Tax cuts before turkey!
The GOP Congress should deliver a giant, beautiful, massive tax-reform bill to President Donald J. Trump’s desk no later than Wednesday, November 22 — Thanksgiving Eve. Enacting a $1.5 trillion tax cut will let Washington Republicans savor their roasted birds after a job well done. (The House’s 216-212 passage of the Senate’s budget blueprint Thursday morning advances this goal.)
More important is what follows Thanksgiving: Black Friday.
Consumers with lighter tax burdens will turbocharge the Christmas shopping season. The shaky retail sector will rebound. This should boost fourth quarter GDP growth and hike corporate earnings in the first quarter of 2018. Atop a chop in corporate taxes from 35 percent to 20, instant expensing of business purchases, the death of the Death Tax, and more, the economy should roll swiftly forward — like a bowling ball speeding toward the dusty pins of the Bush-Obama years.
As Republicans constantly must remember: Good policy is good politics. If, twelve months hence, GDP growth roars at 3 to 4 percent or more, Republicans should keep the House, hold the Senate, and possibly capture at least eight net seats among the 25 that Democrats will defend. This would yield a 60-vote, filibuster-proof GOP majority and empower Republicans to erase the lingering traces of Obama’s legacy of national self-humiliation.
Here are three more reasons for Republicans to move quickly on tax reform: Thad Cochran, John McCain, and Roy Moore. The senators from Mississippi and Arizona, respectively, have been ill. Who knows how much longer they can vote. Meanwhile, a Fox News survey recently found Alabama’s Judge Moore tied 42-42 with Democrat Doug Jones, to replace Moore’s defeated primary opponent, incumbent GOP Senator Luther Strange. If Jones topped Moore, that likely would score Democrats another vote against tax reform and spook already skittish Senate Republicans.
Time is the best friend of those who protect every crooked nook and cranny of today’s convoluted tax system. Thus, the longer tax reform languishes on Capitol Hill, the longer K Street will have to nitpick this legislation to death. This will be especially true if Republicans needlessly and foolishly buckle beneath the Democrats’ class-warfare rhetoric and impose a fourth tax rate on the wealthy, rather than stick with their original proposal: to collapse today’s seven rates (between 10 and 39.6 percent) to three: (12, 25, and 35 percent). If Republicans join Democrats, bash “the rich,” and impose a higher, fourth bracket, they will surrender the moral high ground.
If top earners’ tax rates are not cut, they will fight even harder for their loopholes and exemptions. Denying America’s most successful citizens this trade off will entice them to deploy every Beltway-based lobbyist, lawyer, and arm-twister to shield each wretched crevice in the U.S. Tax Code. That will make it tougher to power-wash the reeking stable that is today’s tax structure.
Republicans also must abandon all talk of phasing in corporate tax cuts over several years. This would be disastrous. Tax cuts must be immediate, at least.
Imagine this sale at your favorite store: “November: 10 percent off every purchase. December: 20 percent off. January: 30 percent off.” November and December sales would implode as consumers awaited January’s bargains. “If businesses know that by delaying recognizing earnings for a year or two (or three) they will face lower tax rates,” predicts Americans for Tax Reform president Grover Norquist, “they will react accordingly and delay new investment, jobs, and earnings.”
Republicans also must abandon all talk of phasing in corporate tax cuts over several years. This would be disastrous.
Similarly, Ronald Reagan’s 1981 tax cut postponed the full 25 percent reduction in levies until January 1, 1983. The high interest rates central to Federal Reserve chairman Paul Volker’s anti-inflation monetary policy already had decelerated output, and the pause in economic activity, until full tax relief arrived, made things worse. The result: The 1982 recession. GDP cratered until New Year’s Day 1983. Robust growth returned immediately and then zoomed along until George H. W. Bush ruined everything with his “Read my lips” tax increase in June 1990.
Republicans should learn this lesson: Tax cuts should not be delayed. They must kick in right away, if not retroactively. Yes, ex post facto laws are fishy. Congress should not be a time machine that travels in reverse. That said, Democrats have raised taxes retroactively — most notoriously, when Bill Clinton signed tax hikes in August 1993 effective that January 1 — 19 days before his inauguration. A GOP tax cut dated January 1, 2017, is this record’s B side. Still, it’s better to legislate backwards to hand people their own money rather than to vacuum their pockets.
As clouds part for Republicans on taxes, a storm gathers for Democrats on ethics.
November 2018 may find the alleged Russia-Trump conspiracy as empty as Al Capone’s vault, when it was pried open on live TV in 1986.
Conversely, “Uraniumgate” may become the Nagasaki of corruption for Democrats, with Hillary and Bill Clinton, the DNC, and Obama administration officials colluding with Russian spies and officials to hand the Kremlin control of 20 percent of America’s uranium supply in exchange for $145 million in dodgy donations to the Clinton Foundation.
Meanwhile, a tax-cut-fueled economic boom may vindicate the GOP’s supply-side philosophy and annihilate the Democrats’ defeatist claim that 2 percent growth is America’s “new normal.”
Choosing between the growth party and the graft party, Americans in November 2018 will flush the Democrats down the commode.
This dream scenario begins with Americans giving thanks on November 23 for a brand-new, beautiful, $1.5 trillion tax cut.