Trump's tax reform plan is less than it appears

In yet another public relations move, President Trump unveiled a tax reform plan on Wednesday that said little, promised much, and left nearly everyone wanting more than was given; and, in fact was on a single page memo what was described (there was a notable absence of charts and graphs) were mostly retreads from the campaign. At its best it showed that the “so-called” reform highlighted the president’s determination to give tax breaks to the wealthy, while middle-class and working families received nearly zero benefits.

Treasury secretary Steve Mnuchin and Gary Cohn, director of the National Economic Council, claimed that the proposal was the “most significant tax reform since 1986” and that it would pay for itself, with a 3 percent increase in the national economy., yet others were not so sure, among them Bernard Baumohl, chief global economist of the Economic Outlook Group, who said, that it was conceptually flawed, and “unlikely to go far in Congress.”

If the devil is indeed in the details, as  convention would have it, then there were scant few; but chief among them was a shrinkage in the individual tax rates from seven to three, respectively, 10, 25 and 35 percent.  Businesses large and small would see their overall rates slashed to 15 percent.  This is a move that many have welcomed as most corporations in Western Europe pay far less.

In her national column, columnist Gail MarksJarvis predicted that “it's bound to be controversial because most savings wold go to the highest-income people, and 20 percent of moderate-income people would face higher taxes.”

Candidate Trump told the AARP in their bulletin, “Aside from dramatically streamlining personal income tax by removing carve-outs for special interests and reducing the number of brackets, we will seek to eliminate the alternative minimum tax and the death [estate] tax. The centerpiece of our tax-reform effort will be on the corporate side, where will lower the rate to 15 percent, allow repatriation of offshore capital at 10 percent, stop taxing returned earnings from overseas that have already been taxed, and allow 100 percent expensing for businesses. These reform will apply to all business enterprise, not just the largest corporate giants.”

Part of the proposal is the long cherished desire by Trump to eliminate the estate tax and the alternative minimum tax --- known as the AMT -- which in the partial pages of his 2005 tax return, (given to political television host Rachel Maddow), showed that without it he would have paid far less in taxes than the $31 million that he did pay. The AMT limits the amount of deductions, and other benefits available to the wealthy

Puzzling for a president that touted “America First” as a campaign slogan, corporations would not have to pay taxes on their foreign profits. Even more baffling is a one time opportunity to bring home cash that is held in reserves overseas, without provisions, or regulations.

In an unwelcome shock to real estate agents and homebuilders, that they see as disincentive to home buying, Trump proposes to “double the standard deduction for individuals, essentially eliminating taxes on around $24,000 of a couple's earnings,” reported The New York Times.

Even more controversial is the desire to remove the deduction of the cost of state and local tax payments, a real benefit for those that live in high tax states, like New York and California, that also happen to have Democratic majorities. In fact. Crain’s New York Business acknowledged, “that provision especially benefits New Yorkers because city and state tax rates are so high here. It allows the average filer to deduct roughly $20,500 annually from his or her federal taxable income, according to the nonpartisan Tax Policy Center. It is also a significant deduction for many people who live in New Jersey and California, and the Independent Budget Office has estimated that doing away with it would increase New York City residents' taxable income by $28 billion, causing their collective federal tax bill to rise by $8 billion a year.”

CNYB also reported that Lily Batchelder, a New York University professor and former deputy director at the White House's National Economic Council, “described Trump's cuts as "immensely costly" and "heavily focused on the wealthy" while raising taxes on "millions of working class families."

As reported before, Trump also wants to delete the 3.8 percent tax that helps fund low income beneficiaries of Obamacare, and funnel what is expected to be trillions, to help fund the cuts to wealthy and corporate tax beneficiaries; which is in this bill.

House Republicans wanted to pay for any tax cuts with a new tax on imports, but this is not part of the plan, but was floated by Speaker of the House, Paul Ryan, in January, to “scrap a tax deduction on imported goods” that could have meant “as much as 15% on products from jeans to Jeeps,” reported USA TODAY, responding to a query to the National Retail Federation.

