A Dissent from Judis’ Dissent

Let me gently dissent from John Judis’s argument that we’re missing the impact the GOP tax bill will have over public opinion over the next year. 

First, points of agreement.

Deficits, debt and inequality in the abstract have seldom been major political drivers of opinion about big legislation. The 2001 Bush tax cut is a good example. It was wildly weighted toward benefits to the wealthiest Americans. That was bad policy, set the country up for fiscal problems later in the decade and deepened the trend to greater income and wealth inequality. But it also did give small but still meaningful tax relief to ordinary families. It wasn’t terribly popular but it almost wasn’t terribly unpopular. That made it hard to mount any significant or effective opposition to it.  By and large voters, not surprisingly, are much more focused on what they are getting than whether someone else is getting something more. The fact that some super wealthy person was getting a lot more than you were was a distant and not terribly compelling reality or lever of opposition.

It is also true that wealth and wage inequality, articulated in the ways progressives usually discuss it, doesn’t have a huge or immediate political traction, even though it is a hugely influential subtext and driver to our entire politics.

John argues that just because the bill is terrible big picture doesn’t mean its near and medium term politics will be bad for Republicans. Democrats are ignoring the fact that it does provide significant, if short-term tax relief for many middle income earners, specifically through expanding the child tax credit and nearly doubling the standard deduction. Yes, those are temporary and they disappear in 2025 or whenever. But you’ve got to be pretty deep into politics to think in those terms. If you are, you likely have settled partisan opinions already.

But if these are all the case, why is the bill at present so deeply unpopular?

Remember, it’s one thing for a big tax increase to be unpopular. Even when it’s good policy very few people want to pay higher taxes. The same applies when you’re doing something like Obamacare which upsets lots of apple carts, even if many people are helped. Big tax cuts should be popular, even if they’re bad policy. But this bill is far more unpopular than any major tax cut bill in the last half century. Indeed, it is more unpopular than the last generation’s two major tax hike bills. That’s kind of amazing. It’s substantially less popular than Obamacare was just after it was passed. Perhaps that’s a funny analogy for Democrats to make. But remember, the passage of Obamacare preceded a massive wave election in 2010.

So again, why is this bill so deeply unpopular?

I think there are essentially three reasons.

One is partisan affiliation and identification. Donald Trump and the GOP are behind it. And they’re both deeply unpopular. So voters, not unreasonably, apply that negativity to a bill they favor.

The second factor, somewhat more substantively, is that Democrats have been successful at painting the bill as essentially a giveaway to the wealthiest Americans. This isn’t just a paint job. That’s what it is. They have been helped by an endless stream of news about the details of what the plan does.

We also need to take account of the last 10 months in which the Trump GOP tried repeatedly to take health care coverage from 10s of millions of Americans. They went at it so hard they pretty much gave up arguing that this would not be the consequence of what they were doing. They just wanted to do it. In doing so, they actually made Obamacare a lot more popular. Trump and Republicans have spent almost a year trying to take benefits from ordinary people to give money back to people who are either very wealthy or extremely wealthy. This reality (combined with other confirming events over the last year) has become deeply embedded in the public psyche. And it is the prism through which voters are viewing this bill. That is key.

There’s a more specific factor that has taken hold in part because of the Obamacare repeal fights, in part because of Trump himself and the plutocrats he’s surrounded himself with. The point I made about the Bush tax cuts above is that people care how things affect them. If I get some tax relief that’s my focus not the fact that someone richer did too, even if maybe they got more than they really needed. But polling shows that a majority of Americans think the big payoffs to the wealthy in this bill are coming at their expense. That is a significant difference from the Bush 2001 tax cut bill and the Reagan one twenty years earlier. Whether that is because of the substance of the bill itself or the Trump prism through which voters are viewing it is uncertain. But it’s a major difference, a highly significant one and not one I expect to see change.

In other words, set aside that it is largely a major giveaway to the wealthiest Americans. The last year has cued the public up to assume that’s what it does.

