In his populist run for the White House, President Donald Trump upended all the rules. He ignited ordinary people, most of them white, many of them working class, plenty of them poor and receiving government aid. And he did it by promising to blow up the game he called rigged, that gave wealthy individuals and corporations everything while a corrupt government made things easy for immigrants here illegally and the people who looked and lived like his supporters were forgotten.
Under Trump, he promised, the economy would grow, the deficit would vanish, voters would enjoy “the biggest tax cut in history” and a better, cheaper health care system would cover everyone.
It would be unfair to expect Trump to have delivered on all these promises by now, but it is reasonable to judge where he’s headed. The best way to do that is by assessing the three major policy proposals he’s supporting.
Last week, the Congressional Budget Office released its analysis of the American Health Care Act, House Republicans’ and Trump’s answer to Obamacare. Over 10 years, the AHCA would cost 14 million people Medicaid coverage, thanks to an $835 billion cut to the program. Election analysts estimate that 39 percent of Medicaid recipients who voted went for Trump. According to the CBO, the AHCA would lead to big price hikes for older Americans, such as voters aged 45 to 64 who favored Trump by 9 percentage points. The AHCA also would eliminate a Medicare payroll surtax on the very wealthy. That would bring Medicare — a program Trump swore to protect and whose recipients favored him by 8 percentage points — three years closer to a bankruptcy, which now is projected for 2023.
The 2018 budget
Also last week, the administration released its federal budget for 2018. The document has received a rare reception, uniting liberals and conservatives in disbelief and fury. Much of the reaction is due to the plan’s big assumption: that economic growth can average 3 percent a year over a decade while the CBO’s current projection is 1.8 percent. David Stockman, the budget chief under Ronald Reagan, said, “I see no way that’s going to happen.” The projection is also economically silly in ignoring that net spending cuts of $4 trillion in the budget and the AHCA over a decade would drastically reduce economic activity and cost jobs. That would make impossible the already wildly unlikely projection of 3 percent growth, and a recession would be quite likely.
That’s far from the only problem with this budget. South Carolina Sen. Lindsey Graham said of the proposed 29 percent cut to the State Department, “That’s going to lead to a lot of Benghazi situations” because security at embassies would suffer. Huge cuts in food assistance and low-income heating aid were met with bipartisan disgust. Many of the voters Trump promised to protect depend on these programs. About 10 million senior citizens are eligible for food stamps. Approximately 7 million households get help with utility bills from the Low Income Home Energy Assistance Program. About 1.2 million of those recipients are in New York, and many are senior citizens. Trump would cut the Environmental Protection Agency’s budget by 31 percent. Staunchly conservative East End GOP Rep. Lee Zeldin said the EPA budget needs increases, not cuts.
Economists are also baffled that the document uses the same unlikely $2 trillion in revenue created by the promised economic boom twice, once to pay for tax cuts and again to balance the budget.
It’s hard to say exactly what Trump’s tax reform would do for most people, because while it would cut the number of tax brackets from seven to three — of 10, 25 and 35 percent — it does not set income levels for each. It is clear that doubling the standard deduction would help some low-income Americans escape taxes altogether, but eliminating deductions for state and local income and property taxes could really sting people in places where such costs are high, like New York, where federal tax bills could skyrocket and home values could plummet.
The rich, though, would make out like gangbusters. The tax plan would eliminate the estate tax (currently levied only on couples with more than $11 million), cut the top personal tax rate from 39.6 percent to 35 percent, and lower the income tax paid on closely held businesses and partnerships from 39.6 percent to 15 percent. The nonpartisan Tax Policy Center says the top 1 percent of households would see net income increase 14 percent, while the bump for the middle class would be just over 1 percent.
Unworkable for the country
Donald Trump promised to side with average Americans. Yet with every significant policy proposal, he has turned his back on the very people who vaulted him into office. The fact that Trump’s health care plan, budget blueprint and tax reform agenda are unworkable for the country is worrisome and frustrating. But the fact that all three are crushing blows to the voters who helped him win the office is a brazen betrayal.