Politically, The GOP Tax Cut Has Been A Huge Bomb

Republicans passed a tax cut bill in December they hoped would help in the midterm elections. It has turned out to be a big dud.

When 2018 began, Republicans were pinning their hopes for foregoing big losses in the midterm elections on the tax cut plan that was passed by Congress back in November, with just two weeks to go until Election Day, though, it’s pretty clear that the so-called Tax Cuts And Jobs Act is not helping Republicans at all:

Republicans thought their massive tax overhaul would be the centerpiece of their midterm strategy. But it turns out they were so wrong they’ve been barely mentioning the $1.5 trillion tax cut on the campaign trail.

With polls showing Americans are more likely to disapprove of the tax law than to approve of it, GOP candidates have been changing the subject to other issues like immigration and health care. Some of the lawmakers who wrote the Tax Cuts and Jobs Act are even struggling to hang onto their seats.

“I would have bet you a lot of money going into this year that, if you cut people’s taxes by thousands of dollars per year, that would be politically popular,” said Ryan Ellis, a prominent Republican consultant. “But it has not worked out that way.”

President Donald Trump tried to steer the conversation back to tax cuts on Saturday, telling reporters that the White House and congressional leaders are working on “a very major tax cut for middle-income people. And if we do that it would be some time I would say just prior to November.”

But, if anything, his remarks sparked confusion, since Congress is out of session until after the November election and can’t act before then.

Meanwhile, there’s a lot of frustration and second-guessing among Republicans over how they failed to sell the tax law to voters

“It’s Republicans once again proving the old adage that they are the stupid party,” said David McIntosh, head of the Club for Growth. “They’ve got a really good issue that they’re not using.”

Many blame Trump, saying he failed to use his power to set the public agenda to focus voters’ attention on the law, instead allowing a parade of controversies — on everything from immigration to tariffs to Vladimir Putin — to push the tax cuts off the front pages.

Grover Norquist, an antitax activist, blames reporters for the lack of GOP political leverage on the issue, saying many news organizations lost interest once the tax cuts were signed into law back in December.

“CNN hasn’t had me on in months, unless it’s to talk about tariffs,” he said. “They had zero interest in the effects of the tax cuts once they passed.”

Some point a finger at congressional Republicans. Large chunks of the public still don’t understand what was in the legislation, said David Winston, a longtime Republican pollster who advises GOP lawmakers.

The bill was pushed through Congress so quickly, and the debate was so circumscribed, that he says many voters never learned how the cuts affect them. Many have heard the law cut corporate taxes, but Winston says his polling indicates that only 35 percent are aware the law also cut individual tax rates at every income level,

This should hardly come as a surprise to Republicans or anyone observing the elections, of course. Even when the tax cut bill was being debated in December, polls were showing that the overall bill was not nearly as popular with the general public, as evidenced herehere, and here. Notwithstanding these numbers, party leaders assured members of the House and Senate who may have been reluctant supporters that the tax bill would be for the party in 2018 once it was passed and the benefits of the bill became apparent. As it turned out, the exact opposed happened. By April, the support that had existed for the bill had virtually evaporated and Republicans were blaming that fact not on the bill itself, but on President Trump. More recently, a poll by NBC News and The Wall Street Journal in August found that just 27% of respondents supported the tax reform bill while 36% called them a bad idea. The RealClearPolitics average meanwhile finds that an average of 39% of those polled approve of the bill, while 42.5% disapprove.

One of the main reasons that the tax cut has fallen flat with voters appears to be the fact that they have not seen any benefits from it so far. Republicans promised, for example, that the cut in corporate taxes would lead to a spark in economic activity and hiring that would be measurable by the time the midterms rolled around. While there has been a modest tick upwards when it comes to growth in Gross Domestic Product, the jobs picture has not improved noticeably. As I noted when the September jobs report was released earlier this month, jobs growth for this year, and for the majority of the Trump Administration’s time in office, has been roughly the same as what we saw during the second term of former President Barack Obama. Additionally, wage growth, which many economists are now saying is the more important number now that we’re nearing the point of full employment, has been stubbornly slow for the past two years. Meanwhile, the corporate expansions that Republicans said would happen are not materializing and many corporations have been using the tax savings they are receiving from the new tax law to fun stock buybacks. Additionally, the changes to corporate taxes have not resulted in the repatriation of corporate profits parked overseas that Republicans claimed would occur in the wake of the tax cuts.

