeal to both. And that’s why Ms. Klobuchar’s name—and profile—attract attention. She’s a woman, obviously, which is important at a time when newly energized women are a growing force within the party. She pleased her party base in the hearings on the Supreme Court nomination of Brett Kavanaugh when she challenged him about his use of alcohol, but did so in a sufficiently calm and understated manner that she won an apology from Mr. Kavanaugh after he initially responded angrily.

.. She also won re-election this year with more than 60% of the vote in the one state Trump forces lost in 2016 but think they have a legitimate chance to flip their way in 2020.

.. The question is whether she or anyone can put together a policy agenda that pleases both party liberals, who are pushing for

  1. a Medicare-for-all health system,
  2. the demise of the Immigration and Customs Enforcement system and an
  3. aggressive new climate-change action plan, and more moderate Midwestern voters, who may be scared off by all of those things.

Ms. Klobuchar’s policy priorities may suggest a path. To address health care, the top priority of Democratic voters, she advocates a step-by-step approach, one that seeks to

  • drive down prescription drug costs by opening the door to less-expensive drugs from Canada,
  • protect and improve the Affordable Care Act, and
  • expand health coverage by considering such steps as allowing more Americans to buy into the Medicare system.

.. She’s talked of a push to improve American infrastructure that would include expanding rural Americans’ access to broadband service, paying for it by rolling back some—though not all—of the tax cuts Republicans passed last year. She pushes for more vigorous antitrust enforcement, more protections for privacy and steps to curb undisclosed money in politics

.. For his part, Sen. Brown, a liberal who this year won Ohio as it otherwise drifts Republican, offers a working-class-friendly agenda that combines progressive impulses for government activism to drive up wages with Trumpian skepticism about trade deals and corporate outsourcing.

 

 

 

 

 

Trump begins making overtures to Democrats amid skepticism it will lead to any deals

President Trump, facing a Congress that will become dramatically more antagonistic toward him in January, has begun courting Democrats who could determine whether his next two years are spent scoring legislative deals or staving off an onslaught of congressional investigations.

Trump’s charm offensive was on display Monday when he hosted Sen. Joe Manchin III (D-W.Va.) at the White House for a meeting that the two men had spent days trying to schedule. Over a lunch of chicken, green beans and mashed potatoes, Manchin preached bipartisanship — urging the president to work with lawmakers on ending a pension crisis affecting tens of thousands of coal miners nationwide, said Jonathan Kott, Manchin’s spokesman.

During the hour-and-a-half lunch, Manchin also suggested that Trump take a look at a comprehensive immigration bill the Senate passed in 2013 as another area of potential cooperation with Democrats — even though Trump has vehemently opposed the legislation and pursued tougher immigration policies while in office. Trump and Manchin were joined at the beginning of the meeting by Vice President Pence and the president’s daughter and adviser Ivanka Trump.

.. In recent days, Trump has invited the top Democratic congressional leaders to the White House amid a pressing government funding battle and privately told a Democratic senator he would consider legislation to help stem the loss of auto manufacturing jobs in Ohio.

The overtures are a signal that Trump and his White House are at least feeling out whether the self-professed dealmaker can find common ground with Democrats next year even as he faces pressure from Republicans to keep the opposition party at arm’s length.

.. “I’ve seen him when others advise not to make a deal and he moves ahead,” said Marc Short, the former White House legislative affairs director.

But others cautioned that Trump’s bipartisan urges can be episodic and fleeting — a dynamic of which lawmakers and his aides are well aware.

“When he thinks he needs to be bipartisan, he does it for a while,” one adviser said.

.. Trump had requested that Pelosi and Schumer meet with him at the White House this week. Aides said the White House did not specify any agenda, but the meeting has been put off until next week, after memorial services are held for former president George H.W. Bush, who died Friday.

.. In previous interactions with Trump, the two Democratic leaders have shown they can push the president toward their desired policy outcomes — and quickly set the narrative. Last year, Pelosi and Schumer left a White House dinner and eagerly put out word that Trump had agreed to a deal that would combine permanent protections for young undocumented immigrants with border security measures, only to have the administration dispute that any agreement had been reached.

Pelosi and Schumer would often skip the staff and try to meet with Trump, who would welcome a deal and emphatically support one.

“The president would learn the details and then would realize it was a bad deal,” a former administration official said.

