It’s All or Nothing for Trump
Today, the president is going on a trip that may prove worthwhile. A few miles away from the White House, Donald Trump is going to meet with senators from his own party for lunch. Visiting the representatives is meant to be a sign of goodwill. Trump knows he has countless enemies among the senators. But he needs their approval for what might just be the most important project of his term — the tax reform he promised his voters. For this, even small friendly gestures, such as a visit on the Hill, can be helpful.
For the president, it's all or nothing. Trump, whose successes so far are limited to the election of Supreme Court Justice Neil Gorsuch, is fully expecting his tax reform bill to pass in Congress by year's end at the latest. Currently, negotiations about the details are entering the final stage. If the reform materializes, it would be a great victory for Trump personally, but also for his crisis-ridden party. If things go wrong, his presidency can safely be pronounced a failure at that point.
What Trump Is Planning
Trump thinks big. His planned tax reform is nothing short of a radical simplification of the complicated tax system, as well as a massive tax break for companies and the American middle class. Trump's main goal is to reduce tax rates for companies from 35 percent to 20 percent. At the same time, most taxpayers should receive higher tax allowances and lower tax rates. Instead of seven, there would only be three tax rates: 12, 25 and 35 percent. Overall, the reform is estimated to cost at least $2 trillion over the next 10 years, an almost magical number.
The giant reform is supposed to help sink the countless failures and glitches of the past months into oblivion. Wall Street is already looking forward to whopping corporate profits and is pushing up the Dow Jones Index to new heights. Trump himself does not miss an opportunity to praise the project. He promises that the tax reform will be great, the most radical reform in the history of the country, at least as great as Ronald Reagan's 1986 tax reform. It will create new growth and new jobs. "[We] can look forward with confidence to the future. It's morning again in America."
Why Trump Just Might Succeed
There is some evidence that Trump may score points this time. In his own party, there is a lot of support for the project. Quite a few members of the House of Representatives and the Senate are up for re-election in next year's midterms; they know that their voters, too, are expecting the party to finally succeed after the embarrassing setback with the votes on Trump's health reform.
It is good for Trump that the first important vote for the proposal was successful in the Senate last week. The Republicans were able to get enough votes to pass a budget resolution, which enables them to pass the reform based on their majority in the Senate alone, without the support of the Democrats. During the initial vote, even Republican senators who until recently have been fighting Trump, such as John McCain and Bob Corker, voted yes. On Thursday, a similar pre-vote is planned for the House of Representatives, and there is a good chance that Trump is going to win a majority there as well.
Why Trump May Fail
At the same time, the prestige proposal may fail in the coming weeks. The biggest risk is Trump himself. The president has often proven that he is a master at alienating important friends from within the party, whom he needs, through sudden maneuvers or attacks.
Even with tax reform, Trump is creating unrest among his representatives. Behind the scenes, delicate negotiations about counter-financing are underway; hundreds of corporate and private tax breaks could be scrapped. At this point, it is unclear who will profit and who will lose tax privileges. You would expect the president to accompany this process as skillfully and quietly as possible.
But Trump won't do that. He has been repeatedly mucking things up with his party's tax experts and has been leading negotiations with individual representatives or lobbying groups familiar to hardly anybody in the GOP. At the same time, he is making promises about which tax breaks will allegedly remain or be scrapped. Over the weekend, Trump spontaneously declared that 401k plans will remain tax free, surprising friend and foe alike. Experts in Congress have actually been thinking about cutting these privileges.
How Republicans Are Reacting
Although many Republicans are backing Trump's tax plans, they are also expecting tough budget cuts in the social sector. For years now, they have been advocating fiscal austerity and less government spending. They have been warning about long-term damage to the economy from increasing interest rates or inflation.
Trump's interference has annoyed some representatives, thus endangering the project. But the president does not care about these concerns. He wants success at any price. He expects critics from his own ranks to vote in favor of his reform eventually — if only in order to avoid another failure for the party.
