Deep in the night on Friday—actually, on Saturday morning—Senate Republicans narrowly passed its version of Trump’s tax bill, which was rushed to completion—Democrats complained that they didn’t see the five-hundred-page bill until an hour before voting started, and even then it literally had handwritten notes in the margins—with little in the way of hearings or testimony (but with a ton of lobbyist insight), and which will increase the deficit by $1.45 trillion even accounting for growth, according to the nonpartisan congressional scorekeeper. Mitch McConnell, the most cynical man in modern political history, then told reporters with a straight face that the bill had gone through “regular order” and would not only be revenue neutral but probably be a revenue producer. That’s an almost impressive amount of horseshit in one sentence.
WHAT IT MEANS:
- There are challenges yet to overcome—namely, reconciling the House and Senate versions of the bill in a manner that keeps enough representatives on board: “Of particular concern will be changes made hours before the Senate passed its final legislation early Saturday morning, when the Senate changed its bill to preserve a provision of the current tax code that sets an alternative minimum tax floor for very wealthy individuals. That provision would be eliminated in the House bill, and scrapping the alternative minimum tax has long been a priority for GOP tax writers.”
- Even so, the bill is more likely to pass than not.
Assume the Republicans keep their act together and President Trump signs a tax bill by Christmas. Politically, I would argue it’s hard to see this as a win. The bill is already historically unpopular—and will hardly become less so once the details are more thoroughly reported—as are
the Congress that passed it and the president who advocated for it. But it would be a legislative victory, something that Republicans can use to argue that they can, in fact, govern. The key question—both for the country and Republican fortunes in the midterms—is what it would mean for the economy.
- The stock market will love it: “Wall Street is seriously pumped about the tax plan making its way through Congress. It's not really because investors think the proposed tax overhaul would unleash enormous growth by creating new jobs and stronger wages. Most established economists have thrown water on that theory. That's because there's no guarantee companies would use their savings from lower corporate tax rates and repatriated foreign profits to create jobs. In fact, few CEOs have publicly made any such promise. But Wall Street can cash in, even if Main Street doesn't. Markets are betting that companies would use their new spare cash to help investors: by purchasing boatloads of stock and beefing up their dividends. Both outcomes can help propel the soaring stock market to new heights, even if jobs and wages don't follow suit.”
- Goldman Sachs believes the tax cuts will boost growth by 0.3 percent in 2019. Economists surveyed by Bloomberg expect the U.S. economy to “expand 2.5 percent next year and 2.1 percent in 2019, after 2.2 percent growth in 2017.” In other words, the economic effects will be modest at best, and not nearly enough to overcome the huge deficits the bill creates.
- Conservative groups have hailed North Carolina as an example of what tax reform can do (unlike Kansas, whose supply-side experiment failed catastrophically): “The tax changes in North Carolina haven’t produced the fiscal calamity that led Republican legislators in Kansas this year to reverse dramatic cuts they passed a few years earlier, but nor have they produced the kind of win-for-all economic prosperity national Republicans say their effort will spur. Instead, North Carolina has enjoyed the same steady growth as much of the country, making it challenging to estimate the impact of the tax cut compared with the many other factors shaping the state’s economy. ‘There’s nothing magical that has happened in North Carolina,’ said John Quinterno, an economic analyst at the Chapel Hill-based research group South by North Strategies.”
- “The state economy and the number of new jobs have grown slightly faster than in the nation at large since the tax cuts began, said Michael Walden, an economics professor at North Carolina State University. … But even if the top-line numbers have improved, workers have not seen huge benefits. The median hourly wage in North Carolina grew roughly on par with the national rate, while the average hourly wage and annual wage grew notably slower, according to the federal Bureau of Labor Statistics. … While North Carolina’s economy has chugged along, signs of strain on state spending have increased. The state budget has not kept pace with a growing population, said Alexandra Sirota, director of the North Carolina Budget and Tax Center, a left-leaning nonprofit. ‘Pretty soon, we’re not going to have enough money,’ Sirota said. The state legislature’s Fiscal Research Division agrees. It projects budget shortfalls of at least $1.2 billion starting in 2019.”
As Republicans try to put together a bill both houses will accept, there’s another wrinkle
: “The negotiations are to begin as Congress faces a Friday deadline to pass separate spending legislation or face a government shutdown, and for that task
Republicans may need votes from Democrats. Yet Democrats are not at all eager to bail out the GOP on any issue, even keeping the government open, after watching helplessly as Republicans sidelined them to ram through a tax bill that is heavily weighted in favor of corporate America and the wealthy.”
- NYT: “With government funding set to expire at the end of Friday, Republicans are aiming to buy more time so they can negotiate over a long-term spending package. The task is complicated by a feud between President Trump and Democrats, whose votes Republicans need to secure passage, and measures on the politically fraught issues of immigration and the Affordable Care Act.”
- “The possibility of a shutdown looms just after Senate Republicans succeeded in passing their sweeping tax overhaul, a moment of triumph for a party that has struggled to produce big achievements despite controlling Congress and the White House. But promises made to secure passage of the tax bill could further complicate negotiations on government funding, and any failure at the fundamental task of keeping the government running would swiftly undercut Republicans’ display of progress.”
The House version of tax reform—though not the Senate’s—would include a huge tax increase on graduate students
, essentially forcing all Ph.D. students who are not independently wealthy to abandon academia. Local universities are concerned, to say the least.
WOMEN GAIN POWER IN LOCAL GOVERNMENT.
The N&O has a piece today noting that, when Raleigh City Council members are sworn in today, half will be women, for only the second time in the city’s history.
This post was excerpted from the
- In Durham, women will comprise three of the six city council seats. (A seventh seat will be filled by a council appointment in the near future.)
- “Raleigh’s shift to an evenly divided male-female council reflects a larger trend in which more women are running for office–and winning. Throughout the country, 35,000 women have expressed interest in running for office since the November 2016 election, according to advocacy groups Emily’s List and She Should Run. Since 2015, North Carolina’s three largest cities–Charlotte, Greensboro and Raleigh–have been ruled by women mayors.” ( I don’t believe Durham has ever had a woman mayor, but please correct me if I’m wrong. Update: I was wrong. Sylvia Kerckhoff was the mayor of Durham from 1993–97.)
- On the other hand, only two of Raleigh’s council members—newbie Nicole Stewart and incumbent Corey Branch—are younger than fifty-nine.
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