White House officials have not said how the proposals would address the deficit, but of particular concern is that wealthy individuals could use the new tax rate, by misappropriating it to personal income, reducing from 39.6 percent to 15 percent, creating a pass though to avoid paying the higher rate. To which Minority House Leader Chuck Schumer said, “That’s not tax reform, That’s just a giveaway to the very, very wealthy that will expand the deficit.”

Despite the much trumpeted influence of first daughter, Ivanka Trump, to include credits for child care, these are not seen in the document.

Senate Finance Ranking Committee Member Ron Wyden said in a statement from Washington on Wednesday: “This is an unprincipled tax plan that will result in cuts for the 1 percent, conflicts for the President, crippling debt for America and crumbs for the working people. Instead of providing a real tax reform plan as promised, this administration is offering cakes to the fortunate few. Instead of focusing on lowering takes for teachers, nurses and cops, Trump appears to be piling on the conflicts of interest by ensuring he himself will receive an elite giveaway.  Yet another reason why it’s critical the American people see his tax returns.”

It also may be a Congressional hurdle that may be another defeat for Trump whose ratings have slipped substantially in how the public feels that he can accomplish his goals, sliding from 17 points in February, according to a recent Gallup poll released last Tuesday.

“The Tax Policy Center says the plan would cost the government $6 trillion over a decade as people pay less in taxes. Unless the government makes huge spending cuts, the tax break would end up increasing the national debt by nearly 80 percent of gross domestic product by 2036,” MarksJarvis reported.

Congress fresh from their recent recess has a lot of work ahead. Stay tuned.

Trump delays from wanting money for border wall

As the White House approached the 100 day mark of the presidency of Donald J. Trump, he was to be celebrated as turning the page from the recent so-called dark past, as he made America Great Again. Yet, he also faced the task to still the wagging tongues that said his legislative actions were a string of defeats; so the president made a concession on Tuesday: he could wait on asking for money in the federal budget to build the border wall between the U.S. and Mexico to avoid a government shutdown.

While it could still be considered a concession, it could also be considered a pragmatic way to avoid another real defeat, after a federal justice blocked his controversial travel ban, and the American Health Care Act, (his replacement for the much maligned Obamacare) went down in flames. With the inclusion of the ban, and the words of his budget director, Mark Mulvaney, who insisted less than 48 hours earlier, “ We want wall funding. We want [immigration] agents. Those are our priorities.” Trump’s win-win desires could have had him bewailing his misfortunes on the 100th day of his nascent presidency.

As Reuters reported, “Trump had run the risk of being blamed by Democrats for a shutdown whose start would coincide with the day he marks 100 days in office. Senate Democratic leader Chuck Schumer welcomed Trump's Monday night comments and noted that there were opponents of the wall among Republicans too.”

“It would remove the prospect of a needless fight over a poison pill proposal that members of both parties don’t support. ... If the threat of the wall is removed, as I hope is the case, our negotiations can continue and we can, hopefully, resolve all of the outstanding issues by Friday,” Schumer said Tuesday, on the Senate floor.

As most have noticed the constant flip-flopping is almost to be expected, but not on this one, a campaign pledge designed to rally the base after his infamous, and untrue, remarks that there were murders and rapists from Mexico, ready to pounce on America. Now, that list has been expanded to include illegal drugs, bound for New York, our most identifiable, and iconic, city, and that it was “soft on crime.”

“It is an outrageous statement, and is absurd on its face and ignores a quarter century of progress in this city in bringing down crime,” Mayor de Blasio said.”We did not become the safest big city in America by being ‘soft on crime.’”

As CBS News reported, “The mayor added that New York City just experienced the safest three month period in the city’s history, and he hopes the president will reconsider his position on the issue.”

Offering a mix - maybe for the future --  is Republican Sen. Jeff Flake, “who represents the southwestern border state of Arizona, speaking to reporters on Tuesday, said there is a need for a wall in some border locations and alternative deterrents in others.”  

