Trump’s Tax Cuts Get an ‘F’ For Enabling the Globalist Elite
They also left worker wages stagnant and increased the deficit. Where is our more nationalist economic policy?
Much has been written about the disappointment of certain segments of the right in the apparent capitulation of Donald Trump to the agenda of the conservative establishment.
Instead of reining in the “globalist elites” he so vociferously ran against or those corporations “who have no loyalty to America,” his one legislative achievement has been to award them a massive tax cut. Through it, he has maintained their favorite mix of low revenue intake and high deficits which gives Republicans a pretext to “starve the beast” and induce fiscal anorexia.
The president has granted them as well their ideal labor market through an ingenious formula: double down on mostly symbolic raids (as opposed to systemic solutions like Mandatory E-Verify) and ramp up the rhetoric about “shithole countries” to distract the media, but keep the supply of cheap, exploitable low-skill labor (legal and illegal) intact for the business lobby.
Trump ran as a populist firebrand—a fusion of Huey Long and Ross Perot—and while he never abandoned that style, he has governed for the most part as a milquetoast free market Republican in perfect tandem with Paul Ryan and Mitch McConnell, one whose solution to everything is more tax cuts and deregulation: a kind of turbo-charged “high-energy Jeb.”
With the outbreak of COVID-19, many on the reformist right are hoping for the emergence of the President Trump they thought they were promised, a leader just as ready to break out of the donor-enforced “small government” straitjacket while in power as he was during the campaign.
Despite signs of progress, what’s more likely is a return to business as usual. Already the GOP’s impulse for austerity and parsimony is proving to be stronger than any willingness to think and act outside the box.
The heightened rhetoric against China will continue—the one thing Trump is good at—but it is unlikely to be matched with the required policy, such as a long-term plan to reshore U.S. industry (that doesn’t just rely on blindly giving corporations the benefit of the doubt). At this point, we already know where the president’s priorities lie when given a choice between the advancement of America’s workers or continued labor arbitrage and carte blanche corporate handouts.
Lest they be engulfed by it like everyone else, the reformist right should ask: is there any way to stand athwart the supply-side swamp yelling Stop?
Many of these conservatives lament the Trump tax cut not just because it was a disaster that failed to spark reinvestment, left wages stagnant, needlessly blew up the deficit and served as a slush fund for stock buybacks, but more fundamentally because it betrayed the overwhelming intellectual inertia and lack of imagination that characterizes conservative policymaking.
More than in any other issue then, a distinct position on taxes would make the new conservatism truly worth distinguishing from the old: tax cuts were after all the defining policy dogma of the neoliberal Reagan era.
If neoliberalism excused inequality at home by extolling the equalization of incomes across the globe (millions of Chinese raised from poverty, while millions of American workers fall back into it!), the new position must shift emphasis back to ensuring a more equitable domestic distribution of wealth and opportunity across all classes and communities in this country.
A reformulation of fiscal policy along populist economic nationalist lines can help with that.
It is worth pondering what might have happened if the administration had gone the other way and followed the last piece of policy advice given by Steve Bannon before his ouster in August 2017. Bannon suggested raising the top marginal income tax rate to 44 percent while “arguing that it would actually hit left-wing millionaires in Silicon Valley, on Wall Street, and in Hollywood.”
Such a move would have been nothing short of revolutionary: it would have been a faithful and full-blown expression of the populist economic nationalism Trump ran on; it would have presented a genuine material threat to the elite ruling class of both parties, and likely would have pre-empted the shock value of Alexandria Ocasio-Cortez proposing a 70 percent top marginal rate.
It might well have put Trump on the path to becoming what Daniel Patrick Moynihan once proposed as a model for Richard Nixon when he gifted the 37th president a biography of Disraeli, namely a Tory Republican who could outsmart the left by crafting broad popular coalitions based on a blending of patriotic cultural conservatism with class-conscious economic and social policy.
