Republicans have both an arithmetic and a messaging problem as they try to enact Donald Trump’s second-term agenda via a giant budget-reconciliation bill. The former involves finding a way to pay for the $4 trillion-plus tax cuts Trump has demanded, along with a half-trillion or so in border security and defense spending increases. And the latter flows from the necessity of hammering popular federal programs (especially Medicaid) to avoid boosting budget deficits that are already out of control from the perspective of conservatives. This sets up Democrats nicely to deplore the whole mess as a matter of “cutting Medicaid to pay for tax cuts for Trump’s billionaire friends,” a very effective message that has vulnerable House Republicans worried.
To interrupt this line of attack while making the overall agenda slightly more affordable, anonymous White House sources lofted a trial balloon earlier this month via a Fox News report:
“White House aides are quietly floating a proposal within the House GOP that would raise the tax rate for people making more than $1 million to 40%, two sources familiar with discussions told Fox News Digital, to offset the cost of eliminating taxes on overtime pay, tipped wages, and retirees’ Social Security.
“The sources stressed the discussions were only preliminary, and the plan is one of many being talked about as congressional Republicans work on advancing President Donald Trump’s agenda via the budget reconciliation process.
“Trump and his White House have not yet taken a position on the matter, but the idea is being looked at by his aides and staff on Capitol Hill.”
The idea wasn’t as shocking as it might seem. Trump’s 2017 tax cuts reduced the top income-tax rate from 39.6 percent to 37 percent, so just letting that provision expire would accomplish the near-40 percent rate without disturbing other goodies for rich people in the 2017 bill like corporate-tax cuts, estate-tax cuts, and a relaxed alternative minimum tax for both individuals and corporations. One House Republican, Pennsylvania’s Dan Meuser, suggested resetting the top individual tax rate at 38.6 percent, still a reduction from pre-2017 levels but a “tax increase on the rich” as compared to current policies.
Crafty as this approach might have been as a way of boosting claims that Trump had aligned the GOP with middle-class voters (the intended beneficiaries of his recent tax-cut proposals) rather than the very rich, the idea of backing any tax increase on the allegedly super-productive job creators at the top of the economic pyramid struck many Republicans as the worst imaginable heresy. You could plausibly argue that total opposition to higher taxes, or even to progressive taxes, was the holy grail for the party, more foundational than any other principle and one of the remaining links between pre-Trump and MAGA conservatism. At the very idea of fuzzing up the tax-cut gospel, old GOP warhorses like Newt Gingrich and Americans for Tax Reform’s Grover Norquist arose from their political rest homes to shout: unclean! Gingrich called it the worst potential betrayal of the Cause since George H.W. Bush cut a bipartisan deficit-reduction deal in 1990 that included a tax increase.
As it happens, it was all a mirage. In virtual unison, both Trump and House Speaker Mike Johnson have said a high-end tax cut won’t happen this year, as Politico reports:
“President Donald Trump and House Speaker Mike Johnson on Wednesday came out against a tax hike on the wealthiest Americans — likely putting the nail in the coffin of the idea.
“Trump told reporters in the Oval Office that he thought the idea would be ‘very disruptive’ because it would prompt wealthy people to leave the country. …
“Johnson separately knocked the idea earlier in the day, saying that he is ‘not in favor of raising the tax rates because our party is the group that stands against that traditionally.’”
Trump’s real fear may be that wealthy people would leave the GOP rather than the country. Many are already upset about Trump’s 19th-century protectionist tariff agenda and its effects on the investor class. Subordinating the tax-cut gospel to other MAGA goals might push some of them over the edge. As for Johnson, the Speaker is having to cope with the eternal grumbling of the House Freedom Caucus, where domestic budget cuts are considered a delightful thing in itself and the idea of boosting anyone’s taxes to succor the parasites receiving Medicaid benefits is horrifying.
If Trump’s “big, beautiful” reconciliation bill runs into trouble or if Democrats set the table for a big midterm comeback wielding the “cutting Medicaid to give billionaires a tax break” message, squashing the symbolic gesture of a small boost in federal income-tax rates for the wealthy may be viewed in retrospect as a lost opportunity for the GOP. For the time being, that party’s bond with America’s oligarchs and their would-be imitators stands intact.
Don’t expect the polls to carry the day.
