Peter Morici: Voter skepticism about tax reform has ominous ring for Republicans
Republicans are having a tough time selling their basic approaches to corporate and personal tax reforms. A recent poll indicates voters oppose what came out of the House bill by a 17-percentage- point margin and the Senate package is likely no more popular.
The White House says these tax cuts will generate enough growth to pay for themselves. That’s hardly credible but so are Democrats’ claims that business tax cuts — which compose about two-thirds of the package — won’t instigate more job-creating investment and is just a giveaway to the rich.
As the wounds from the financial crisis continue to heal, economic growth should improve to about 2.4% without any change in policy. Slashing corporate taxes by 20%, along with deregulation, should boost investment and worker productivity by a like amount and add two- or three-tenths of a percentage points to long-term annual growth.
In 2018, Congress will turn its focus to infrastructure spending and immigration reform to top the legislative agenda, and the kinds of initiatives the administration is backing should then take growth to about 3%.
Unfortunately, we are witnessing a revolution of diminished expectations.
Good jobs and wages still advance tepidly as compared to the closing decades of the 20th century. Most families are stuck with the same income — or less — and the essentials of middle-class life — housing, health care and a college education — are much tougher to afford.
Yet recent polls indicate as many Americans believe themselves middle class as before the crisis, and most are satisfied with their jobs and feel they are getting ahead when the data indicate they are not.
Perhaps Americans deny facts, because they believe elected politicians are too inept or cynical to do better.
After all, they can’t fix the U.S. health-care system even though Germany and Holland have demonstrated similar private systems can deliver high-quality care at one-third less cost.
Despite the Trump administration pounding on friends — Canada, Mexico and South Korea — and foe — China — alike by Commerce Secretary Wilbur Ross and U.S. Trade Representative Robert Lighthizer, the trade deficit is getting bigger and jobs losses worse.
Globalization and the nexus of digital technologies, automation and artificial intelligence have divided America into those who are doing great — those that go to Ivy League colleges and elite state universities on rich parents’ donations and tuition payments or who receive admission and scholarships for pleasing the identity politics of their politically correct faculties — and the rest of us who go to left-out state schools, face a lifetime burdened by student debt and labor as contingent workers in the gig economy.
More than anything else, that’s what elected President Donald Trump, and the GOP had better hope and pray his program instigates more widely distributed opportunities in the course of boosting growth from 2% to 3% or that improvement won’t save the party from major setbacks in the upcoming midterm and 2020 elections.
Much was made of Trump’s tweeting and unpresidential behavior after the Republicans took a shellacking in off-year gubernatorial races — in Virginia, those issues may have been determinative but much more was at play in New Jersey.
In 2009, Chris Christie, a tough U.S. attorney, was elected governor of New Jersey on a platform to drain the swamp in Trenton and resurrect the state’s moribund economy but did not deliver.
Despite a few notable reforms — such as raising the retirement age for new public employees — the state’s finances remain shaky, and its taxes are among the highest even in the tax-heavy Northeast. And economic growth since he took office has only been about half the pace of the rest of the nation.
Democrat Phil Murphy has captured the keys to the governor’s mansion in a landslide on a progressive platform that includes a millionaire’s surtax, a single-payer health system and a $ 15 an hour minimum wage.