On Tuesday afternoon, Senator John McCain wasn’t too sure about the G.O.P.’s tax plan, given that he didn’t know what was in it. “I have to see what the bill says. It changes every day,” he told reporters when asked whether he would vote for it. And yet, by Thursday—despite the fact that “what’s in it” was still largely unclear, he had flipped, Bob Corker-style, to a “yes.” “After careful thought and consideration, I have decided to support the Senate tax reform bill,” he said in a statement. “I believe this legislation, though far from perfect, would enhance American competitiveness, boost the economy, and provide long overdue tax relief for middle-class families.”
But even with the final text of the bill in flux, “far from perfect” seems like a gigantic understatement. As The New York Times reported in stark terms on Thursday, the proposed legislation stands to “widen American economic inequality while diminishing the power of local communities to marshal relief for vulnerable people.” The legislation is poised to impact almost every aspect of public life, including health care and education. And in their rush to chalk up a legislative victory, hanging their “yes” votes on impractical promises that may never materialize, Republicans, including the president, seem unwilling to grapple with the bill’s long-term effects—or even to read it very closely.
Take, for instance, the president, whose big tax speech in Missouri was peppered with statements about the plan that were just plain wrong. His biggest whopper, naturally, was his insistence that despite estimates he and his heirs could save $1 billion under the proposed legislation, the bill is going to cost him “a fortune.” He also erroneously stated that the current plan is the “biggest tax cut in the history of our country, bigger than Reagan” (combined with the tentative budget Republicans introduced in October, it’s actually the 12th-largest); that the stock market was flat before he came along (the uptick started way back in 2008 under you-know-who); and that the current 3.3 percent growth rate is “the largest increase in many years” (it was the largest increase in . . . three years—incidentally, the economy grew at 5.2 percent in the third quarter of 2014). On Wednesday, Trump topped the whole thing off by claiming that opponents of the plan, of which there are many, are either jealous Democrats who can’t stand the idea of not getting credit for such a kick-ass bill, or simply don’t get it.
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Back in the realm of reality, tax experts and economists are extremely skeptical that the Senate and House bills will generate the economic and job growth lawmakers have promised. According to the Joint Committee on Taxation, under the Senate plan people earning between $20,000 and $30,0000 a year would be hit by a tax increase in 2021, with most people earning under $75,000 a year seeing an increase by 2027. (Those making more would continue to receive a cut.) According to the Tax Policy Center, under the House plan, although every income group would receive a tax cut through 2027, roughly 56 to 75 percent of the cuts would benefit the richest one-fifth of Americans. The nonpartisan Congressional Research Service similarly concluded that the bill would give the biggest percentage boost to people making between $500,000 and $1 million a year, while those making less than $30,000 would likely end up paying more by 2021. “When you put all these pieces together, what you’re left with is we are squandering a giant sum of money,” Edward D. Kleinbard, a former chief of staff at the Joint Committee on Taxation told the Times. “It’s not aimed at growth. It is not aimed at the middle class. It is at every turn carefully engineered to deliver a kiss to the donor class.”
It also happens to (still) be wildly unpopular with voters. Surveys conducted by ABC News and The Washington Post, CNN, Politico, and Quinnipiac University have revealed that support for the Republican tax “reform” package is very, very low, with the results of Quinnipiac’s poll showing just one-quarter of voters approve of the plan. And yet, with McCain’s help (and in spite of Trump’s), it’s probably going to pass.
The Dow Jones Industrial Average rallied more than 300 points after word of McCain’s support for the tax bill, which is, in its own way, damning. The stock market doesn’t go up when companies expect to pass on their profits to labor. On the contrary, corporate America is already making plans to increase dividends and stock buybacks.