Yesterday, President Trump said something peculiar about the tax plan Republicans will soon unveil. “The rich will not be gaining at all with this plan,” he told reporters. “The wealthy will be pretty much where they are. If we can do that, we’d like it. If they have to go higher, they’ll go higher, frankly.” The actual tax-policy changes Trump has endorsed would, in fact, confer massive windfall benefits upon the rich. At the time he said this, the most obvious interpretation was that Trump was lying (or, in a slight variation, bullshitting).
In the wake of his surprise immigration deal with congressional Democrats, though, a different interpretation beckons. Maybe Trump is actually willing to sign a tax bill that does not cut taxes for rich people. While Trump’s behavior can not be predicted with confidence, and a reversal on an issue of this magnitude would court unimaginable blowback, there are straws in the wind. In a meeting with Senate Democrats, Trump disavowed any plan to reduce taxes on the affluent. “The president was adamant from the get-go this is not a tax cut for the rich,” Senator Joe Manchin, a Democrat from West Virginia, told Morning Joe. “And I repeat that, this will not be a tax cut for me or any rich people.” Trump emerged from the meeting preaching the virtues of bipartisan deal-making: “More and more, we’re trying to work things out together. That’s a positive thing, and it’s good for the Republicans and good for the Democrats.”
What makes the threat of such heresy especially acute for Republicans is that they have no way of sniffing it out on the basis of public rhetoric. Republicans use straightforward terms to describe immigration policy — “DACA,” “wall” — which make it perfectly obvious when Trump departs from party orthodoxy. On taxes, Republicans are habituated to a public that does not share their goal of reducing taxes for the most affluent, and so they smother their intentions in euphemisms and dissembling. A Republican who is double-crossing his party by refusing to help the rich would sound exactly like a Republican president who is trying to fool the public into thinking he has no intention of helping the rich.
The Republican uncertainty about where he’s heading with this partisanship can be gleaned from their responses. “My goal is to lower taxes on every American if it’s possible, help them keep more of what they earn and encourage them to reinvest back in the local economy,” said Texas congressman Kevin Brady, chairman of the House Ways and Means Committee, after Trump’s comments. The Wall Street Journal editorializes today, “what we hear about the debate behind the scenes is worrisome.”
The Journal’s specific fear is that tax cuts will be “hostage to a budget process that is hostile to pro-growth tax policy.” By this, the Journal means that Congress’s tax cuts could be measured by real economists, not voodoo-economics enthusiasts who keep Ayn Rand novels on their nightstand.
Republicans have been describing their efforts as “tax reform,” and have largely succeeded in getting the news media to adopt this terminology. But tax reform means eliminating deductions, preferences, and loopholes. It’s going to be nearly impossible to do that with just 52 Republican votes. The default alternative will be just to hand rich people a huge tax cut, like Republicans did under George W. Bush. However, as the Journal’s editorial implicitly concedes, doing that will require breaking a lot of long-standing Senate budget rules and spending political capital doing something unpopular.
Trump might just decide he’s tired of Republican leaders using his presidency to try to pass a bunch of unpopular laws, since popularity is the thing Trump cares about more than anything else. He could instead cut a deal with Democrats to reform the tax code and not give rich people a big tax cut. That would help his approval ratings rather than hurt them.
To be sure, this course of action poses massive risks. The lure of signing big tax cuts is a major reason Republican leaders have continued to back Trump and to excuse his norm-breaking behavior. Just last week, the House again voted down a proposal to require Trump to disclose his tax returns. If Trump sells out Paul Ryan on taxes, Ryan might sell out Trump on taxes. In the meantime, Ryan and his party can’t be sure about the president whose loyalty once seemed assured.
