Republican candidate Donald Trump focused this weekend on his economic platform: Cut taxes and regulations across the board while also saving Social Security, Medicare, and other government safety-net programs.
Trump’s platform is nearly invincible in the general election if he stresses it enough, polling shows. Trump’s plan will also have a transformational effect on how people view his party. But he still needs to make the accounting work to ensure that his Third Way platform is feasible.
“We’re going to save your Social Security without killing it like so many people want to do. And your Medicare,” Trump said this weekend at a rally in Phoenix, which followed a rally in Las Vegas where he also highlighted Social Security. Trump is only starting to focus on the issue, but he’s been aware of its political potential at least since the Wisconsin primary,when he taunted conservative-movement candidate Ted Cruz and establishment rival John Kasich: “If we don’t make the country rich again, you’re going to have your Social Security cut by Cruz and Kasich.”
This is a major opportunity for Trump. Both parties have attacked Social Security and Medicare in recent years, causing panic among middle-aged Americans. 51 percent of people who have not yet retired — including 64 percent of people under 30 — doubt that they will ever get any Social Security benefits at all, even though they’re paying into the system. 66 percent of all Americans think Social Security is plagued by either “crisis” or “major problems.” 79 percent of Americans during the 2014 midterm elections wanted Social Security to be increased. 79 percent!
Recent Republican candidates Mitt Romney and Paul Ryan ran on an “entitlement reform” scheme that would have resulted in massive cuts and changes to Social Security. They based their plan on the fact that big government spending ran up a dangerous debt, leading us to an “entitlement crisis” that needed to be solved. But they had no idea how to actually increase revenue in the United States to offset their cuts. After they lost the election, Ryan signed off on President Obama’s trillion-dollar-plus “Cromnibus” budget bill that spiked the deficit up even higher.
Trump plans to bring back revenue by reversing trade deals, which he says can bring trillions of dollars back into U.S. government coffers practically overnight. He’s also looking for revenue from other sources: He wants to keep companies in the United States by fighting corporate inversion. He wants to dig up $300 billion by allowing Medicare to negotiate prescription drug prices. He wants to cut waste, fraud, and abuse, and eliminate the Department of Energy and the Environmental Protection Agency. And he wants to help small companies generate more taxable revenue by easing their federal regulatory burden.
“We’re going to get rid of a big, big percentage of the rules and regulations,” Trump said. “We’re going to get rid of Dodd-Frank to a large extent. So that the banks can loan you money because right now they don’t loan businesses money … Unless you have more money than you’re asking for, they don’t want to loan you money because the regulators are running the banks. And you need money to start businesses.”
With new revenue rolling in, Trump thinks he can save Social Security and cut taxes too. In other words, he thinks he can combine the two most popular fiscal policies in American politics.
“Hillary is going to raise your taxes like crazy. I think to 60 or 65 percent,” Trump said. “She doesn’t want to talk about it. And I’m giving the largest tax cut of anybody, of any candidate that’s run for office.”
“We’re the highest-taxed nation in the world, folks. Nobody pays more taxes. We’re the highest-taxed. Our businesses are the highest taxed in the world. We’re giving a massive tax cut. Especially for business and for small business and especially for the middle class,” Trump said.
Trump’s tax plan, which he rolled out during the primaries, is without question the most conservative tax reform plan since Woodrow Wilson and Congress gave us the federal income tax in 1913 — but it still rankles establishment Republicans because it goes after loopholes and tax havens for politically-connected corporations.
The Trump tax plan wipes out income taxes for poor people making less than $25,000 or married couples making less than $50,000, which exempts “nearly 75 million households,” according to the campaign, from losing a dime of wages to the federal government.
For everybody else, you get three tax brackets: 25 percent, 20 percent, or 10 percent. And for businesses, the ceiling is 15 percent for everyone.
Compare that to Ronald Reagan’s tax reform bill of 1986, which conservative hero Grover Norquist’s group Americans For Tax Reform was literally created to help push. Reagan kept the corporate tax rate at 34 percent and the top individual rate at 28 percent. Trump’s plan is much more conservative.
Trump’s plan is also markedly different than George W. Bush’s tax cuts, which gives Trump another advantage: it nullifies the biggest Obama-era criticism of Republican tax policy, that tax cuts favor the wealthy and drive up the deficit in ways that lead to disaster, like the 2008 financial collapse.
Trump is also craftily positioning himself on Obamacare: Get rid of President Obama’s disastrous program, which threw people off their existing private plans and stifled competition, and “replace” it and preserve the universal health care concept but with more inter-state competition and elements of privatization.
“Obamacare, which we’re going to terminate by the way, 100 percent, and replace,” Trump said. “Because of Obamacare and other things that they have messed up, but because of Obamacare you have so many part-time jobs. People who have never had a part-time job in their life, they always had jobs. Companies are taking people that have been with them for 20 years or more and they’re saying, ‘I’m sorry. I love you. You’re great. I have to make you part time.’ Because they want to get away from those horrendous Obamacare rules and regulations.”
And then, of course, there is Trump’s certainly-not-inexpensive promise to “take care of our vets” by picking up their medical bills at private doctor’s offices instead of utilizing the VA system.
Trump has struck gold politically, but he still has a question to ask himself: How far will he go in preserving the social safety net? Specifically, what will he do about Medicaid? So far, Trump has come out in favor of “block grants” to states for Medicaid. The size of those block grants could end up determining his level of support among African-Americans, who are not currently supporting him by any stretch of the imagination.
Republicans never won the fight to repeal Obamacare, in part, because Obamacare expands Medicaid and that is very popular, especially with African-Americans. Public Policy Polling research during the 2014 midterms — which Republicans still won! — showed 58 percent of people in Florida and 59 percent in Pennsylvania approved of the government expanding Medicaid.
Compare the fates of Louisiana Governor Bobby Jindal, who fought Medicaid expansion and dropped to a 27 percent approval rating in his last year in office, with John Kasich, who expanded Medicaid and hit 62 percent approval in his home state of Ohio last fall.
Can Trump really cut taxes and spending better than Ronald Reagan, reverse the Bush-era income inequality aspect of tax cuts, and also save the social safety net? It depends on how much revenue he can really gin up through new trade deals and corporate de-regulations, and it depends on how much budget waste he can eliminate.
But if Trump gets the numbers right, he could overhaul the image that many struggling people have of the Republicans — that they only cut benefits for the poor to pay for their tax cuts for the rich. And he could arrive at a Third Way solution that will change forever the way people vote in America.