Trade is another area that could be ripe for cooperation between Trump and congressional Democrats — leaving GOP leaders increasingly uneasy about Trump’s tendencies.

.. Lighthizer has spoken encouragingly of Pelosi — who has repeatedly bucked presidents, including Barack Obama, on trade — to GOP lawmakers since her views are more likely to align with Trump’s and she could be willing to work with the administration, according to two Republicans briefed on those exchanges.

Last week, Pelosi — joking that the new North American pact “has some kind of gobbledygook name” — said the trade deal “formerly known as Prince” was still a work in progress.

.. Pelosi said. “But what isn’t in it yet is enough enforcement reassurances regarding provisions that relate to workers and to the environment. There also has not been a law passed in Mexico in terms of wages and working conditions in Mexico.”

.. The notion still has plenty of skeptics in the West Wing, with questions over how to pay for new projects. Yet Shahira Knight, Short’s successor as Trump’s main liaison to Capitol Hill, has told one key House Democrat that the president wants to pursue an infrastructure deal and acknowledges that it’ll take real money. 

.. The notion still has plenty of skeptics in the West Wing, with questions over how to pay for new projects. Yet Shahira Knight, Short’s successor as Trump’s main liaison to Capitol Hill, has told one key House Democrat that the president wants to pursue an infrastructure deal and acknowledges that it’ll take real money.

The White House outreach has only gone so far — particularly when it concerns committees and lawmakers more likely to be investigating the administration than cutting deals.

Rep. Bennie Thompson (D-Md.), the likely incoming chairman of the House Homeland Security Committee, has heard “not a word” from the White House as he prepares to lead a panel that plans to scrutinize the administration’s immigration directives and response to natural disasters.

.. Last Wednesday, Trump phoned Sen. Sherrod Brown after the Ohio Democrat requested a call to discuss General Motors’s recent decision to shutter several auto plants, including one in northeastern Ohio. During the call, Brown, who also talks trade with Lighthizer, urged Trump to get behind legislation he drafted that would get rid of tax provisions that could incentivize companies to ship auto manufacturing jobs abroad.

.. Trump said he liked the bill, according to Brown’s retelling, and his office rushed a copy of the legislation over to the White House. But Brown has tried to negotiate with the White House before — notably on the tax legislation last year — only to find that Trump ultimately decided to shun bipartisan dealmaking and go toward a Republican-only approach.

Brown hopes that this time it’s different.

The Tax-Cut Con

The advocates of tax cuts are relentless, even fanatical. An indication of the movement’s fervor — and of its political power — came during the Iraq war. War is expensive and is almost always accompanied by tax increases. But not in 2003. ”Nothing is more important in the face of a war,” declared Tom DeLay, the House majority leader, ”than cutting taxes.” And sure enough, taxes were cut, not just in a time of war but also in the face of record budget deficits. Nor will it be easy to reverse those tax cuts: the tax-cut movement has convinced many Americans — like Tinsley — that everybody still pays far too much in taxes.

.. A result of the tax-cut crusade is that there is now a fundamental mismatch between the benefits Americans expect to receive from the government and the revenues government collect. This mismatch is already having profound effects at the state and local levels: teachers and policemen are being laid off and children are being denied health insurance. The federal government can mask its problems for a while, by running huge budget deficits, but it, too, will eventually have to decide whether to cut services or raise taxes. And we are not talking about minor policy adjustments. If taxes stay as low as they are now, government as we know it cannot be maintained. In particular, Social Security will have to become far less generous; Medicare will no longer be able to guarantee comprehensive medical care to older Americans; Medicaid will no longer provide basic medical care to the poor.

.. The reason Tinsley’s comic strip about the angry taxpayer caught my eye was, of course, that the numbers were all wrong. Very few Americans pay as much as 50 percent of their income in taxes; on average, families near the middle of the income distribution pay only about half that percentage in federal, state and local taxes combined.

.. In fact, though most Americans feel that they pay too much in taxes, they get off quite lightly compared with the citizens of other advanced countries. Furthermore, for most Americans tax rates probably haven’t risen for a generation. And a few Americans — namely those with high incomes — face much lower taxes than they did a generation ago.

.. In the United States, all taxes — federal, state and local — reached a peak of 29.6 percent of G.D.P. in 2000. That number was, however, swollen by taxes on capital gains during the stock-market bubble.

By 2002, the tax take was down to 26.3 percent of G.D.P., and all indications are that it will be lower still this year and next.

