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Jared Bernstein: It’s going to take more than facts to win the tax debate

In an effort to sell their big, wasteful, regressive tax cut, Team Trump has shifted its nonsense machine into overdrive.

President Donald Trump speaks about tax reform during an event at the Harrisburg International Airport, Wednesday Oct. 11, 2017, in Middletown, Pa. (AP Photo/Alex Brandon)

In an effort to sell their big, wasteful, regressive tax cut, Team Trump has shifted its nonsense machine into overdrive. It’s making up numbers and “analyses” and offering transparently phony arguments to convince the media and the public that its proposed $2 trillion tax cut for the wealthy is great for workers and costless to the budget.

Few who aren’t paid to propagate such fantasies appear to be buying it (which, to be clear, doesn’t mean it won’t pass Congress). As Washington Post economics reporter Heather Long aptly summarized, when it comes to the substantive points regarding winners, losers, costs of the tax cuts and the alleged growth effects to offset those costs: “This isn’t a liberal versus conservative debate. This is a White House and top GOP leaders versus pretty much everyone else debate.”

The tendency of me and my analytic colleagues in these debates is to head right down into the weeds. We’re inexorably drawn to explain why tax cuts never pay for themselves, why the design of this plan is particularly unlikely to generate much growth at all, and why — who’d have guessed? — when you eliminate estate taxes and the alternative minimum tax (which cost Trump himself $31 million in 2005), open up a big new loophole for “pass-through” businesses, exempt foreign earnings from U.S. taxation, etc., you help the wealthy, not the middle class.

Our analytic instincts are warranted; we must start with the facts. But as Thomas Pynchon sort of said (I’m only slightly altering his famous quote): If they can get you arguing about abstruse tax incidence and growth effects, they don’t have to worry about the facts.

They say: Eliminating the estate tax will help truck drivers! “Truckers will be the No. 1 beneficiaries of President Trump’s tax plan,” according to a “senior White House official.” (I can see why you’d want that to be an anonymous statement.) That sends tax expert David Cay Johnson to the Internal Revenue Service data showing that, given that there are only a few trucking companies that would potentially pay the estate tax, it’s unlikely that its repeal will help truck drivers. CC Huang adds that for the median independent trucker to gain a penny from the cut in the pass-through rate, his/her earnings would have to increase by a factor of 2.5.

Perhaps this sort of “he said, she said” (or, “he lied, she corrected”) is unavoidable, and, as I noted above, most active participants in the debate understand what’s real and what’s fake. For what it’s worth, the Trump plan is getting its butt kicked in the Twitterverse.

The problem is we’re well past the point where rational, fact-based argument will win the day. Trump and his phony sales force have not been moved one iota by fact checks, harsh critiques (former Treasury secretary Lawrence H. Summers labeled the top members of Trump’s econ team ”... some combination of ignorant, disingenuous and dishonest”), killer tweets, or sound analysis debunking their outsized growth assumptions. I’ve tried to call out Republicans who have long posed as fiscal hawks, yet are now signing off on this debt-increasing package, but Sen. Bob Corker (R-Tenn.) aside (and let’s see where he ends up on this), their fiscal hypocrisy apparently doesn’t bother them.

This debate is no more driven by facts than anything else that spews from Trump’s mouth. It’s tough to watch other people I thought had some brains and integrity support indefensible positions, but this fits all too smoothly with a pattern of allegedly moderate conservatives willingly conforming to Trump’s nonreality.

Let’s not put too fine a point on it: The motivation for this tax cut is not tax reform. It is not faster economic growth. It is not faster wage growth. It is not helping Trump’s base voters, truckers or otherwise. It certainly isn’t debt reduction, despite Mnuchin’s audacious claims.

The purpose of this regressive plan is instead twofold: first and foremost, to deliver the tax cuts that Republican donors paid for, and second, once the deficit and debt inevitably rise, to insist on spending cuts targeting Social Security, Medicaid and Medicare.

I recall reading that when their tax-writing colleagues presented the plan to the House Republican caucus, upon hearing about the repeal of the estate tax, the audience applauded. This is a tax break for the richest 0.2 percent of estates!

If that sounds terribly nonrepresentative of what the public wants, that’s because it is.

These politicians, in other words, have no intention of trying to help those working-class families who could actually use some help. There’s no plan to do anything about slow wage growth, the costs of college, health care/addiction, or the lack of opportunity that persists in parts of the land today even as the overall job market is solid — while corporate earnings and the stock market are crushing it.

This problem of nonrepresentative politics obviously goes beyond this one policy debate; we saw similar dynamics in the Republican health care repeal plans. Facts were helpful in that debate, and for now, the worst outcomes have been avoided.

In that spirit, Team Tax Wonk will continue to battle team Trump, but 20-20 vision is of little help in the darkness. I’m not yet sure what is needed, but it will take more than the facts to win this one.


Jared Bernstein | The Washington Post

Bernstein, a former chief economist to Vice President Joe Biden, is a senior fellow at the Center on Budget and Policy Priorities and author of “The Reconnection Agenda: Reuniting Growth and Prosperity.”