He also said, “a lot of us have been pushing for additional border security funding for a while, but solitary 2,000 mile wall has never been a must-have for anybody in a border state.”

Trump, of course, feels otherwise , and using the medium of social media, tweeted the contrary, and said, “If... the wall is not built, which it will be, the drug situation will NEVER be fixed the way it should be!”

Reuters also stated that “Trump has said Mexico will repay the United States for the wall if Congress funds it first. But the Mexican government is adamant it will not provide any financing and Trump has not laid out a plan to compel Mexico to pay. Department of Homeland Security internal estimates have placed the total cost of a border barrier at about $21.6 billion.”

Going beyond the wall, if there is no budget covering April 29 to Sept. 30 “before 12:01 a.m. (0401 GMT) on Saturday, government funds will halt and hundreds of thousands of the country's several million federal employees will be temporarily laid off.”  

The furlough of federal workers would affect the closing of national parks, and even government web sites, which would not be updated, causing hundred of headaches across the country, The feeling in Congress is that there must be “a short-term extension of current spending, possibly of one week's duration, in order to finish up negotiations on the longer-term bill for funding through the end of September.”

“Yeah, it looks like it,” said Republican Senator Lisa Murkowski, a Senate Appropriations Committee member, when asked by a Reuters reporter about the likelihood of a short-term extension. But, Senate Majority Leader Mitch McConnell said, however, that “it was too soon to talk about such a possibility and that negotiations were still under way to reach a longer-term deal.”

The president's fellow Republicans control both chambers of Congress, but the current spending bill, which has to be passed by Friday night, will need 60 votes to clear the 100-member Senate, where Republicans hold 52 seats.

On the table are principally $30 billion in new defense and border spending, $18 billion dollars in cuts for domestic spending to balance out the increase in defense, including the money to strip out federal funding for the so-called sanctuary cities. And, while Attorney General Jeff Sessions announced at the end of last week, that he had sent a letter to those city and local governments asking for a letter of compliance, there was also defiance. Earlier in January Chicago Mayor Rahm Emanuel had said, with conviction, that his city would remain so

On Tuesday, there was an unexpected change,  “a federal judge in California, blocked the Trump administration from enforcing a threat to take away funds from sanctuary cities -- the latest blow from the federal judiciary to President Donald Trump's immigration agenda,” reported CNN.

“In his ruling, Judge William H. Orrick sided with Santa Clara County, the city of San Francisco and other jurisdictions, who argued that a threat to take away federal funds from cities that do not cooperate with some federal immigration enforcement could be unconstitutional,” they concluded.

The ruling is applied nationwide and the Orrick “blocked the government from enforcing a key portion of Trump's January executive order on immigration, which ordered the Department of Homeland Security and Justice Department to block cities who do not cooperate with federal immigration enforcement from receiving federal funds.”

It is a partial move, and “does not block the government from enforcing conditions on federal grants nor does it block the government from creating a definition of sanctuary jurisdictions -- but the government will not be able to block federal funds from going to those cities as Trump ordered.”

Meanwhile, health care is still on the burner, and the president has said that he will remove subsidies that some low-income people receive to obtain coverage on the marketplaces created by President Obama’s Affordable Care Act. Rumor has it that Trump will horse-trade to keep these, or at least some of them, in place, to get their cooperation for his pet projects, as they stand now. Heretofore the deal was for every dollar in subsidies there would be a dollar to pay for the border wall, but the wall is off the budgetary table, at least for now.

There are 237 Republicans in the House and there are five vacancies, and 216 are needed to pass a vote on the budget. In combination with the aforementioned with the Senate, Trump needs Democratic votes. And, if more than 21 House Republicans refuse to support the bill, it will fail, without Democratic support, thus the compromise.

In 2014 the GOP sued to remove the subsidies, saying that Obama had no constitutional grounds to do so, but with no explicit action from Congress, the judge ruled in favor of the opposition, but the ruling was put on hold.