This is a low number compared with almost every other advanced country. In 1999, Canada collected 38.2 percent of G.D.P. in taxes, France collected 45.8 percent and Sweden, 52.2 percent.

.. Meanwhile, wealthy Americans have seen a sharp drop in their tax burden. The top tax rate — the income-tax rate on the highest bracket — is now 35 percent, half what it was in the 1970’s. With the exception of a brief period between 1988 and 1993, that’s the lowest rate since 1932. Other taxes that, directly or indirectly, bear mainly on the very affluent have also been cut sharply. The effective tax rate on corporate profits has been cut in half since the 1960’s. The 2001 tax cut phases out the inheritance tax, which is overwhelmingly a tax on the very wealthy: in 1999, only 2 percent of estates paid any tax, and half the tax was paid by only 3,300 estates worth more than $5 million. The 2003 tax act sharply cuts taxes on dividend income, another boon to the very well off. By the time the Bush tax cuts have taken full effect, people with really high incomes will face their lowest average tax rate since the Hoover administration.

.. Yet a significant number of Americans rage against taxes, and the party that controls all three branches of the federal government has made tax cuts its supreme priority. Why?

3. Supply-Siders, Starve-the-Beasters and Lucky Duckies

It is often hard to pin down what antitax crusaders are trying to achieve. The reason is not, or not only, that they are disingenuous about their motives — though as we will see, disingenuity has become a hallmark of the movement in recent years. Rather, the fuzziness comes from the fact that today’s antitax movement moves back and forth between two doctrines. Both doctrines favor the same thing: big tax cuts for people with high incomes. But they favor it for different reasons.

One of those doctrines has become famous under the name ”supply-side economics.” It’s the view that the government can cut taxes without severe cuts in public spending. The other doctrine is often referred to as ”starving the beast,” a phrase coined by David Stockman, Ronald Reagan’s budget director. It’s the view that taxes should be cut precisely in order to force severe cuts in public spending. Supply-side economics is the friendly, attractive face of the tax-cut movement. But starve-the-beast is where the power lies.

.. So the standard view of economists is that if you want to reduce the burden of taxes, you must explain what government programs you want to cut as part of the deal. There’s no free lunch.

What the supply-siders argued, however, was that there was a free lunch. Cutting marginal rates, they insisted, would lead to such a large increase in gross domestic product that it wouldn’t be necessary to come up with offsetting spending cuts.

.. The other camp in the tax-cut crusade actually welcomes the revenue losses from tax cuts. Its most visible spokesman today is Grover Norquist, president of Americans for Tax Reform, who once told National Public Radio: ”I don’t want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub.” And the way to get it down to that size is to starve it of revenue. ”The goal is reducing the size and scope of government by draining its lifeblood,” Norquist told U.S. News & World Report.

.. Edwin Feulner, the foundation’s president, uses ”New Deal” and ”Great Society” as terms of abuse, implying that he and his organization want to do away with the institutions Franklin Roosevelt and Lyndon Johnson created. That means Social Security, Medicare, Medicaid — most of what gives citizens of the United States a safety net against economic misfortune.

.. The starve-the-beast doctrine is now firmly within the conservative mainstream. George W. Bush himself seemed to endorse the doctrine as the budget surplus evaporated: in August 2001 he called the disappearing surplus ”incredibly positive news” because it would put Congress in a ”fiscal straitjacket.”

.. to starve the beast, you must not only deny funds to the government; you must make voters hate the government. There’s a danger that working-class families might see government as their friend: because their incomes are low, they don’t pay much in taxes, while they benefit from public spending. So in starving the beast, you must take care not to cut taxes on these ”lucky duckies.” (Yes, that’s what The Wall Street Journal called them in a famous editorial.) In fact, if possible, you must raise taxes on working-class Americans in order, as The Journal said, to get their ”blood boiling with tax rage.”

.. The supply-side movement likes to present itself as a school of economic thought like Keynesianism or monetarism — that is, as a set of scholarly ideas that made their way, as such ideas do, into political discussion. But the reality is quite different. Supply-side economics was a political doctrine from Day 1; it emerged in the pages of political magazines, not professional economics journals.

.. That is not to deny that many professional economists favor tax cuts. But they almost always turn out to be starve-the-beasters, not supply-siders.

