Why Democrats Will Be the Big Winners From Trump’s Tax Bill

This article first appeared on Dorf on Law.

Surprising everyone (including themselves), Congressional Republicans joined hands earlier this month and said, "Look at us, we're finally doing something !"

They then passed a blatantly regressive and extremely unpopular tax bill and started celebrating. Donald Trump signed it, and here we are.

It did not matter to Republicans:

—that no one (other than Republican donors and ideologues) thought that changing the tax system was even a medium priority,

—that the bill was written for (and in some cases was literally written by the lobbyists for) the largest corporations and wealthy people,

—that the bill received the worst poll ratings of any major piece of legislation in history,

—that the bill made the tax system even more complicated than it already was,

—that the process of creating the bill was chaotic, compressed, and entirely partisan,

—that the Republicans went out of their way to take a whack at taxpayers in blue states, hypocritically violating the Constitution by deliberately setting up discriminatory treatment among the states (and all but dooming many of the sixteen blue-state Republicans in the House who lamely voted against the bill), or

—that the Republicans lied non-stop about the magical growth effects of tax cuts.

With this mess now the law of the land, and the process of exposing its numerous hidden loopholes only beginning to flower, the next battle is over people's perceptions of the new law.

Republicans have convinced themselves that they can turn this around, that people will come to love this exercise in stroke-the-rich lawmaking. They are fooling themselves.

The new story from Republicans is apparently that they lost control of the narrative about the bill as they sped it through Congress.

Boss_Trump An image of Boss Trump adapted from Thomas Nast's political cartoon titled 'The "BRAINS" that achieved the Tammany victory at the Rochester Democratic Convention' in the Library of Congress. The original cartoon was published in Harper's Weekly on October 21, 1871. DonkeyHotey

What everyone heard was that it was good for the rich and that the majority of non-rich people would end up paying more, but that latter part is only true several years down the road (and only if Republicans do not complete their bait-and-switch by making it all permanent, raising its costs and collateral consequences significantly).

For the Republicans to win the battle of spin, therefore, they have to get people to notice that nearly everyone gets at least a small tax cut almost right away. This generation of Republicans was raised on the unchallenged belief that if you give people things, they will vote for you.

(This, among other reasons, is why Mitt Romney could not conceive of his 2012 loss as anything other than having been outbid by an opponent who offered more "free stuff" to the undeserving masses.)

Although it is true that most people will see their taxes fall in the next year or so, it is unlikely that Republicans will see much political benefit. Democrats have a number of responses that have the virtue of being true.

Most fundamentally, if we want tax cuts for non-rich taxpayers, we can give tax cuts to non-rich taxpayers. That is not difficult. In fact, it is what Barack Obama and the Democrats did in the process of fighting the Great Recession in 2009.

Even though Republicans did everything they could to slow down the recovery, the economy finally bounced back (and Trump, of course, is now taking credit for an economy that is staying on exactly the same trajectory it was on when Obama left office).

In addition, the tax cuts that non-rich people will receive are rather small, on the order of one percent or so of income (under one thousand dollars per year on average). No one would leave a few hundred dollars on the table, of course, but these are not head-turning numbers.

In addition, these modest cuts will not be obvious until after 2018 is over, so even people who can be mollified by a few shiny objects and seashells will not see the baubles in a politically relevant time frame.

Last week, James Hohmann in The Washington Post summarized ten reasons why the Democrats would win the political battle over taxes. His list was actually a distillation of a storm of responses that he had received after he had tried to argue that Republicans would benefit politically, and a chastened Hohmann then gave over his column to the overwhelming arguments on the other side.

Hohmann's list is worth looking over, mostly because it is a combination of wonky arguments and political arguments that add up to a pretty overwhelming story that should make non-Republicans smile.

In particular, the idea that Republicans can now win politically through simple public relations magic is almost laughable, both because they are not very good at public relations and because they have in fact been doing PR nonstop on this issue for months (years, really). The notion that they were passively allowing the narrative to turn against them is nonsense.