Shutdowns, of course, are a public relations nightmare for any administration, and Trump’s is no exception. Obama had his 16-day experience in 2013 and Clinton had his in 1995.  As Wikipedia states,  that was “the result of conflicts between Democratic President Bill Clinton and the Republican Congress over funding for Medicare, education, the environment, and public health in the 1996 federal budget”.

Former presidential candidate, Ted Cruz has supported a shut down, four years ago, and is likely to do sot this year. On the other hand, Schumer has said previously, perhaps facetiously, that if Trump does not interfere, then all will be well.

There is some wiggle room, that was created, last December, by Obama when there was a provision to borrow money till August 2018, with debt ceiling adjustments, but as with all things associated with Obama, the GOP, in the person of Trump, will revile it.

New ads rally support for Trumpcare 2.0

In the midst of the bombs on Syria, and the nuclear tests by North Korea, and the news about the investigation of the Trump campaign, and family members, over their pre White House chats with Russian officials, plus the end of the bromance with Vladimir Putin, by President Trump, there is a reset brewing for Trumpcare, or as some Washington wags are calling it, Trumpcare 2.0.

Beginning Monday there have been ads on air, both radio and television, social media, and the like, by a group called America First Policies to help hit the button on a revitalization of the defeated bill, to the tune of $3 million dollars.  The Washington Post described the efforts, that were also shared by New York Magazine.  In brief, they said:

“In a phone call, the Trump campaign veterans who run the organization described the expenditure as a gesture of appreciation to Trump’s friends in the chamber as well as a way to encourage other House Republicans to get behind the effort to revive health-care legislation. The $3 million “advocacy campaign” will be split among the 12 Republicans beginning Monday and feature broadcast, digital and social components, the advisers said.The television and Web spots are titled “Repeal Now” and feature a script that praises the House members by name for “taking on Nancy Pelosi,” the House Democratic leader, and “standing with President Trump to repeal Obamacare now.”

Countering that effort by the president’s supporters are a series of ads, especially on the radio, by AARP warning the public that there are “behind the door” meetings to start a revitalization, and notes, especially, to shorten the life of Medicare. Add to the loss of over $840 billion over 10 years in Medicaid, and the die is cast.

The former certainly represents a strong effort to relaunch the bill that was “rocked” as New York Magazine described it it,  since Trump, and Speaker Paul Ryan, faced intense opposition as it tried to replace the the 2010 Affordable Care Act, the legacy of President Barack Obama. And, the latter to sustain the opposition, in whatever guise that it attempts to portray itself.

AARP’s effort may prove to be effective, as recent polls show that the public feel that Democrats are better at handling healthcare than Republicans. Yet, while this is trending high in the polls, the fact remains that Trumpcare was not about health coverage, but was essentially a tax cut. As the  authors noted,, “This is essentially true. Trumpcare itself was a tax cut — the bill eliminated Obamacare’s 3.8 percent tax on investment income, and made up the lost revenue by throwing millions of poor people off of health insurance.”

The public sentiment is in agreement, and they know that they will lose with the Trump approach; which was recognized by more moderate Republicans who opposed the AHCA because it would leave 24 million more people uninsured by 2026, rather than under current law.

"The headline would still be, 'Millions are deprived of health care,'" said Krista Jenkins, a political science professor at Fairleigh Dickinson University and director of its PublicMind survey research group. "That narrative remains, that we're taking something away from people who already have it. That's a very hard sell, if not impossible,” in an interview with NJ.com.

If this is not  eventually done, as the Wall Street Journal described it, the loss to donors and supporters will be considerable: “Leaving the health law’s taxes in place — particularly the 3.8 percent tax on investment income —could pose challenges for the tax bill. Passive owners of many businesses pay their companies’ taxes on their individual tax returns and face that 3.8 percent tax. If Republicans lower big corporations’ tax rates and leave that 3.8 percent tax, business groups will likely object that they aren’t getting parity.”