Bush is a lot smarter than most Democrats, and realizes that polls mean only present support. Once he’s gotten out there and beat the drum for a while, the polls will change.
Unless Democrats respond in kind, with Kristoff’s advice… reject it sight unseen and declare there is no Crisis.
Cranky, Allen and others.
There are big political and mechanical differences between Iraq and pushing Social Security Privatization through. Once the decision is made to go to war the nation is on a speeding train with no way to control the engineer. And all kinds of wells are tapped: general patriotism “we are at war”, “support the troops”. And once you are engaged in combat it is in many ways too late, there is no easy way to extract yourself.
Social Security is different. No one enlisted in the War on Social Security. It may be true that this president has the iron grip over his party and the media that you suggest, and that he will be able to ram some plan through even in the face of productivity numbers that suggest no crisis at all. I don’t agree with the premises, but those are issues for another time.
The problem Bush and the Republicans face is time. Whatever plan is adopted, it will require months to actually put individual accounts into place and then to allow individuals to exercise whatever limited choices in investment vehicles they have. As the actual details of the plan start coming out, mainly the fact that future benefits even with returns on the private accounts will be much less than promised under the current plan, people will begin to murmer.
Now if they were able to maintain the sense of “crisis” they might sell this as being “better than nothing”. But the only way to do this is to stop reporting economic productivity numbers altogether. 4.0% economic growth for 2004, already in the bag, simply blows the doors off the productivity models of the Social Security Trustees, not just the Intermediate Cost (which called for 2.7% in 2004 and 1.8% in 2005) that produces the 2018 and 2042 dates used by all, but all the Low Cost one that shows no long term shortfall at all (2.8% and 2.1%).
By June it will be clear that doing nothing would have been a better deal than doing something, particularly this something. And Republicans will be staring up a hill at 2006. They will be faced with having broken something that never needed a fix, lurching ever closer to that Third Rail of American politics.
The beauty is that there is no downside to cut and run here. There is no way that accounts will be set up by June and the US will have invested probably a few million dollars in staff time. The Republican Congress will have two choices: repeal it, or ride it into the Valley of Death that will be the 2006 midterms.
Bush may not care, he is not running for reelection, but the firmer he grasps that veto plan, the better for Dems in 2006.
And? Not to be rude, but it appears to me that the general public is not going to be given a chance to express its opinion. Transfer of Social Security wealth to Wall Street is already scheduled to happen, and there will be a big “burst” of support at just the right minute to satisfy the media.
Cranky
OK, but since when does this administration need informed public support to achieve its goals? And the goal here of course is not to improve investment opportunities or retirement benefits for retired Americans – it is to destroy a successful and essential government program as part of an ideological crusade to deligitimize all government programs that do not redstribute wealth upwards. They will lie and distort and dissemble to whatever degree necessary unless Democrats stand up and call this for what it is, and contesting the issue on this terrain – what the American people really want – is not what the fight is about.
That is, of course, until they start the lying.
Actually, check out Talking Points Memo – Josh points out that the Post wrote up the poll quite badly and that the numbers look better for the Democrats.
LATEST NEWS IN THE WASHINGTON STATE GUBERNATORIAL RACE
Democratic candidate Christine Gregoire put together a string of victories Wednesday against Republican Dino Rossi. The race, which still isn’t over, has been extremely close.
Permanent Defense: King County reported +59 votes for Gregoire, giving Gregoire the overall lead in the statewide manual recount by 10 votes. This does not count the 725 ballots the Supreme Court said can be counted.
The especially good news about all of this is it shows Democrats are willing to stand and fight. We won’t be intimidated by the GOP….No more stolen elections! Christine Gregoire has held on for almost two months now – and we believe she will emerge from this as our state’s Governor.
He’s hoping to scare the public into supporting his plans, a la Iraq. The advantage he had that time was that a lot of Americans wanted to lash out at Arabs–any Arabs–in the wake of 911, so they were open to persuasion. The advantage he has this time is that the relentless talk of “Social Security crisis” has eroded the public’s support to some extent, since many are skeptical that they’ll ever get benefits. It’s not as strong a card to play as the post-911 anger was, so there’s hope. Given the Democrats’ disarray, however, I’d say he has a decent chance of prevailing. The real test is whether the Dems can wake up and finally start acting like an opposition party, and not get caught up in giving the Republicans fig leafs.