Donald Trump tweeted out a major promise to voters on Saturday, pledging to cut taxes for middle-income Americans by an unspecified amount if Republicans maintain control of the Senate and the White House and regain control of the House.
“Face It, You Probably Got A Tax Cut!” This was a New York Times headline, and it is very true. If Republicans take back the House, and keep the Senate and Presidency, one of our first acts will be to approve a major middle income Tax Cut! Democrats only want to raise your taxes!
— Donald J. Trump (@realDonaldTrump) August 24, 2019
I guess the president forgot to mention that the Congressional Budget Office is projecting trillion-dollar deficits beginning next year and extending through the entire decade.
White House adviser Larry Kudlow said Thursday that the administration was looking at a “tax cuts 2.0” package to create long-term economic improvement but added that it wasn’t looking at near-term cuts.
“The idea of some short-term payroll tax cut fix — it doesn’t work. It never works. It has no lasting impact,” he said.
He added that tax cuts such as lower individual tax rates, lower capital gains rates, changes for noncorporate businesses and relief for residents of high-tax states could be rolled out before the 2020 election.
It’s not that taxes shouldn’t be cut. Both taxes and spending need to be substantially reduced. But there are no adults left in the Republican Party to tell the president and spendthrift members “no.” So, the trillion-dollar deficits predicted by the CBO will only get worse if the president gets his way.
And no, we cannot grow our way out of these deficits. They have been institutionalized under this Congress. With all budget constraints removed, it’s Katy-bar-the-door with taxpayer money.
Of course, there’s not enough taxpayer money being spent, so the Fed simply asks the U.S. mint to print up however much money is needed and we paper over our sins.
Trump’s announcement this morning comes after a weird week when he said he would propose a payroll tax cut, then rescinded the idea, and then announced his middle-income tax cut today:
“I’m not looking at a tax cut now,” he told reporters before leaving the White House to travel to Kentucky. “We don’t need it. We have a strong economy.”
He had said Tuesday that he was looking at a temporary payroll tax cut and floated indexing capital gains to inflation, lowering the tax burden for investors.
On Wednesday, Trump moved away from that position, saying he’s not looking to make the change to capital gains taxes because doing so is “probably better” for high-income earners and he wants to help the middle class.
The GOP has been whipsawed by their leader this week. His change of mind on taxes, on tariffs, and other issues is unsettling for both politicians and businessmen who crave predictability.
Maybe next week…