Most importantly, however, Hohmann's list leaves out the two strongest reasons to believe that the Republicans are going to be punished by voters for shoveling money toward mega-rich political patrons.

First, turning around people's attitudes is notoriously difficult. No matter the reason for the public's overwhelmingly negative reaction to the new tax law, Republicans are now swimming upstream.

The most important reason that people will be difficult to convince is that we all experience what is known as "confirmation bias," which is the all-too-human tendency to latch onto facts that support what we already believe and to reject (or simply ignore) facts that conflict with what we think we know.

The next few months (and beyond) will be filled with plenty of stories about one loophole after another that has been discovered by expensive tax lawyers and exploited by their well-heeled clients.

Even the non-news will be about how big the difference is between the paltry tax cuts for most people and the lavish benefits for people who can figure out (to take but one easy example) how to become pass-through entities.

People already hate this law, even though Republicans have been strenuously trying to convince them that it is "a middle-class tax cut." There will be, at best, mixed evidence about that claim moving forward.

The evidence that supports people's negative initial response will resonate. The rest will fall victim to the old political adage: "If you're explaining, you're losing."

Second, Hohmann's list does not mention anything outside of the debate over the new tax law, even though the larger context is going to be disastrous for Republicans. They simply will not be able to stop themselves from trying to repeal the New Deal and the Great Society, which means that they will now go after Social Security, Medicare, and Medicaid. They were even stupid enough to tell us that they were going to do so even before they passed the new tax law.

The fact is that people love Social Security, Medicare, and Medicaid. There is a reason that Social Security was long called "the third rail of American politics," that even anti-government activists say stupid things about keeping "your government hands off my Medicare," and that the Medicaid cuts in the Republicans' repeal-and-replace health care bills were wildly unpopular.

Democrats would be in a very strong position if people were merely saying, "Yes, I got a small tax cut, but the super-rich really made out like bandits, and I'm tired of growing inequality."

But now it is even better for Democrats, because people will be saying (quite correctly), "My small tax cut will be used as an excuse to cut my future Medicare and Social Security benefits, and Medicaid might not be able to cover my parents' final years in a nursing home."

Earlier this year, after an initial hiccup, House Republicans passed a health care bill that supposedly fulfilled their promise to "end Obamacare." My immediate thought at the time was that the Democrats should be celebrating. They needed to try like crazy not to allow the bill to become law, of course, because it would gratuitously harm vulnerable people, but it was a political winner either way.

Republicans failed to repeal the Affordable Care Act only after going to the mat to try to pass a series of increasingly unpopular health care bills. And they have now passed a historically unpopular tax bill that will only look worse over time.

If the Republicans were going to succeed at something, this is the best possible combination of outcomes, not just for Democrats but for the American people, because reversing the damage from the Republicans' health care bills would have been much more difficult (bordering on impossible), whereas the tax bill can be relatively easily reversed when the Democrats get the chance.

In the coming weeks and months, there will no doubt be occasional navel-gazing pieces by supposedly centrist journalists with titles like, "Rethinking the Republicans' Tax Law: Is It Really 'the Worst Tax Bill Ever'?" or "Give Trump Credit for Signing a Big Tax Cut, Whatever Else Might Happen." That is how political commentary works.

But people already know that the new tax bill was a terrible idea, and convincing them otherwise seems all but impossible. The Democrats will show endless loops of Republicans high-fiving each other, interspersed with Republicans' somber-faced subsequent pronouncements that "we" all must now face the music and cut popular social programs.

Plenty of people will see the connection, even if Democrats were not all too happy to do it for them.

Neil H. Buchanan is an economist and legal scholar and a professor of law at George Washington University. He teaches tax law, tax policy, contracts, and law and economics. His research addresses the long-term tax and spending patterns of the federal government, focusing on budget deficits, the national debt, health care costs and Social Security.