The best test for judging any Trump administration tax plan is the Mnuchin test — the standard that President Trump’s own Treasury Secretary, Steven Mnuchin, laid out a few months ago:
“Any reductions we have in upper-income taxes will be offset by less deductions, so that there will be no absolute tax cut for the upper class. There will be a big tax cut for the middle class, but any tax cuts we have for the upper class will be offset by less deductions that pay for it.”
I’ll repeat the key phrase for emphasis: “there will be no absolute tax cut for the upper class.”
Mnuchin was right to make this commitment. While middle-class incomes have stagnated, the top 0.01 percent of earners have had their average inflation-adjusted income roughly quadruple to $11.3 million since 1980. Their taxes have fallen, too. There’s no justification for cutting those taxes further.
Yet on Wednesday Trump, with Mnuchin as the pitch man, proposed precisely that, violating Mnuchin’s own standard.
Trump Faces Deal-Making Challenges as Congress Returns
“Legislatively, September may be the longest month of the year, with several must pass items that face an uphill climb,” said Doug Heye, a longtime Republican strategist. The president’s decision to push the immigrant program to Congress “only makes that harder, on an issue that for years Republicans have struggled to make any headway on. The question is whether this was a strategic decision by the White House.”
His self-proclaimed deal-making skills could also be put to the test in foreign policy as he decides how to respond to North Korea’s nuclear saber-rattling while separately seeking to renegotiate the North American Free Trade Agreement with Mexico and Canada and broker peace between Israelis and Palestinians. And he may alienate America’s traditional European allies if he tries to scuttle Mr. Obama’s nuclear agreement with Iran by declaring Tehran out of compliance over their objections.
.. As he pressures North Korea to curb its nuclear program, he has belittled South Korea for “appeasement” and threatened to tear up its trade deal with the United States. As he lobbies lawmakers to back his legislative priorities, he has castigated Senator Mitch McConnell, the majority leader, and other Republicans crucial to passage.
.. Mr. Trump’s allies argue that he had a better summer than the Washington conventional wisdom would suggest and that he has a path forward. They contend that after the fights of early August, the president took on the mantle of a national leader with a vigorous and visible response to Hurricane Harvey, and that cleaning up the devastation may prove both a rallying point and a strategic leverage.
.. “It may sound counterintuitive, but the president heads into September with a bit of wind at his back,” said Michael Dubke, who served as his White House communications director. “Harvey was handled well, tax reform is back on track, the debt ceiling showdown will be pushed to a later date and while there are no good choices in North Korea, the president’s national security team is second to none.”
.. It’s not a mistake to disagree when you disagree; it is a mistake to suggest that somehow this president, who was elected just as the Constitution prescribed, and has the responsibility to lead the country, that somehow we need to not work with this president.”
.. On Tuesday afternoon, Mr. Trump will host a group that has been dubbed the Big Six to discuss his tax overhaul —
- Mr. McConnell;
- House Speaker Paul D. Ryan;
- Treasury Secretary Steven Mnuchin;
- Gary D. Cohn, the president’s national economics adviser;and
- Senator Orrin G. Hatch of Utah and
- Representative Kevin Brady of Texas, the Republican chairmen of the tax-writing committees.
.. Allies said Mr. Trump’s approach to negotiations, however, is to hold out for the best deal possible until the last moment, so it is too soon to judge.
.. “My style of deal-making is quite simple and straightforward,” he once wrote. “I aim very high, and then I just keep pushing and pushing and pushing to get what I’m after. Sometimes I settle for less than I sought, but in most cases I still end up with what I want.”
.. But those who have studied his career in real estate and business said that it has been marked by as many failed deals as successful ones.
- He bought an airline that failed.
- He bought a football team in a league that collapsed.
- He filed for bankruptcy protection multiple times.
