Thursday, December 7, 2017

Republicans Win on Taxes

Congressional Republicans recognized they couldn’t end the 2017 legislative session without a major accomplishment, especially after the high-profile failure to pass health care “repeal and replace.” Saturday morning at about 1:06 (EST), they passed a major revision of the tax code by 51 to 49 votes. No Democrat supported it and only one Republican failed to support it – Bob Corker of Tennessee on deficit grounds.

Republicans are the party to lower taxes and they now can claim the issue. As expected, they argue it will pay for itself by spurring growth and point to the DOW as evidence. Unfortunately, polls show, like health care, the law is not popular. Only 29 percent of Americans approve of it and only a quarter (24%) believe the middle class would benefit (wealthy win, 64%).

The Democrats lost the Senate vote making their usual defensive argument about distribution and equality issues instead of jobs and growth. Also, they claim the deficit will increase by up to one trillion dollars. Unfortunately, fewer people care about the deficit today than in the early Obama administration, and the Democrats, as the long-established party of “tax and spend,” has little credibility arguing for fiscal prudence. Also, few people (30%, Pew 2017) believe any significant progress will be made on the handling of the deficit.

Democrats may gain some longer term benefit as the public reacts negatively to the taxes effect on personal income, but for now, the Republicans and President Trump will claim a victory that will especially satisfy their corporate and business constituents.

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