.. And they often secretly — or sometimes not so secretly — hold supply-siders in contempt. N. Gregory Mankiw, now chairman of George W. Bush’s Council of Economic Advisers, is definitely a friend to tax cuts; but in the first edition of his economic-principles textbook, he described Ronald Reagan’s supply-side advisers as ”charlatans and cranks.”

..Douglas Holtz-Eakin  .. his conclusion was that unless the revenue losses from the proposed tax cuts were offset by spending cuts, the resulting deficits would be a drag on growth, quite likely to outweigh any supply-side effects.

.. since the 1970’s almost all of the prominent supply-siders have been aides to conservative politicians, writers at conservative publications like National Review, fellows at conservative policy centers like Heritage or economists at private companies with strong Republican connections. Loosely speaking, that is, supply-siders work for the vast right-wing conspiracy.

.. What gives supply-side economics influence is its connection with a powerful network of institutions that want to shrink the government and see tax cuts as a way to achieve that goal. Supply-side economics is a feel-good cover story for a political movement with a much harder-nosed agenda.

.. Irving Kristol, in his role as co-editor of The Public Interest, was arguably the single most important proponent of supply-side economics. But years later, he suggested that he himself wasn’t all that persuaded by the doctrine: ”I was not certain of its economic merits but quickly saw its political possibilities.” Writing in 1995, he explained that his real aim was to shrink the government and that tax cuts were a means to that end: ”The task, as I saw it, was to create a new majority, which evidently would mean a conservative majority, which came to mean, in turn, a Republican majority — so political effectiveness was the priority, not the accounting deficiencies of government.”

.. In effect, what Kristol said in 1995 was that he and his associates set out to deceive the American public. They sold tax cuts on the pretense that they would be painless, when they themselves believed that it would be necessary to slash public spending in order to make room for those cuts.

.. But one supposes that the response would be that the end justified the means — that the tax cuts did benefit all Americans because they led to faster economic growth. Did they?

.. skeptics say that rapid growth after 1982 proves nothing: a severe recession is usually followed by a period of fast growth, as unemployed workers and factories are brought back on line. The test of tax cuts as a spur to economic growth is whether they produced more than an ordinary business cycle recovery. Once the economy was back to full employment, was it bigger than you would otherwise have expected? And there Reagan fails the test: between 1979, when the big slump began, and 1989, when the economy finally achieved more or less full employment again, the growth rate was 3 percent, the same as the growth rate between the two previous business cycle peaks in 1973 and 1979. Or to put it another way, by the late 1980’s the U.S. economy was about where you would have expected it to be, given the trend in the 1970’s. Nothing in the data suggests a supply-side revolution.

.. Does this mean that the Reagan tax cuts had no effect? Of course not. Those tax cuts, combined with increased military spending, provided a good old-fashioned Keynesian boost to demand.

.. While the Reagan tax cuts didn’t produce any visible supply-side gains, they did lead to large budget deficits. From the point of view of most economists, this was a bad thing. But for starve-the-beast tax-cutters, deficits are potentially a good thing, because they force the government to shrink. So did Reagan’s deficits shrink the beast?

..  In response to these deficits, George Bush the elder went back on his ”read my lips” pledge and raised taxes. Bill Clinton raised them further. And thereby hangs a tale.

.. Clinton did exactly the opposite of what supply-side economics said you should do: he raised the marginal rate on high-income taxpayers. In 1989, the top 1 percent of families paid, on average, only 28.9 percent of their income in federal taxes; by 1995, that share was up to 36.1 percent.

Conservatives confidently awaited a disaster — but it failed to materialize. In fact, the economy grew at a reasonable pace through Clinton’s first term, while the deficit and the unemployment rate went steadily down. And then the news got even better: unemployment fell to its lowest level in decades without causing inflation, while productivity growth accelerated to rates not seen since the 1960’s. And the budget deficit turned into an impressive surplus.

Tax-cut advocates had claimed the Reagan years as proof of their doctrine’s correctness; as we have seen, those claims wilt under close examination. But the Clinton years posed a much greater challenge: here was a president who sharply raised the marginal tax rate on high-income taxpayers, the very rate that the tax-cut movement cares most about. And instead of presiding over an economic disaster, he presided over an economic miracle.

.. the Clinton-era surge probably reflected the maturing of information technology: businesses finally figured out how to make effective use of computers, and the resulting surge in productivity drove the economy forward. But the fact that America’s best growth in a generation took place after the government did exactly the opposite of what tax-cutters advocate was a body blow to their doctrine.