“If you look at his record, there are a lot of deals that didn’t work out,” said Michael D’Antonio, a Trump biographer. “So if you think about the true record of performance, he is very good at promotion and creating the idea that he is a deal maker, but not very good at making actual successful deals.”
.. some Democrats argue that Mr. Trump’s very weakness may yet prove to be a boon. Since legislating entirely with fellow Republicans has yet to yield the results Mr. Trump had hoped, he may have more incentive to work with Democrats on areas where they could find agreement, particularly
- infrastructure and the
- tax code.
Democrats would also like to work on legislation stabilizing the Obama health care markets.
Sarah Huckabee Sanders’s provocative veiled threat to Congress
She repeated: “Again, if they can’t, then they should get out of the way and let somebody else take their job that can actually get something done.”
.. This is a remarkable tone for the White House to be setting on the eve of a number of critical fights and pieces of legislation. We knew President Trump was willing to unleash his Twitter account on GOP congressional leaders, and during one Q&A, he left open the idea that Senate Majority Leader Mitch McConnell (R-Ky.) might need to be replaced if he can’t deliver. But Sanders’s repeated comments make clear those weren’t just one-offs; this is now the White House’s official strategy and talking point.
.. To recap, the things on Congress’s to-do list are:
- averting a government shutdown,
- passing the first major tax reform since 1986,
- a hurricane relief bill for Harvey (and the possibility of emergency action required for Hurricane Irma in Florida),
- a massive to-be-determined infrastructure bill and now
- comprehensive immigration reform. (Sanders made clear Trump doesn’t want “just a one-piece fix.”) Oh, and don’t forget that Trump wants Congress to
- resurrect health care and get that done, too.
.. Even if this wasn’t a Congress in which failure and gridlock have become the norm, that would be a daunting set of tasks. Trump has now set the bar so high that he’s basically guaranteeing Congress will fail, by his standards.
.. And Sanders so casually adding comprehensive immigration reform to their to-do list Tuesday — and basically giving them six months to complete it before DACA is phased out — was the equivalent of a gut punch to congressional leaders, given years and years of failure on that issue. Having the White House pile that on is almost cruel.
.. The problem, as I noted earlier Tuesday, is that Trump has shown little appetite for providing that leadership. He has demonstrated that he much prefers to leave things to Congress and blame them when they fail. Even more troublingly for GOP leaders, Trump doesn’t just get out of the way; he is forever changing his positions and giving Congress conflicting signals, leaving leaders without the opportunity to apply presidential pressure on members.
.. Trump’s only priority seems to be passing something, but even on that front, his efforts are usually counterproductive. Even in urging large-scale action on immigration, the White House on Tuesday declined to say specifically what it wanted from a bill or whether Trump would sign a straight replacement of just DACA.
.. Tuesday’s example was the latest indication of a looming showdown and irreconcilable, inherent problems between Congress and the White House.
This will get worse before it gets better.
The Finance 202: Here’s how Louise Linton could change the tax debate
Linton set off a firestorm Monday when she posted a shot of herself stepping off a government plane in Kentucky ahead of her husband, Treasury Secretary Steven Mnuchin. The photo showed her draped in luxury brands, which she proceeded to name in a caption and tag in the image. Since Linton’s account was public, a stranger — an Oregon mother of three named Jennifer Miller – was able to comment on the post, writing, “Glad we could pay for your little getaway.” Linton turned what was already likely a PR headache into a full-blown migraine by snapping back:
“Aww!!! Did you think this was a personal trip?! Adorable! Do you think the US govt paid for our honeymoon or personal travel?! Lololol. Have you given more to the economy than me and my husband? Either as an individual earner in taxes OR in self sacrifice to your country? I’m pretty sure we paid more taxes toward our day ‘trip’ than you did. Pretty sure the amount we sacrifice per year is a lot more than you’d be willing to sacrifice if the choice was yours. You’re adorably out of touch. Thanks for the passive aggressive nasty comment… Go chill out and watch the new game of thrones. It’s fab!”