The White House also needs the money from the repeal to help fund the tax overhaul and the tax code revision. In a sharp reversal from earlier statements from Trump, Mick Mulvaney, his budget director, said that had the president saying he was going to do tax reform next, now says that has to wait. He said in an interview with Fox Business that if health care doesn’t happen “fast enough, I’ll start the taxes. But, the tax reform and the tax cuts are better if I can do health care first.”

The Washington Post reported last week that congress changed budget rules to make it easier “to pass a broad overhaul of the tax code once the roughly $1 trillion in taxes that are in the Affordable Care Act have already been repealed.”

Mulvaney has said that doing health care first can help build momentum “after we fix health care,” and that the plan “is trying to do” it first. In, and of itself, that may prove to be difficult, because, “the greatest threat to Trumpcare’s passage isn’t the wavering commitment of the president’s erstwhile allies, but the resilient opposition of the House’s moderate Republicans and far-right zealots,” emphasized by the New York Magazine coverage.

Taking it one step further, an adviser to America First Policies suggested that the group could eventually switch from carrots to sticks, telling the Post, “We’re starting positive, but all options are on the table.”

Money may well be the stick to spur a revitalization, and as the Koch brothers have already said, any lawmaker who gave a full assault on the ACA would be rewarded with that most persuasive of tools - money - specifically campaign money for those who join them in their radical approach to gutting the AHCA.

Treasury Secretary Steve Mnuchin has set a hopeful date of August for tax reform, but critics note that this is an ambitious date and and that, “no president has managed to pass comprehensive tax reform in three decades.”

The Financial Times says that the administration is trying to find “ways to make the US tax system simpler and more competitive,” and while pushing ahead, has also found, that “among the key sticking points is a “border adjusted” plan that would, in effect, tax imports while exempting exports. Senior administration officials have told the FT that the controversial measure is unlikely to survive, a development that would leave a $1tn hole in Republican tax plans over 10 years.”

Trump, in that same report by NJ.com, also told “the Wall Street Journal that he might cut off federal subsidies that allow insurers to reduce deductibles and out of pocket costs for lower-income Americans unless Democrats negotiate on repealing the health care law. The subsidies affect 7 million Americans”

Post Gorsuch leaves Democrats in high anxiety

The affable and boyish, Neil Gorsuch, replete with fist bumps, has been sworn in as the newest justice on the US Supreme Court, giving a home court advantage to the conservatives, through the good office of President Donald Trump, and another pyrrhic victory for the administration who seems to have needed every chit, and legislative trick to shoehorn him in. But, the this is familiar territory, as with Trump’s cabinet level positions -- such as Betsy DeVos for education.

 

The whole affair left a bad taste in the mouths of the public as they watched the to and fro between Republicans and Democrats, as they pounded away at each other. For the Dems, the situation was clear, after the denial of President Obama’s choice of Merrick Garland, that was successfully blockaded by the GOP.  Meanwhile Chuck Schumer could not, in good legislative conscience, hand the victory to Trump, yet he also may have shot his party in the foot, by using the filibuster, which had been a bipartisan tool that may now well cost the party in future legislations.

 

As Barron’s noted, “The point of the filibuster was to strengthen the minority to force president and majority lawmakers to take their opponents views into consideration - to force them to be more moderate in whom they nominate and in what they enact.”

 

Established near the end of the 19th century, the filibuster (debate) allowed a leapfrog over over the usual “three-fifths of the Senators duly chosen and sworn,” unless they “bring the debate to a close by invoking cloture under Senate Rule XXII. The only bills that cannot be filibustered are those few considered under provisions of law that limit time for debating them,” but,and this is a big but, changed by a simple majority vote with a rule that itself be filibustered, requiring two-thirds of senators who are present and voting to end debate.

 

Then with a majority party appealing even a rule change as unconstitutional can be done. The presiding officer, in the Senate, is generally expected to rule in favor of the rules of the Senate, but any ruling from the chair “may be appealed by a simple majority of Senators.” Harry Reid used this in 2013 when he declared that majority rule could change long held beliefs about nominations, other than the Supreme Court. Coming full circle, “on April 6, 2017, that precedent was further changed by Mitch McConnell and the Republican majority to include Supreme Court nominations.”

