The White House and its allies sold their health care plans with lies. They said the plans would protect Medicaid (they wouldn’t); they said the plans would increase coverage (they didn’t); they said the plans would lower premiums and improve “access” (they couldn’t). The public was not fooled. Senate Republicans twice tried to send Obamacare repeal back to the House, and twice failed, consuming most of their legislative calendar in the process.
You would think that after this failure, Republicans would try a different strategy to sell their latest plan, an ambitious bid for tax cuts. That instead of lying, they would defend their ideas on their merits and in good faith, and hope to persuade Americans that this is the right plan.
This was too much to ask for. In rolling out their tax proposal, the White House and its allies have opted again for outright lies.
Let’s first consider the major details of the Republican tax plan. Under its framework, the seven current individual tax brackets would be consolidated to just three: 12 percent, 25 percent, and 35 percent. The standard deduction would double for both couples and individuals, and the child tax credit would both grow and include more high-income households. Republicans would slash the corporate tax rate would from 35 percent to 20 percent, cut taxes on “pass-through” companies, repeal the alternative minimum tax (which applies to certain upper-income households) and end the estate and gift tax, which is paid primarily by the most wealthy.
Selling it on ABC’s Good Morning America, Gary Cohn, director of the White House Economic Council, said, “The wealthy are not getting a tax cut under our plan.” In a separate interview on Fox News, Treasury Secretary Steve Mnuchin promised that “this tax plan will cut down the deficits by a trillion dollars,” while President Trump insisted in a press conference that he would not gain from these provisions. “My plan is for the working people,” he said. “I don’t benefit.”
None of this is true. The rate consolidation may benefit some middle-income households, but the vast majority of gains go to the richest Americans. As Howard Gleckman notes for the Tax Policy Center, “The Individual rate cuts, repeal of the Alternative Minimum Tax and the estate tax, and preservation of tax preferences for charitable giving, mortgage interest, and retirement savings all primarily benefit those with high-incomes.” The tax cut for “pass-through” businesses—where profits are taxed at individual and not corporate rates—is an outright giveaway to the wealthy: More than two-thirds of income earned at these companies goes to the top 1 percent of tax filers.
That includes Americans like Donald Trump, who has organized most of his businesses as pass-throughs. Trump family members like Ivanka Trump and Jared Kushner would also see a large windfall. Similarly beneficial to Trump (or at least his heirs) is his plan to end taxes on estates of more than $5.5 million for individuals (and $11 million for couples). This would also provide a major windfall to the heirs of his Cabinet members—including Mnuchin, who has an estimated net worth of $621 million. The same goes for the alternative minimum tax, which hits Trump and is the reason why, in 2005, he paid a rate of 24 percent on $150 million of income instead of the 4 percent he would have paid based on his many deductions. Donald Trump doesn’t just benefit from his tax plan; he flourishes under it.
The most obvious and egregious of these lies is Mnuchin’s claim that the tax plan would raise revenues. The nonpartisan Committee for a Responsible Federal Budget estimates that this plan would actually reduce revenue by $2.2 trillion over 10 years. History suggests that tax cuts never result in higher revenues. The last round of major tax cuts, in 2001 and 2003 under President George W. Bush, were a key driver of public debt for the decade that followed despite promises that they would “pay for themselves.” The Bush cuts were also sold as a middle-class benefit; they also delivered most of their gains to the highest-income households.
These claims by Trump surrogates were not stray statements amid more cogent and truthful arguments. They are the basis for the argument for “tax reform” deployed by the president of the United States, his treasury secretary, and his chief economic adviser. And they were unambiguous lies having no relationship to the actual impact of the policies at hand.
It’s not worth asking why the White House and its allies have decided to sell their policies by purposefully misleading the public aside from knowing that they would be unpopular otherwise. We should, instead, recognize that this is what politics will look like under President Trump: with the nation’s top officeholders opting for lies instead of anything approaching the truth.