Even Trump Knows SALT is a Problem

President Donald Trump speaks on the phone with children as they track Santa's movements with the North American Aerospace Defense Command (NORAD)  Santa Tracker on Christmas Eve at the president's Mar-a-Lago estate in Palm Beach, Fla., Sunday, Dec. 24, 2017. (AP Photo/Carolyn Kaster)
Carolyn Kaster/AP

It seems revealing to me that key Republicans are already suggesting that the new GOP tax law was too generous to corporations and the wealthy. This is not to valorize these voices. They knew this a week ago when they voted for the bill. But those who are least principled are often the most sensitive feel for public opinion. That is how to see these day-two faux-second thoughts.

Indeed, the most notable example to me is not Marco Rubio and not specifically about the giveaways to the very wealthy but rather President Trump and his reference to the end of most deductions for SALT taxes. There are so many other more insane things, more consequential things, in that interview that it’s easy to miss the significance of the brief exchange on the end of SALT deductions.

The exchange comes when Mike Schmidt is talking to Trump about what Trump views as the Democrats’ failure to “do a partisan.” In that context, he says this.

And if I did bipartisan, I would have done something with SALT [the state and local tax deduction]. With that being said, you look back, Ronald Reagan wanted to take deductibility away from states. Ronald Reagan, years ago, and he couldn’t do it. Because New York had a very powerful group of people. Which they don’t have today. Today, they don’t have the same representatives. You know, in those days they had Lew Rudin and me. … I fought like hell for that. They had a lot of very good guys. Lew Rudin was very effective. He worked hard for New York. And we had some very good senators. … You know, we had a lot of people who fought very hard against, let’s call it SALT. Had they come to me and said, look, we’ll do this, this, this, we’ll do [inaudible]. I could have done something with SALT. Or made it less severe. But they were very ineffective. They were very, very ineffective. You understand what I mean. Had they come to me for a bipartisan tax bill, I would have gone to Mitch, and I would have gone to the other Republicans, and we could have worked something out bipartisan. And that could’ve been either a change to SALT or knockout of SALT.

But, just so you understand, Ronald Reagan wanted to take deductibility away and he was unable to do it. Ronald Reagan wanted to have ANWR approved 40 years ago and he was unable to do it. Think of that. And the individual mandate is the most unpopular thing in Obamacare, and I got rid of it …

The disordered stream of consciousness goes on from there. But what’s he talking about here with the SALT issue? As usual, in the same passage Trump can’t seem to decide whether the change is awesome (Reagan tried and failed; I finally accomplished it.) or whether it’s bad, too “severe”, etc. The upshot is that Trump seems to recognize that it’s a problem and, because of that, tries to argue that it is Democrats’ fault.

If they’d only agreed to make a deal, he would have helped them out on the SALT front. There’s so much going on here – Trump manages to be the passive bystander in his world historical accomplishment that even Reagan wasn’t able to achieve. But whatever … what stands out to me is that I think he recognizes that the SALT change is a political negative. At least he recognizes how much attention it’s gotten – far more than other changes that are much more consequential. And I would argue that attention is almost by definition negative. Unless you’re wildly ideological, if you’re from a low tax state, who cares? It doesn’t affect you other than in a very, very indirect way. You care if it affects you, if you’re from a high tax state. In which case, it’s a big negative.

For now, I just want to note this. As I’ve argued, I think this will be the most short-term politically consequential part of the bill.