For this, Trump would even accept massive new debt. The trained real estate speculator does not consider debt a serious problem as long as he comes out on top.
How did he put this during the election campaign? "I'm the king of debt. I love debt."
For the president, it's all or nothing. Trump, whose successes so far are limited to the election of Supreme Court Justice Neil Gorsuch, is fully expecting his tax reform bill to pass in Congress by year's end at the latest. Currently, negotiations about the details are entering the final stage. If the reform materializes, it would be a great victory for Trump personally, but also for his crisis-ridden party. If things go wrong, his presidency can safely be pronounced a failure at that point.
What Trump Is Planning
Trump thinks big. His planned tax reform is nothing short of a radical simplification of the complicated tax system, as well as a massive tax break for companies and the American middle class. Trump's main goal is to reduce tax rates for companies from 35 percent to 20 percent. At the same time, most taxpayers should receive higher tax allowances and lower tax rates. Instead of seven, there would only be three tax rates: 12, 25 and 35 percent. Overall, the reform is estimated to cost at least $2 trillion over the next 10 years, an almost magical number.
The giant reform is supposed to help sink the countless failures and glitches of the past months into oblivion. Wall Street is already looking forward to whopping corporate profits and is pushing up the Dow Jones Index to new heights. Trump himself does not miss an opportunity to praise the project. He promises that the tax reform will be great, the most radical reform in the history of the country, at least as great as Ronald Reagan's 1986 tax reform. It will create new growth and new jobs. "[We] can look forward with confidence to the future. It's morning again in America."
Why Trump Just Might Succeed
There is some evidence that Trump may score points this time. In his own party, there is a lot of support for the project. Quite a few members of the House of Representatives and the Senate are up for re-election in next year's midterms; they know that their voters, too, are expecting the party to finally succeed after the embarrassing setback with the votes on Trump's health reform.
It is good for Trump that the first important vote for the proposal was successful in the Senate last week. The Republicans were able to get enough votes to pass a budget resolution, which enables them to pass the reform based on their majority in the Senate alone, without the support of the Democrats. During the initial vote, even Republican senators who until recently have been fighting Trump, such as John McCain and Bob Corker, voted yes. On Thursday, a similar pre-vote is planned for the House of Representatives, and there is a good chance that Trump is going to win a majority there as well.
Why Trump May Fail
At the same time, the prestige proposal may fail in the coming weeks. The biggest risk is Trump himself. The president has often proven that he is a master at alienating important friends from within the party, whom he needs, through sudden maneuvers or attacks.
Even with tax reform, Trump is creating unrest among his representatives. Behind the scenes, delicate negotiations about counter-financing are underway; hundreds of corporate and private tax breaks could be scrapped. At this point, it is unclear who will profit and who will lose tax privileges. You would expect the president to accompany this process as skillfully and quietly as possible.
But Trump won't do that. He has been repeatedly mucking things up with his party's tax experts and has been leading negotiations with individual representatives or lobbying groups familiar to hardly anybody in the GOP. At the same time, he is making promises about which tax breaks will allegedly remain or be scrapped. Over the weekend, Trump spontaneously declared that 401k plans will remain tax free, surprising friend and foe alike. Experts in Congress have actually been thinking about cutting these privileges.
How Republicans Are Reacting
Although many Republicans are backing Trump's tax plans, they are also expecting tough budget cuts in the social sector. For years now, they have been advocating fiscal austerity and less government spending. They have been warning about long-term damage to the economy from increasing interest rates or inflation.
Trump's interference has annoyed some representatives, thus endangering the project. But the president does not care about these concerns. He wants success at any price. He expects critics from his own ranks to vote in favor of his reform eventually — if only in order to avoid another failure for the party.
For this, Trump would even accept massive new debt. The trained real estate speculator does not consider debt a serious problem as long as he comes out on top.
How did he put this during the election campaign? "I'm the king of debt. I love debt."
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