Trump May Have Made A Major Miscalculation On Taxes

The American Public Appears To Have Gotten Smarter About Tax Cuts

While the White House continued (lying and) asserting Trump’s tax plan really is mostly beneficial to the middle class, this Tweet jumped out at us:

On the face of it just appears to be a little dig at Dems. But it may reflect something deeper: genuine surprise that anyone would risk coming out against cutting taxes, even if there’s no way of paying for it. There’s nothing voters like more than free money, right?

That used to be true: When we were growing up, people clamored for lower taxes, and rewarded many a politician’s half-baked tax cut scheme by jumping in headfirst. Now not so much. In fact, we hear people complaining a lot less than we used to about how their income tax is too high. More often these days it’s health insurance premiums, or college tuition, or property taxes, or gas prices again in the wake of Hurricane Harvey.

Since Trump’s election, we’ve encountered oodles of lamentations on the ignorance of the American electorate. But we think people have actually gotten much more savvy about the fact that tax cuts don’t typically pay for themselves. Despite what politicians say over and over again. (And Ryan Lizza in the New Yorker is right when he says to resist the President’s spin: it’s “tax cuts” not “tax reform”).

Ironically, the Tea Party almost certainly had something to do with this. They drummed the idea into people’s heads that everything has to be paid for: if the federal government wants to give out any kind of new benefit, they have to take another benefit away that costs the same or more. And if they don’t, Tea Partyers were willing to rain hellfire (in the form of government shutdowns or adult demonstrations of the obstinacy of a 2-year old) until they did. Of course, the Tea Party (now morphed into the Freedom Caucus) isn’t behaving that way these days, now that we have a Republican President. But they planted the seed.

And it’s far from a slam-dunk for Conservatives: the National Review calls Trump’s plan “anti-growth”.

All that makes Trump’s plan, potentially, a much harder sell. Way harder than he may have anticipated.

This piece in the Washington Post, (despite its unfortunate, elitist-sounding headline), sums up a lot of what we’ve been talking about. As does this report from the Pew Research Center. Both argue Americans are not too irritated with the taxes they’re paying right now: they’d just rather see the money being spent more efficiently on priorities like veterans and infrastructure, and wealthy people (including the President) paying their fair share. 

Remember That Bipartisan Healthcare Effort That Was “Going Nowhere”? Well Apparently It Is Going Somewhere

Both Bloomberg and Politico report Republican Senator Lamar Alexander and Democrat Patty Murray are close to a bipartisan agreement to support Obamacare pricing and stability. They probably won’t have it ready for a vote this week as originally intended, which means it won’t have an immediate effect on next year’s plans. Alexander would have to muster support from House and Senate leaders which is far from a certainty, since they might even oppose it out of embarrassment after repeatedly and earnestly insisting Trumpcare was the “only option”.

Senators Patty Murray (D) Washington & Lamar Alexander (R) Tennessee

Alexander and Murray’s plan is not intended to be a full-fledged Obamacare update, but would ensure continued cost-sharing payments to health insurance companies, while also giving states some increased flexibility. That flexibility would likely come from fast-tracking waivers that are already built into Obamacare, if states have good ideas of their own. But big distinction here: even with waivers, states would still have to meet the basic Obamacare parameters: pre-existing conditions, etc. Not do pretty much whatever they want, which is what Graham/Cassidy offered.

Tom Price Is Toast (Not Officially Yet, But…)

A cascade of stories in Politico outlined Price’s use of $1-million worth of private and military jets (normally kept at the ready for urgent trips by the Secretary of State or Defense) since May, at the expense of taxpayers, often when commercial flights, or other options were available. And in the span of a week, the President’s Health and Human Services Secretary has come to embody all the negative stereotypes of the Trump Cabinet.

Price made it worse with incomplete and inaccurate responses, that then had to be revised each time Politico came out with a new damning nugget.

And then Price really made it worse by promising: “The taxpayers won’t pay a dime for my seat on those planes”, then writing a check for just $52,000.

So in our opinion the President really has no option.

Health and Human Services Secretary Tom Price


Plus, Price is a “loser”. The main reason Trump brought him in was to ensure a swift death for Obamacare. After all, Price, a physician by training (just like Rand Paul and Bill Cassidy), was 12 years in the House, and Chairman of the powerful House Budget Committee: so how could “repeal and replace” be anything but a breeze with him in charge? Except now he’s failed at it 3 times.

We think the only reason the White House is stalling is to reconcile the activities of other Cabinet Secretaries who may have taken similar liberties with flying machines, and figure out a way of explaining why it’s OK for them to stay on, and not Price.

Trump Does The Right Thing (Eventually) Waiving Law Preventing Aid From Reaching Puerto Rico

The Jones act stipulates that deliveries from the U.S. can only be made by U.S. flagships. Now ships from other countries will be able to deliver oil and other supplies. Interestingly, this isn’t a problem for the U.S. Virgin Islands, which already have a permanent waiver. But Puerto Rico does not. Even though Trump finally came around to the correct course of action, it’s worth remembering his instinct was to side with business interests vs. a desperate humanitarian crisis. Isn’t he supposed to be for the folks whose voices are not heard?

Trump also Tweet-stormed about Puerto Rico, which gave us the sensation of being sucked into a time warp. Because while characteristically self-congratulatory (“Governor said ‘great job!‘”), his latest Tweets would’ve been just dandy…a week ago. But back then, Trump was busy attacking NFL players and owners instead.

If You Want A Shining Example Of Where China’s Eating Our Lunch, Africa’s It

Forget that Trump mispronounced “Namibia”, the President was absolutely right to dedicate some of his time at the U.N. last week wooing African leaders. The U.S. was the African continent’s biggest trading partner less than a decade ago. Now we trail China by so much we can barely make them out on the horizon.

Although it’s hard to get very up-to-date numbers, according to the Brookings Institution, China/Africa trade was close to $200-billion in 2012, more than double the U.S./Africa total. Most of it in oil and minerals. About half of all China’s foreign aid currently goes to Africa.

And China’s army just opened up its first military base on foreign soil. Guess where? In the small Northeast African country of Djibouti. China even showed off its first overseas base by conducting live fire drills. But practically no one took notice. Big mistake.

Chinese soldiers drill at their new home in Djibouti

So Trump’s overtures to African leaders is one area where he is absolutely doing the right thing. And even though Americans may not have noticed, and overall trade with Africa is still relatively small, it was symbolically significant to both Africa and China.

Weekend Reading

Sarah Kliff’s piece (with lots of cool graphics) on Vox, which shows just how crazy U.S. health care costs are compared to the rest of the world. Which the President said he would fix, yet none of the Republicans’ failed plans did.