“Trumpian populism remains a tantalizing promise for people who are interested in it.”
Olsen expected the tax plan to include some of Trump’s populist campaign promises — that the rich would pay more, the forgotten working class would pay less, and special interest loopholes like the carried-interest provision for hedge-fund managers would be gone.
But the tax bill ended up instead being traditionally Republican in its focus on cutting taxes for the well-to-do but barely touching the working class and not helping the middle class to a significant degree.
.. “That’s not what Trump promised,” Olsen said. “And it’s not what Trump’s voters thought they were getting.”
Whatever happened to Ivanka Trump’s child care tax credit?
One of the biggest disappointments for conservatives who believed that Trump could have offered a new, more reform-minded populist economics was the failure of the expanded child care tax credit offered by Republican Sens. Mike Lee and Marco Rubio.
It was an actual populist idea, geared to the working class, because it was refundable against payroll taxes. But not only did Republican leaders oppose it, they made sure it failed by requiring it to get 60 votes, unlike other amendments.
.. The tax bill might not be the kind of populist piece of legislation Trump promised during the campaign, but it does have a lot in it to make conservatives happy. Obamacare is unraveled; there are more tax breaks for people who home-school their kids or send them to religious schools;
.. Maybe the most important thing Trump offers his supporters isn’t economic policy or any policy at all — it’s his racially charged Twitter feed and the cultural grievances it directs at immigrants, Muslims and millionaire black athletes.
Sure, Trump’s followers like the idea of having fewer tax brackets, said conservative Ben Domenech, publisher of TheFederalist.com, but, “What gets them riled up and active is the embrace of the culture-war issues — that Trump has shown himself perfectly happy to fight in a way that Republicans in a lot of other positions have been unwilling to traditionally.”
His tax bill is much more tilted to the wealthy than the tax bills of Ronald Reagan or George W. Bush. And his white-identity politics is much more raw and more central to his persona.
It’s as if the Chamber of Commerce, Wall Street and the wealthy get the policy, while Trump’s blue-collar base gets the Twitter feed.
The report shows that this bill is much like a teaser rate on a new credit card: there are some goodies in the first couple of years, but those disappear fairly quickly, at least for those below the median income.
In 2019, the first full year that this bill would be law, the benefits are concentrated on the bottom of the income stream, with middle-class people, on average, paying just under ten per cent less in taxes than they would if the law weren’t passed. With each passing year the benefits shift upward, toward the rich.
By 2021, those making between twenty thousand and thirty thousand dollars a year are paying considerably more in taxes, those between thirty thousand and two hundred thousand see their benefit shrinking, and those making more start to see their taxes falling.
By 2027, every income level below seventy-five thousand dollars a year sees a tax increase, while everybody above that level sees a continued decrease, with the greatest cut in taxes accruing to those making more than a million dollars a year.
.. the effective tax rate—meaning the percentage that people, on average, actually pay after they take all deductions—changes in a precisely regressive form. The poorer you are, the higher your effective rate will rise. By 2027, only those making a hundred thousand a year or more will see an actual cut in their effective tax rate.
.. Feldstein is, arguably, the single most widely respected Republican-leaning scholar of tax policy, and one of the few academics who came out in favor of the bill
.. He argues that cutting individual tax rates won’t increase economic growth and will add to the deficit—which, he acknowledges, is a bad thing. But he’s so excited about the corporate tax-rate cut that he thinks the bill should pass nonetheless.
.. Its most respected defender acknowledges that three-quarters of the benefit are a wasted, harmful gift for the rich, but a quarter of the benefit goes to corporations, and we must assume they will spend it wisely.
Switch to chained consumer-price index would shift burden after several years as people move into higher bracket
Tucked into Republicans’ tax overhaul bill is a technical tweak to how inflation is measured. The change is designed to hold down the deficit, but over time it becomes a significant tax increase that hits many of the same middle-class households who start out as the plan’s beneficiaries.
.. This makes economic sense because economists consider the chained CPI a more accurate gauge of the cost of living. But because it also yields a lower measure of inflation, it pushes people more rapidly into higher tax brackets. For some income groups, this could eventually wipe out the entire initial tax cut
.. many taxpayers with no real gain in income would still be pushed into higher brackets merely because of inflation.
.. But economists have long known the CPI overstates the cost of living. When prices for a particular commodity rise faster, consumers shift to cheaper alternatives. The CPI adjusts for this by updating the weights of various items in the index every two years.
.. Since 2001, inflation has averaged a quarter percentage point less under the chained CPI than the regular CPI.