.. They tried to make the best of the situation. The good economy of the late 1990’s, ardent tax-cutters insisted, was caused by the 1981 tax cut. Early in 2000, Lawrence Kudlow and Stephen Moore, prominent supply-siders, published an article titled ”It’s the Reagan Economy, Stupid.”

.. But anyone who thought about the lags involved found this implausible — indeed, hilarious. If the tax-cut movement attributed the booming economy of 1999 to a tax cut Reagan pushed through 18 years earlier, why didn’t they attribute the economic boom of 1983 and 1984 — Reagan’s ”morning in America” — to whatever Lyndon Johnson was doing in 1965 and 1966?

.. By the end of the 1990’s, in other words, supply-side economics had become something of a laughingstock

..  the most striking example of what skillful marketing can accomplish is the campaign for repeal of the estate tax.

.. the estate tax is a tax on the very, very well off. Yet advocates of repeal began portraying it as a terrible burden on the little guy. They renamed it the ”death tax” and put out reports decrying its impact on struggling farmers and businessmen — reports that never provided real-world examples because actual cases of family farms or small businesses broken up to pay estate taxes are almost impossible to find. This campaign succeeded in creating a public perception that the estate tax falls broadly on the population. Earlier this year, a poll found that 49 percent of Americans believed that most families had to pay the estate tax, while only 33 percent gave the right answer that only a few families had to pay.

.. the public rationale for tax cuts has shifted repeatedly over the past three years.

.. During the 2000 campaign and the initial selling of the 2001 tax cut, the Bush team insisted that the federal government was running an excessive budget surplus, which should be returned to taxpayers. By the summer of 2001, as it became clear that the projected budget surpluses would not materialize, the administration shifted to touting the tax cuts as a form of demand-side economic stimulus: by putting more money in consumers’ pockets, the tax cuts would stimulate spending and help pull the economy out of recession. By 2003, the rationale had changed again: the administration argued that reducing taxes on dividend income, the core of its plan, would improve incentives and hence long-run growth — that is, it had turned to a supply-side argument.

.. So what were the Bush tax cuts really about? The best answer seems to be that they were about securing a key part of the Republican base. Wealthy campaign contributors have a lot to gain from lower taxes, and since they aren’t very likely to depend on Medicare, Social Security or Medicaid, they won’t suffer if the beast gets starved. Equally important was the support of the party’s intelligentsia, nurtured by policy centers like Heritage and professionally committed to the tax-cut crusade. The original Bush tax-cut proposal was devised in late 1999 not to win votes in the national election but to fend off a primary challenge from the supply-sider Steve Forbes, the presumptive favorite of that part of the base.

..  the selling of the tax cuts has depended heavily on chicanery. The administration has used accounting trickery to hide the true budget impact of its proposals, and it has used misleading presentations to conceal the extent to which its tax cuts are tilted toward families with very high income.

.. The most important tool of accounting trickery, though not the only one, is the use of ”sunset clauses” to understate the long-term budget impact of tax cuts.

.. But, of course, nobody expects the sunset to occur: when 2011 rolls around, Congress will be under immense pressure to extend the tax cuts.

.. the administration has carried out a very successful campaign to portray these tax cuts as mainly aimed at middle-class families. This campaign is similar in spirit to the selling of estate-tax repeal as a populist measure, but considerably more sophisticated.

.. the 2001 tax cut, once fully phased in, will deliver 42 percent of its benefits to the top 1 percent of the income distribution.

.. It might seem impossible to put a populist gloss on tax cuts this skewed toward the rich, but the administration has been remarkably successful in doing just that.

.. One technique involves exploiting the public’s lack of statistical sophistication. In the selling of the 2003 tax cut, the catch phrase used by administration spokesmen was ”92 million Americans will receive an average tax cut of $1,083.’‘ That sounded, and was intended to sound, as if every American family would get $1,083. Needless to say, that wasn’t true.

.. About half of American families received a tax cut of less than $100; the great majority, a tax cut of less than $500.

.. David Stockman famously admitted that Reagan’s middle-class tax cuts were a ”Trojan horse” that allowed him to smuggle in what he really wanted, a cut in the top marginal rate.