 

While the filibuster has been used, by both parties in the Senate, its use while changed has been given historical animus when used famously by Strom Thurmond, a conservative “blue dog” Democrat, against the 1957 civil rights bill. Southern senators also filibustered the Voting Rights Act of 1965, the Fair Housing Act of 1968, and the Equal Opportunity Act of 1972.

 

Notably, few have succeeded, yet, some observers believe that the Democrats did “the country a service by forcing the real nuclear option of all nominees,” yet while that may, or will be seen in the future, not only for future legislation, but also for replacing future spots for aging justices, such as Ruth Bader Ginsburg.

 

Some are now saying that the prolonged partisanship is to blame and not the loss of the filibuster for any future Democratic battles. Writing for The Atlantic, Tim Donnelly and Jeffrey Rosen said that, “it’s time to acknowledge that the cause of the breakdown in the Senate isn’t the end of the filibuster, but polarization in the country—which political scientists Nolan McCarty, Keith Poole, and Howard Rosenthal suggest is as extreme in Congress in recent years as it’s been since the decades after the Civil War and Reconstruction. And, if polarization is, indeed, the cause of the Senate’s problems, then there is no easy solution.

 

”If the Democrats are to score any wins then it may be due to the failure of the Trump administration to score any legislative victories, as it has failed to deliver -- the travel ban stuck in appeal, and the defeat of the American Health Care Act, then even some of the more die-hard Trump fans may feel the burn, more than Jane Fonda encouraged us in those 80s exercise videos. When and if the failed promises, the hits in the household budget, and the failure to make America great again, then even with even deeper partisanship  defeat may occur. Schumer and Nancy Pelosi, even as minority leaders might, just maybe win a few in this ballpark, even with bases loaded.

 

The Trump White House is beginning to occupy its own alternate universe, nearly Tolkien like in its assertions, about the mythical - maybe magical - “deep state” - what The Chicago Tribune defined as “an alleged shadowy network of powerful entrenched federal and military interests,” that are undermining the president’s efforts.

 

There is no evidence to support these assertions, and perhaps the reference is to the Caucus of GOP conservatives that defeated the replacement for the much derided Obamacare, that has helped over 20 million people with health coverage, and which nearly 75 percent of Americans want to remain.

 

The budget -- “skinny” as it is  -- offers little to reality with draconian cuts out projects like the Great Lakes restoration, a bipartisan effort that keeps hundred in full employment,  and is sure to cut off Trump’s nose to spite his face. So even with the regret over the loss of the filibuster, the GOP may be defeated merely by self-implosion.

 

There are those that still support him and only want the country to give him a chance. In fact a recent visit to Wilkes-Barre by the Tribune revealed this sentiment, with one man even saying, “They’re going to do anything have to do to make sure Trump doesn’t succeed,” hinting at the ubiquitous “they” that might be members of the aforementioned “deep state.” And, another even noted, “There’s a bias,” sure to change if jobs are not seen, and some of the very programs, especially those of the Great Society, are damaged, such as Medicare and Medicaid. While Candidate Trump said, he would not, touch those entitlement programs, it is entirely possible that to keep other GOP leaders happy, after long being in the minority, that he does.

 

That same budget, wants to increase the world’s largest military budget, and shore up the deficit for them, and not John Q. Public, making even a diehard supporter think twice about continuing support for the president.

 

Last November there were predictions that the often competing campaign promises, (which have now devolved into competing factions) would prove to be problematic and his advisors might be a team of rivals, especially since most have little experience in government, and often have great wealth as their only asset. And, we have seen that with the reassignment of Stephen Bannon from the National Security Council, and even more reassignments.

 

With rumors that Reince Priebus might also be moved, or even sacked, it looks as if there truly will be a shakeup, especially with the defeat of the AHCA.  And, it’s quite clear that Trump’s biggest mistakes are, that as a non-politician, he has no experience over some of the most pressing issues, making the case that there is no White House leadership.