.. This raises about $130 billion more revenue over 10 years in the latest versions of both the House and Senate bills
.. After-tax incomes drop by 0.2% to 0.3% for households earning between $40,000 and $1 million and 0.4% for those earning between $20,000 and $40,000. The impact is largest for the lowest-income taxpayers because they depend more on the standard deduction, child tax credit and a new family flexibility credit, all of which will be indexed to the chained CPI.
.. This is also why some income groups start with a tax cut and end up with a tax increase.
.. Once the new index becomes law, don’t count on it being reversed, for two reasons: First, because the effect is so subtle in any single year, most taxpayers won’t even notice so there is little political price to keeping it. Second, as deficits widen, the revenue the new index raises becomes ever more irreplaceable.
.. Lawmakers decided to let most of the personal tax cuts expire in 2025 to keep the total cost within Senate guidelines. But the chained CPI will stay.
.. when lawmakers finally get around to tackling the deficit, they may apply the chained CPI to government benefits such as Social Security to save even more money.
Bannon’s grand ambitions should inspire the same soul-deadening déjà vu, the existential exhaustion, with which Bill Murray’s weatherman greeted every morning in Punxsutawney, Penn. They should bring to mind both Friedrich Nietzsche’s idea of eternal recurrence and his warning that if you stare deep into the abyss, it stares into you.
.. What Bannon is promising is what the Tea Party actually delivered, in a past recent enough to still feel like the present: a dramatic ideological shake-up, an end to D.C. business-as-usual, and the elevation of new leaders with a sweeping vision for a new G.O.P.
.. The ideological shake-up took the form of paper promises, not successful legislation. The end to D.C. business-as-usual just created a new normal of brinkmanship and gridlock. And when the Tea Party’s leaders — Ted Cruz and Rand Paul, above all — reached out to claim their party’s presidential nomination, they found themselves steamrolled by a candidate who scorned all their limited-government ideas and offered, well, Trumpism instead.
.. when it comes to governance, Trumpism turns to have two fatal weaknesses:
- the dearth of Trumpists among elected Republicans, and
- the total policy incapacity of Trump himself.
So having failed in his appointed role as Trump whisperer and White House brain, Bannon has decided to do the Tea Party insurgency thing all over again, except this time with his
- nationalist-populist cocktail instead of the
- last round’s notional libertarianism.
.. Maybe the Tea Party was a dead end, but some Trumpist primary candidates will finally produce a Republican Party capable of doing something with its power.
.. His professed nationalism, with its promise of infrastructure projects and antitrust actions and maybe even tax hikes on the rich, is potentially more popular than the Tea Party vision ..
.. But this imaginative exercise collapses when you look at Bannon’s own record and the candidates he’s recruiting... At the White House, Bannon did not manage to inject much heterodoxy into any part of the same old, same old Republican agenda. But he did encourage the president to pick racialized fights at every chance... his new grass-roots populism promises to be more of the same:
- a notional commitment to some nebulous new agenda,
- with white-identity politics and the
- fear of liberalism supplying the real cultural-political cement... Especially because the would-be senators he’s recruiting are a mix of cynics and fanatics who seem to share no coherent vision, just a common mix of ambition and resentment... if you believe figures like Roy Moore and Erik Prince are going to succeed where Trump is obviously failing, I have some affidavits attesting to Harvey Weinstein’s innocence to sell you... He and his allies are the latest group to recognize the void at the heart of the contemporary Republican Party, the vacuum that somebody, somehow needs to fill.
- .. The activists and enforcers of the Tea Party era tried with a libertarian style of populism.
- Paul Ryan tried with his warmed-over Jack Kempism.
- My friends the “reform conservatives” tried with blueprints for tax credits and wage subsidies.
.. now they, too, need to reckon with a reality that has confounded every kind of Republican reformer since Barack Obama was elected: Our politics are probably too polarized, our legislative branch too gridlocked, and the conservative movement too dysfunctional and self-destructive to build a new agenda from the backbenches of Congress up, or even from the House speaker or Senate majority leader’s office.
.. Our system isn’t really all that republican anymore; it’s imperial, and even an incompetent emperor like Trump is unlikely to restore the legislative branch to its former influence. So if you want to remake the Republican Party as something other than a shambolic repository for anti-liberalism, the only way it’s likely to happen is from the top down —
- with the election of an effective, policy-oriented conservative president (which Donald Trump is not),
- surrounded by people who understand the ways of power (which Bannon, for all his bluster, didn’t) and
- prepared to both negotiate with Democrats and bend his own party to his will.
.. I would not be wasting my time trying to elect a few cranks and gadflies who will make Mitch McConnell’s life more difficult.
Instead I would be looking for the thing that too many people deceived themselves into believing Trump might be, and that Bannonite populism for all its potential strength now lacks: a leader.