In addition to this, the actual impact on the pocketbooks of the average American from the tax cuts has been minimal at best. The changes to the law, for example, did not apply to the taxes that people were required to file and pay by April 15th of this year. To the extent that the average American has felt any impact from the tax cuts, it has come in the form of bonuses or changes to tax withholding that has had, at best, a modestly positive effect on take-home pay. In the first regard, the Administration made much of the fact that, in the wake of the passage of the tax cut, some corporations announced bonuses that they would be paying to their employees. In reality, though, most of those bonuses were paid before the end of the year in 2016, meaning that they were taxed at the rates that were in effect before the passage of the new tax law. On the withholding side, estimates have been that the withholding changes made necessary by the changes to the tax code have resulted in roughly an additional $30 per paycheck for the average American. That amounts to roughly $500 over the course of the year. While this is not an insignificant number for people living paycheck to paycheck, it’s hardly something to write home about. To the extent that most Americans will feel the benefit from the December 2016 tax cut, it won’t come until next year when they’re preparing that tax returns and, of course, it will be too late for Republicans to benefit from that politically.

FILED UNDER: Campaign 2018, Congress, Deficit and Debt, Donald Trump, Economics and Business, Politicians, Taxes, US Politics,
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010. Before joining OTB, he wrote at Below The BeltwayThe Liberty Papers, and United Liberty Follow Doug on Twitter | Facebook

Comments

  1. Stormy Dragon says:

    It hasn’t even been good for investors, since the markets have all been essentially flat since the tax cuts (as it always does after Republican tax cuts).

  2. gVOR08 says:

    Could be they just got too greedy. Usually they’ve been a little more generous with token cuts for the 99% when they do their corporate and plutocrat tax cuts.

    Or maybe, just maybe, this is a hopeful sign. Republicans have been lying about tax cuts since forever. Maybe it’s finally beginning to wear thin. Maybe Lincoln was right and they can’t fool all the people (or at least enough of the people) all the time.

  3. Facebones says:

    Also important, Mitch McConnell basically coming out and saying that Social Security and Medicare are going to get cut because, somehow, the deficit exploded. (Coincidentally, around the time of the tax cut for billionaires.) Doesn’t take a polisci major to tie those two events together.

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  4. Slugger says:

    Why would anyone expect that the tax cut would be politically popular? Nobody gets exited when somebody else gets a tax cut. These tax cuts benefited a small portion of the population. Helping the rich family on the hill across town does not excite people much. As I write this the Dow is down 450 points.
    Our current tax policy is attracting entrepreneurs to our country. Right now a bunch of them are stuck on the Mexico-Guatemala border hoping to get those premium coal mining and Harley-Davidson building jobs that our economy is sure to produce.

  5. Kylopod says:

    Just because it isn’t popular doesn’t mean the GOP hasn’t benefited politically from it. First–and perhaps most crucially–it was a payoff to the party’s donor class. It also helps maintain the Trumpist-establishment coalition. It was an actual legislative accomplishment; if it hadn’t been passed, the Trump Admin would have had virtually no legislative record to run on at all. And while people may not like the tax bill, it isn’t toxic in the way taking away social programs would be–a clue to why it passed and ACA repeal did not, and why that’s generally the formula whenever Republicans get into power. They try to attack the social programs, and they often end up chipping away at them, but their main legacy usually ends up being little more than deficit-financed tax cuts for the rich.

    15
  6. Ratufa says:

    But, how popular were the tax cuts with business groups and wealthy donors? Did they help with fundraising? Even if ordinary people aren’t thrilled with the cuts, they still might be a net plus for Republicans because of their popularity with our Corporate Overlords.

  7. Kathy says:

    And then there are the various tax hikes through tariffs. You know, giving with one hand and taking with the other?

    When taxes go up, prices tend to go up because manufacturers, distributors and retailers want to recoup their extra expenses as far as possible. When taxes go down, prices may not go down because manufacturers, distributors and retailers know you’re willing to pay the current price.

