With the two-year anniversary of the Tax Cuts and Jobs Act looming, Republican and Democratic lawmakers are staking out very different conclusions on the success of the law since then.
For Democrats, the TCJA was a top-heavy tax cut that exacerbated wealth inequality and left mere crumbs for low- and middle-income taxpayers. Republicans, meanwhile, maintain that evidence abounds that the tax overhaul — signed into law December 22, 2017 — is working exactly as intended.
“I think one way to describe what ultimately happened here is the Republicans gave a middle finger to the middle class. Simple as that,” Senate Finance Committee member Robert P. Casey Jr., D-Pa., said at a December 11 Senate press conference.
Casey, joined by Finance Committee ranking member Ron Wyden, D-Ore., and committee member Debbie Stabenow, D-Mich., rattled off a list of what they deemed broken promises by Republicans concerning the TCJA.
Casey recalled a meeting at the White House between President Trump and Finance Committee Democrats to discuss a draft of the TCJA where Trump said that what he wanted was a big middle-class tax cut, and even directed Treasury Secretary Steven Mnuchin to ensure that outcome.
But, Casey continued, the Joint Committee on Taxation has estimated that around 50 million households earning under $100,000 would see either a tax increase or tax cut of less than $9 per month. The TCJA also repealed the individual mandate, which has now given a foundation to a lawsuit that seeks to have the Affordable Care Act struck down, and it further repealed a deduction for union dues, he said.
“So much for a great benefit for the middle class,” Casey said.
Stabenow said that Trump’s assertions that the TCJA would spur business investment, drive up workers’ wages, and reduce the deficit have also fallen flat.
The White House Council of Economic Advisers predicted wages would go up $4,000, but median family income has actually risen only $514, Stabenow said. And despite all the hoopla by Republicans around TCJA-linked worker bonuses, bonuses for workers have actually dropped 22 percent since the tax law was enacted, she said.
Stabenow observed that business investment growth has been negative for two straight quarters this year. That “meets the definition of a recession, which is deeply concerning to me, the direction this is going,” she said.
And rather than shrinking, the deficit has only continued to surge in the wake of the TCJA, leading Republicans to try to cut entitlement spending on programs like Medicaid.
“Bottom line: President Trump made a whole lot of promises that have not come true. This is a betrayal . . . to everyone in our country who’s working hard every day to give their family a better life,” Stabenow concluded.
Hello From the Other Side
Far from seeing broken promises, Republicans see the TCJA as a success story.
“Democrats would prefer Americans believe things were terrible in their country,” Finance Committee Chair Chuck Grassley, R-Iowa, said in a December 11 statement. But according to him, things have never been better.
Businesses are hiring, workers in every tax bracket are earning more, and “decreasing poverty rates and substantial corporate investment in the workforce tell the real story,” he said.
Grassley also touted the child tax credit expansion and nearly doubled standard deduction as “pro-family provisions,” and maintained that the tax overhaul kept the code’s progressivity intact.
“At the end of the day, the proof is in the pudding. America is back at work and back on track thanks to President Trump and Republican leadership,” Grassley concluded.
The Trump administration has also recently touted the tax cuts as a triumph of delivering on promises.
Unemployment is at near-historic lows, “thanks in large part to TCJA,” the Treasury Department declared in a December 10 release, with 5.1 million more jobs existing than the Congressional Budget Office projected in 2016.
Manufacturing has seen a boost, with 524,000 more jobs added in that sector since November 2016, Treasury observed. And by almost every measure, the United States is economically outperforming other G-7 countries, it claimed.
Further, annual growth in real disposable personal income per household has averaged $2,577 during the Trump presidency, compared with $1,606 under the Obama administration, according to the release.
“American workers and their families are experiencing the benefits of pro-growth policies that are generating booming job creation and wage growth,” Treasury said.
Acting White House Chief of Staff Mick Mulvaney likewise recently touted the TCJA as a great economic victory.
“Twenty years from now when they write the history of the first term of the Trump administration, it will be that we proved that supply-side economics works and that you can have significant growth without significant inflation,” he said December 10 at an event in Washington hosted by The Wall Street Journal and the CEO Council.
As for the increase in the deficit, Mulvaney pinned the blame on Republicans in Congress. “Congress spends money. . . . If you say the president is to blame, go look at his budget.”
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Correction, December 12, 2019: Wyden is the Senate Finance Committee’s ranking member.