The Republican tax plan may have passed Congress and been signed by President Trump, but that’s not stopping the New York Times from slamming it as a fairy tale that will doom the GOP in the 2018 congressional elections. In the process the paper made some bold anti-Republican predictions that can be checked next year, as the consequences of the tax bill wind through the economy and the political landscape
First, on the front of Thursday’s Times, Patricia Cohen insisted that President Trump’s “Rosy Forecast for Economy Defies Evidence.” The text box: “Betting against long odds that a revised tax code will increase jobs and wages.”
When President Trump adds his distinctive signature to the tax bill, he will also be making a huge bet that the Republican strategy of deep cuts for businesses and wealthy individuals will fuel extraordinary growth across the board.
If they are proved correct, they will be repudiating not only historical experience, but most experts. From Congress’s own prognosticators to Wall Street’s virtuosos, scarcely any independent analyses project anything like the rosy forecasts offered by the president’s top economic advisers.
[Goldman Sachs] annual growth estimate of 2.5 percent for 2018 matched the one issued this week by the nation’s central bank, the Federal Reserve, while the latest median Wall Street forecast hovered close by. And in 2019, growth is expected to drop to 1.8 percent, Alec Phillips, chief United States political economist for Goldman, said Wednesday after the Senate vote.
“We note that the effect in 2020 and beyond looks minimal and could actually be slightly negative,” the company said in a recent published summary.
Such projections are unlikely to deter Mr. Trump and Republican leaders from declaring success next year. Lower taxes and extra incentives to invest in 2018 are almost certain to encourage consumers to spend and businesses to expand.
Reduced rates mean most Americans will start taking home more money right away. Roughly three-quarters of taxpayers are expected to get a cut next year, according to the nonpartisan Tax Policy Center.
But, but! Cohen insisted that while good things might happen temporarily, bad things would definitely transpire:
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But like a shot of adrenaline, that initial burst of economic activity is likely to fade.
Over time, most of the broad-based tax cuts will disappear. Although the richest sliver of Americans will continue to get a break, most people who earn less than $100,000 will see their taxes rise, which could slow the economy’s primary engine, consumer spending.
Further tightening is likely if the Republicans follow through on sharply cutting Medicare, Medicaid, Social Security and other programs that tend to put extra cash into the pockets of lower and moderate-income households.
Either way, the deficit will continue to balloon....
Friday’s front page featured reporter Jonathan Martin, who rarely has an encouraging word for Republicans, staying true to form: “For G.O.P., Tax Law Is a Salve, But Hardly a Cure-All for 2018.”
The sweeping tax overhaul approved by Congress this week hands Republicans a long-sought achievement they believe will bolster their defenses in next year’s midterm campaign, but party officials concede the measure may only mitigate their losses in what is shaping up to be a punishing election year.
While the tax legislation is broadly unpopular as it reaches President Trump’s desk, the bill offers Republicans the sort of signature accomplishment they have been lacking to galvanize their demoralized donors and many of their voters.
Yet with voters indicating by wide margins they prefer Democrats to control Congress and bestowing Mr. Trump with historically low approval ratings, the tax plan is hardly a panacea for Republican lawmakers on the ballot in 2018. At best, it is the political equivalent of tacking up plywood against exterior windows to lessen the inevitable damage of an impending storm.
Officials in both parties believe Democratic gains in the House, where Republicans enjoy a 24-seat majority, could reach as high as 40 seats if the political environment does not improve for the Republicans.
And, as of now, it only appears to be worsening.
Friday’s Times also ran with a dispatch from a Maryland town built on socialism, er “egalitarian pillars”: “Egalitarian Town Worries About What’s Next,” by Tara Siegel Bernard.
The word “equality” carries special meaning in this planned community, nestled in the corridor between Baltimore and Washington.
Subsidized apartment complexes and tidy townhouses coexist with single-family colonials and split- levels, and racial, socio-economic and religious diversity is embedded in the fabric. Columbia’s founding father created the town in 1967 with hopes that all types of workers could afford to live there, “from the company janitor to the company president.”
It is through this lens that residents here are viewing the tax plan that Congress finalized this week. Even as people here try to assess how the new code will affect them individually, many are expressing greater concerns about the “knock-on” or secondary effects of the plan, which down the line could reduce or eliminate spending in some areas to pay for tax breaks for businesses and the wealthiest Americans.
In Columbia, that could mean cuts to the well-regarded public schools and aid programs for the most vulnerable residents, changes that would further chip away at the egalitarian pillars on which the town was built.
President Trump has advertised the new plan as a “massive tax cut” for working and middle-class Americans, while Republican leaders in Congress promise it will create jobs and simplify the tax code. At the same time, the plan is expected to add at least $1 trillion to the deficit and increase health insurance premiums; the number of uninsured people could rise by millions.
And Republican lawmakers have already signaled that they will call for cuts to popular entitlement programs like Medicare and Social Security.
Slowing entitlement growth (not necessarily actual “cuts” in spending) has been bandied about by House Speaker Paul Ryan, but were not part of the tax plan just signed into law.
To a retiree like Sharonlee Vogel, who lives in the Long Reach village in Columbia, those types of changes are distressing. She had personal concerns -- including the curtailed tax break on state and local taxes -- but she was more upset about how it would hurt middle- and lower-income families and the fraying safety net.
The safety net has been “fraying” in Timesland for a generation without actually ripping apart.
Bernard has previously attacked a proposed slight reduction of entitlement spending as hurting “the old and poor.”