    And the thing with “trickle-down economics,” is that even if it does work, all you’re likely to get is a few drops.

  8. gVOR08 says:

    @Ratufa: Republicans (pols, not voters) don’t have an ideology or a philosophy, they have a business plan – sell favors to the wealthy and buy votes from the rubes.

    There were, IIRC, stories that donors were threatening to bail if they didn’t get something.

  9. reid says:

    That’s okay, they can switch to striking fear over the army of MS-13 gang members and middle easterners at our southern border, as well as pointing out how Democrats will take away everyone’s healthcare. (Sadly, there are people for whom this BS works.)

  10. JohnMcC says:

    Wow, you mean that cutting taxes on large financial and other businesses in a period of low unemployment and late in a period of growth is NOT the path to the Kingdom of God? Amazing! Hoocudanode?

  11. Kathy says:

    @reid:

    And their guns. Don’t forget their guns.

    When you have no legislative or policy accomplishments to speak of, past picking names off a list and passing a payoff to your donors in the guise of “tax reform,” there’s really nothing left but blind fear.

  12. reid says:

    @Kathy: Yes, guns too. They’re really doubling down on the dogwhistles, idiocy, and outright lies to motivate their base. It’s just getting more and more disturbing.

  13. Daryl and his brother Darryl says:

    While this is not an insignificant number for people living paycheck to paycheck, it’s hardly something to write home about.

    Especially when inflation has eaten it all up, as well as any wage increase.

  14. Anonne says:

    @Slugger: Republicans that are dyed-in-the-wool will celebrate any tax cut, even if it doesn’t affect them personally. They are so contemptuous of taxes and the government, they don’t care if ultra-rich people get tax cuts leaving them to pay a greater share of the nation’s burden.

  15. Teve says:

    @Anonne: I have relatives who cheer when rich people cheat on their taxes, because they’re not good with math and economics and don’t understand that it just puts them, and me, on the hook for more debt.

  16. SC_Birdflyte says:

    @Stormy Dragon: After a period of flat markets, now we have the return of volatility. Good times!

  17. OzarkHillbilly says:

    On the withholding side, estimates have been that the withholding changes made necessary by the changes to the tax code have resulted in roughly an additional $30 per paycheck for the average American.

    Pizza money. I guess that’s an upgrade over “Let them eat cake.” but hardly a decent return for our children’s future.

  18. OzarkHillbilly says:

    @One American: Rich people don’t do any actual “work”. That’s what we get paid for.

  19. Tyrell says:

    The big alligator in the room is the budget deficit. This is another problem that Congress wants to kick down the road. Few want to talk about it.
    Along with any tax reform, government reform is also needed. And that means cutting budgets, eliminating agencies, and cutting out a lot of foreign aid.
    There are many federal agencies that are no longer needed. Some are so secretive that Congress does not know their existence. There should be a private, independent committee that audits and evaluates each program and makes recommendations.
    What we have is a powerful, unchecked fourth branch of the federal government that costs businesses and citizens.*
    Examples of tax money waste:
    43 million dollar convenience store in Afghanistan
    LA schools use school food funds for sprinklers
    Wine making study
    Tricycle Safety Agency
    $400,000 study of video games
    Office of Human Research Project
    Millennium Challenge Corp.
    US Board on Geography Names
    Sugar Subsidy
    State Justice Institute
    Tricycle Safety Authority
    There are dozens more. These cost the taxpayer and create more regulations and red tape for business.
    See – Prime Cuts Subsidies, and Reason.com
    *“Oregon man jailed for collecting rainwater on his own property!” (CNS News)
    We need a balanced budget amendment.

  20. An Interested Party says:

    The tax cuts are very “popular”with those of us who actually work for a living.

    And what tax bracket are you in, sweetie?

    The big alligator in the room is the budget deficit.

    Funny how this has been the “big alligator” in the room for what seems like forever and what, if any, pain have we had to suffer for because of it…

  21. Eric Florack says:
  22. Eric Florack says:

    @Anonne: that’s probably because they believe and correctly, that somebody else’s being rich doesn’t make them poor.