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Brief #24—Economics

Policy Summary
With the midterm elections quickly approaching, speculation continues to mount as to how much of an impact the Trump administration’s policy will have on the impending elections. Of these policies, few have raised more eyebrows that the Tax Cuts and Jobs Act (TCJA), signed by President Trump on December 22nd, 2017. Many people on both sides of the aisle considered the piece of legislature to have been passed prematurely, as it was pushed through Congress in the span of less than two months.  Prior to being signed into law, it received the support of only 32% of American voters.

The presidential administration was not without their reasons for wanting to push the legislature through Congress so quickly. Facing criticism from the right for failing to make good on the promise to “repeal and replace” the Affordable Care Act, they found themselves in need of a quick legislative change that could potentially shift national focus onto their successes rather than their failures. It is also worth noting that the quicker the bill was passed, the less time its critics would have to build arguments against it. Were the bill signed into law in time for the 2018 tax year, there was the possibility that voters would respond positively when they saw an increase in their take-home pay as well as further economic growth stemming from the tax cuts extended to corporations.  In the months since, though, this prediction has not come to pass. Rather, the opposite has taken shape.

Analysis
Does the bill’s reception serve to indicate that conservative candidates may have cause for concern in impending election? Many people seem to think so. Washington D.C. think tank Brookings Institute recently published a study discussing exactly that topic. In the study, Governance Fellow Vanessa Williamson argues that the implementation of the TCJA less than a year before a congressional election could be considered contradictory to the GOP principles —tax cuts are often an area that Republican candidates lean on in times when voter turnout is low.

The decision to implement these tax cuts, however, is misguided for several reasons. It is a policy changed fueled by poorly calculated political and economic assumptions. For many voters, the difference in take-home pay was likely difficult to notice, as the tax cuts that affected them were small. According to the Urban-Brookings Tax Policy Center, a joint venture of Brookings Institute and fellow think tank The Urban Institute, voters in the middle-income bracket will be seeing tax savings that total less than $20 per week.

It also seems apparent that the Trump administration has failed to take recent history into account. The tax cuts implemented by President George W. Bush benefited roughly three-quarters of American voters but in the year that followed, only one in every five Americans remembered it.  A few years later, the 2008-2009 tax cuts implemented by President Barack Obama caused taxes to decrease for eight out of every ten voters though it was reported that only 10% were able to take note. Despite the constant controversy over tax cuts, American voters have displayed significantly short memories when the actual policies are implemented.

Recent history has also proven that enthusiastic voters tend to look to their own party leaders for political cues, particularly in our current state that Forbes’ Howard Gleckman calls a “hyper-partisan atmosphere.’ While it is certainly possible that the GOP could have taken time to build up support for the legislation among their grassroots supporters, rushing it through Congress cost them exactly that opportunity.

We should also not forget the other element of the bill that contradicts a core belief among conservative voters. According to the study, many conservatives stand by the principle that tax cuts should not favor corporations and high-income households. The TCJA, though, did exactly that. By that logic, it does not seem like a policy change that middle and working-class conservatives should be in favor of.

The implementation of this controversial piece of legislature could serve as a valuable tool for campaigning Democrats to use to their advantage as election day draws near. As of now, it does not seem as though they are making an aggressive effort to do this–were they to treat it the way conservatives treated the ACA, the results could swing significantly in their favor.

The TCJA was a misguided policy from the start and it is not likely to prove a boon to the Republican Party in November, as voters will probably either have forgotten about the meager benefits extended to them or still be standing against the policy.

Resistance Resources:

  • The Urban-Brookings Tax Policy Center is a nonpartisan think tank that provides independent analysis on current and long-term tax-related matters.
  • The Urban Institute is a think tank dedicated to social and economic research, dedicated to improving the “well-being of people and places.”
  • FairVote is a non-partisan organization that works to give voters a stronger and help shape a representative democracy that benefits all Americans.

This Brief was submitted by USRESIST NEWS Analyst Samuel O’Brient Brief, Contact Sam@usresistnews.org

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