.. If a couple had multiple children, if the children were all still under 18 and if the couple’s income was just high enough to allow it to take full advantage of the child credit, it could get a tax cut of as much as 4 percent of pretax income. Hence the couple with two children and an income of $40,000, receiving a tax cut of $1,600

.. But while most couples have children, at any given time only a small minority of families contains two or more children under 18 — and many of these families have income too low to take full advantage of the child tax credit. So that ”typical” family wasn’t typical at all. Last year, the actual tax break for families in the middle of the income distribution averaged $469, not $1,600.

.. through a combination of hardball politics, deceptive budget arithmetic and systematic misrepresentation of who benefits, Bush’s team has achieved a major reduction of taxes, especially for people with very high incomes.

.. Alan Auerbach, William Gale and Peter Orszag, fiscal experts at the Brookings Institution, have estimated the size of the ”fiscal gap” — the increase in revenues or reduction in spending that would be needed to make the nation’s finances sustainable in the long run. If you define the long run as 75 years, this gap turns out to be 4.5 percent of G.D.P. Or to put it another way, the gap is equal to 30 percent of what the federal government spends on all domestic programs. Of that gap, about 60 percent is the result of the Bush tax cuts. We would have faced a serious fiscal problem even if those tax cuts had never happened. But we face a much nastier problem now that they are in place. And more broadly, the tax-cut crusade will make it very hard for any future politicians to raise taxes.

So how will this gap be closed? The crucial point is that it cannot be closed without either fundamentally redefining the role of government or sharply raising taxes.

.. Politicians will, of course, promise to eliminate wasteful spending. But take out Social Security, Medicare, defense, Medicaid, government pensions, homeland security, interest on the public debt and veterans’ benefits — none of them what people who complain about waste usually have in mind — and you are left with spending equal to about 3 percent of gross domestic product. And most of that goes for courts, highways, education and other useful things. Any savings from elimination of waste and fraud will amount to little more than a rounding-off error.

.. Let’s assume that interest on the public debt will be paid, that spending on defense and homeland security will not be compromised and that the regular operations of government will continue to be financed. What we are left with, then, are the New Deal and Great Society programs: Social Security, Medicare, Medicaid and unemployment insurance. And to close the fiscal gap, spending on these programs would have to be cut by around 40 percent.

.. It goes almost without saying that the age at which Americans become eligible for retirement benefits would rise, that Social Security payments would fall sharply compared with average incomes, that Medicare patients would be forced to pay much more of their expenses out of pocket — or do without. And that would be only a start.

.. All this sounds politically impossible. In fact, politicians of both parties have been scrambling to expand, not reduce, Medicare benefits by adding prescription drug coverage

.. I think within a decade, though not everyone agrees — the bond market will tell us that we have to make a choice.

In short, everything is going according to plan.

.. Some supporters of President Bush may have really believed that his tax cuts were consistent with his promises to protect Social Security and expand Medicare; some people may still believe that the wondrous supply-side effects of tax cuts will make the budget deficit disappear. But for starve-the-beast tax-cutters, the coming crunch is exactly what they had in mind.

.. In Norquist’s vision, America a couple of decades from now will be a place in which

  • elderly people make up a disproportionate share of the poor, as they did before Social Security. It will also be a country in which
  • even middle-class elderly Americans are, in many cases, unable to afford expensive medical procedures or prescription drugs and in which
  • poor Americans generally go without even basic health care. And it may well be a place in which only
  • those who can afford expensive private schools can give their children a decent education.

The End of Impunity

What Democrats can do with subpoena power.

Schiff said he’ll look at the work being done by Robert Mueller, the special counsel, and by the Senate Intelligence Committee, and figure out where the gaps might be. “One that I would put as very important is the issue of whether the Russians were laundering money through the Trump Organization,” he said.

If Democrats prevail in November, his committee won’t be the only one examining Trump’s finances. Under a rarely used 1924 law passed after the Teapot Dome scandal, leaders of three congressional committees —

  1. the House Ways and Means Committee, the
  2. Senate Finance Committee and the
  3. Joint Committee on Taxation

— can each demand to see the president’s tax returns.

..  “We are in a fight for the soul of our democracy,” he said. “So I understand that for me to effectively do that second lane that I just talked about — voting rights and all those good things, prescription drugs — I need to have the democracy intact.”

The Trump administration, he said, needs to be exposed, which might mean hearings into the way Trump is profiting off the presidency, or on abuses of the security clearance process. “What we’re going to have to do is try to create a new but appropriate sense of what is normal,”