Financial markets and most media pundits are missing the new writing on the wall. For a variety of reasons surrounding shrewd moves by President Trump, the chances for significant tax cuts in the next ten weeks have risen sharply.
Since the Charlottesville blow-up in mid August, when the president’s fortunes were at low ebb — and I’ll repeat my view that there’s not a white-supremacist, racist, hateful bone in Trump’s body — we’ve witnessed a dramatic executive turnaround. Trump beautifully handled the hurricane emergencies. His bipartisan political pivot to “Charlie and Nancy” to keep the government open and raise the debt ceiling was clever indeed. As economist Steve Moore puts it, POTUS publicly spanked GOP leaders Paul Ryan and Mitch McConnell. And though there’s plenty of confusion about immigration reform, it’s clear now that 800,000 dreamers won’t be deported for at least two years if ever.
Some polls show POTUS’s approval nearing 50 percent. The public likes what it sees.
And most important, Trump has cleared the decks for tax cuts and reform.
Make no mistake: Trump is absolutely committed to tax cuts. This is completely unlike the health-care muddle. And critical here is the argument Trump is making: A big drop in large- and small-business tax rates will mostly benefit middle-class wage earners.
Research from Kevin Hassett, formerly of AEI and now chairman of the CEA, shows about 70 percent of the benefits of business tax cuts going to wage earners. This is not a tax cut for the rich, as Johnny-one-note Democrats insist.
There are two big numbers standing atop Trump’s tax plan: 3 percent and 15 percent. Three percent is the new growth path that will normalize America’s economy and generate at least $3 trillion of additional revenues over ten years (or sooner). This is the mother of all pay-fors. Fifteen percent is the…