The third factor has to do with specific ways this law actually hurts significant segments of the population which may not be the most needy but are politically vocal. Start with the end of the SALT deductions, the severe restriction on your ability to deduct what you pay in state and local taxes. This is a huge attack on relatively high tax blue states which will dramatically increase the already severe disparity in how much money blue states send to the federal government versus what they get back. This may not be terrible for poor and lower middle class taxpayers. But in states like California, New York, New Jersey, Pennsylvania and other comparable states it will actually hit upper middle class and wealthy tax payers pretty hard. And those are people who tend to make their voices heard politically. Those changes will also affect more affluent homeowners.

Beyond this there are a number of changes down in the bill that hit various groups of tax payers because the bill writers needed to get the money for those corporate tax breaks. Those stories will start coming out in the coming months too.

Of course, socking it to blue states is a feature of the bill rather than a bug. But there’s a problem. There are a lot of Republican Reps in blue states. 14 in California. 9 in New York. 5 in New Jersey. 12 in Pennsylvania. In what looks to be a very challenging midterm election already, supporting that big a tax hike on your own constituents will be a tough vote to explain. In special elections to date, aside from differential turnout, the biggest area of Republican erosion has been in affluent and educated suburbs which lean Republican. In a lot of blue states those are just the places likely to be hit by these changes. A number of Reps voted against the bill for just that reason. But history suggests voters punish the party in power in these cases regardless of how their own Rep voted.

Now, the reply to all this is that whatever the bill’s unpopularity now, starting next year people are going to start seeing more money in their paychecks. They’ll see that it really was a tax cut for them too and their opinions will change.

Is that probable?

Not really.

We have a recent example, the legislation Obama and the Democrats passed in the midst of the financial crisis included temporary middle income tax cuts larger than the current cuts in this bill. Politically speaking it made no difference at all. Indeed, most people didn’t even realize they’d gotten a tax cut.

Some of that may have been that the Democrats did a poor job selling the bill. I do think that’s part of the equation. The bigger factor, however, is that the overriding narrative of the Democrats first two years of complete control of the federal government was that they’d raised some taxes and spent a lot of money on new programs and stimulus relief. The tax cuts the great majority of people got just didn’t change that equation, certainly not for people already inclined to see what the Democrats were doing in negative terms. What all of that comes down to is that there’s little reason to think that small but non-trivial changes in the amount of take home pay will make an unpopular bill popular. We have evidence for this. It’s recent and I think pretty on-point.

What does tend to drive election opinion is the broader economy. There’s a lot of historical support for that. But that raises another problem, or really a mystery. The US economy has actually been doing quite well this year. Yet President Trump remains historically unpopular and big majorities of voters want Democrats to take over Congress. Maybe that will change next year. But it’s not clear why. Trump appears to be so divisive and so bad a President that the normal tendency to support incumbents during periods of good economic news does not appear to be working. Again, I would suggest this is a reason to question whether small changes in take home pay will change the public verdict on this bill.

The tax cut bill is unpopular first because its authors are very unpopular. It is also unpopular because of the disorderly and chaotic process in which it was constructed in which it was quite clear that the overriding goal was tax cuts for the wealthiest Americans. A lot of the maneuvering was to find ways not to raise taxes too much on ordinary people so that it became impossible to pass. The overriding goal, however, was clear. So it is both the popular mood, the unpopularity of the President and the substance of the bill itself that is driving its low numbers. Recent evidence suggests that the relatively marginal short term benefits to middle income earners are not ones that will change anyone’s opinions. They’ll mainly confirm opinions of people already committed to supporting the President. Republicans are heading into a midterm election year with a historically unpopular president, coupled with polling which suggests wave-like numbers of people want the Democrats to take over Congress. Republicans have added to this by passing an extremely unpopular bill. Maybe it will start to get more popular and that will improve the position of congressional Republicans. But contrary to John’s claims about Democratic wish-fulfillment, this strikes me as magical thinking.

We shall see.