Not that Trump would have needed to go back to Nixon or Disraeli for instruction on the matter. In 1999, long before Elizabeth Warren came along on the national scene, a presidential candidate eyeing the Reform Party nomination contemplated the imposition of a 14.25 percent wealth tax on America’s richest citizens in order to pay off the national debt: his name was Donald Trump.
What ever happened to that guy? The Trump of 1999 was onto something. Maybe this could be a way to deal with our post-pandemic deficits.
Then and even more so now, the idea resonates: a Reuters/Ipsos poll from January found that 64 percent of Americans support a wealth tax, a majority of Republicans included. Poll after poll has reaffirmed this. It seems as if there is right-wing populist support for taxing the rich more.
To the common refrain, “the rich are just going to find ways to shelter their income or relocate it offshore,” I have written elsewhere about the concrete policy measures countries can and have taken to clip the wings of mobile global capital and prevent such an outcome.
I have written as well about how taxing the rich and tightening the screws on tax enforcement have implications that go beyond the merely redistributive approach to fiscal policy conventionally favored by the left; about how it can be a form of leverage against an unaccountable investor class used to shopping at home and abroad for the most opaque assets in which to hoard vast amounts of essentially idle capital.
A deft administration would use aggressive fiscal policy as an inducement for this irresponsible class to make things right by reinvesting in such priorities as the wages and well-being of workers, the vitality of communities, the strength of strategic industries and the productivity of the real economy – or else Uncle Sam will tax their wealth and do it for them.
It would also be an assertion of national sovereignty against globalization’s command for countries to stay “competitive” by immiserating their citizens with ever-lower taxes on capital holders and ever more loose and “flexible” labor markets in a never-ending race to the bottom.
Mike Lofgren has penned a marvelous essay in these pages about the virtual secession of the rich from the American nation, “with their prehensile greed, their asocial cultural values, and their absence of civic responsibility.”
What better way to remind them that they are still citizens of a country and members of a society —and not just floating streams of deracinated capital—than by making them perform that most basic of civic duties, paying one’s fair share and contributing to the commonweal? America need not revert to the 70-90 percent top marginal rates of the bolshevik administrations of Truman, Eisenhower or Kennedy, but proposals for modest moves in that direction would be welcome.
There is one more thing to be said about the significance of taxing the rich. Up until very recently, there has been a prevailing tendency among the reformist right (with some important exceptions) to couch criticism of the elites primarily or even exclusively in cultural terms. There seems to have been a polite hesitation at taking the cultural critique to its logical economic conclusions. It is easy to excoriate the excesses of elite identity politics, the “woke” part of woke capitalism; it’s something all conservatives—and indeed growing numbers of liberals and socialists—agree on. Fish in a barrel.
But to challenge the capitalism part, i.e. free market orthodoxy, not in a secondary or tertiary way, but head on and in specific policy terms as Lofgren and a few others have done, would involve confronting difficult truths, namely that the biggest beneficiaries of tax cuts and Reaganite economic policy in general, which most conservatives enthusiastically promoted for four decades, are the selfsame decadent coastal elites they claim to oppose. It is they who more than anyone else thrive on financialized globalization, arbitrage and offshoring.
In other words, it amounts to an honest recognition of the complicity of conservatism in the mess we’re in, which is perhaps a psychological bridge too far for too many on the right, reformist or not. (Trigger Warning!) This separation of culture and economics has led to the farce of a self-styled nationalist president lining the pockets of his nominal enemies, the globalist ruling class.
Already, the White House is proposing yet another gigantic corporate tax cut. Using the exact same discredited logic as the last one, senior economic advisor Larry Kudlow wants Americans to trust him when he says that halving the already lowered 2017 rate to 10.5 percent will encourage these eminently reasonable multinationals to reinvest. There he goes again.
A conservative call to tax the rich would signal that the right is ready to end this charade and chart a course toward a more patriotic, public-spirited and yes, proudly hyphenated capitalism.
Michael Cuenco is a writer on politics and policy. He has also written for American Affairs.