Issue 129:2017 11 16:Taxing for Mr Trump (J.R.Thomas)

16 November 2017

Taxing for Mr Trump

by J R Thomas

American Bald Eagle in front of flag looking fierce

There are not many obvious similarities between Mrs May and Mr Trump, but the two leaders can certainly find one – a wafer thin majority when it comes to getting legislation through their respective legislatures.  Mrs May retains power by virtue of her controversial deal with the Northern Ireland Democratic Unionist Party and must nervously contemplate the newspaper headlines every morning to assess how many Conservative MP’s are at her service, and how many cabinet ministers she will need to fire.  Mr Trump of course has a Republican majority in both the House of Representatives and in the Senate. Although being Republican does not necessarily mean that Representatives will support their President in all, or indeed, any, matters, in practice the President can be reasonably confident of being able to get a majority for any legislation he cares to propose in the House.  But it is a very different matter in the Senate – step forward Senator John McCain.

The Senate is of course the more senior legislative organ; unlike the House of Lords it is in Bagehotian terms both dignified and efficient – the upper and more senior house but also approving all legislation before it becomes law. Senators often have age and experience and even dignity on their side; they are also more independent and free-thinking than members of the lower house – and they can be trouble.  Currently there are fifty two Republican Senators, the Democrats having forty eight – or technically forty seven and Bernie Sanders, who is an independent once again.  As we write, three Republican senators are restricted in their participation, Senator McCain who is suffering from the side effects of cancer treatment, Rand Paul who was attacked by his neighbour while cutting his lawn at home (we throw no further light on this), and Thad Cochrane, who is recovering from an infection.

Mr Trump, in need of a legislative success, is advancing with his proposed tax change bills, far reaching and complex pieces of legislation of particular benefit to corporate America (it is interesting that lowering tax rates on corporates is not hugely controversial in the US) but with intended benefits to all tax payers, especially the lower paid.  Whilst it is supported by all Republican members of both Houses in principle, bits of the legislation are controversial.  Among the Representatives a bit of pork-barrelling will probably cope with that, but Senators are made of greater things – more and better pork might deal with some issues, but some are matters of principle where not even the finest bacon will help.  Several Senators are, for instance, implacably opposed to the proposed inheritance tax change – they think it favours the rich too much; some are opposed to amending the deductibility of home mortgage interest – not generous enough to middle income home owners.  The current tax code allows tax credits to tax payers adopting a child – the policy writers would like to dump that but the pro-life lobby is campaigning that it should remain.  Finding a way through this maze will take some doing; though the up-coming midterm elections may to some extent focus politicians’, or at least strategists’ minds.

Mr Trump needs to get this through; he has achieved no major policy victory so far and to win one for the pocket book would go down well with his core supporters.  Having nothing to point to in his first year is not a great achievement – though it has not benefitted the Democrats either.   Mr Trump is unpopular amongst the scribbling and chattering types, but his core supporters have so far remained loyal, if only on the basis that at least he is trying to do things.

The Democrats though still seem divorced from their traditional supporters; Mrs Clinton is touring the country promoting her book on the election; her party is still arguing endlessly about why they lost.  This so far is focussed not on why their core supporters did not turn out, but on marketing and polling deficiencies – which might be seen as a lightning rod when the candidate did not really cut the mustard.  Mrs Clinton remains a formidable force in the Democrats, but increasingly a group of potential candidates, who may wish to prevent her running again in 2020, is emerging.  Leader of that pack is Terry McAuliffe, the departing governor of Virginia, who was the Clintons’ principal and remarkably successful fund raiser for all their runs at the Presidency.  Now Mr McAuliffe thinks it should be his turn – though there are plenty of others.  But Hillary may yet get her final chance – ambition and the historical appeal of being the first female President might yet win out, certainly if the lady has her way.

Last week saw two races for Governorships – one in Virginia which the Republicans were hoping they might win – not in natural Republican territory but polling suggested a close race – and one where they had taken the precaution of putting in place a non-Trump Republican candidate.  Maybe that was a mistake – he lost – as did a similar candidate, Kim Guadagno, in New Jersey.  New Jersey is a more serious loss – it has been run by Chris Christie (he of the bridge – he’ll always be haunted by that bridge) a popular Republican, Presidential hopeful, supporter of Donald, who has reached the statutory limit on holding his office.  Mrs Guadagno was his deputy and seemed a natural successor, but not to the voters, who went for the Democrat Phil Murphy by a 12% margin.

Mr Trump is on his big tour of the Far East and has not said much about these two setbacks for the Republicans, though it seems quite possible that they may not be upsetting him too much.  In any case, governorships do not much matter – a contest for a Senate seat would be a very different thing.

The media are making much of the ongoing enquiry by Robert Mueller, the special counsel investigating the Trump campaign’s possible, or alleged if you prefer, connections to Russian money and Mr Putin.  Mr Mueller now has his first scalp, that of Paul Manafort, one of the President’s campaign advisors, together with his business partner Rick Gates.  They have been charged (similarities to Al Capone may be noted but we are not commenting) with tax evasion and non-filing offences relating to earnings from assisting a political campaign in the Ukraine.  Mr Mueller says there’s a lot more, and various persons are being interviewed, but what the more is, Mr Mueller is keeping to himself.

But note that so far none of this comes anywhere near Mr Trump; and even if the Russians were working with, or as has been suggested, blackmailing, Mr Manafort (both fiercely denied), that does not implicate the President in anything.  Mr Trump seems a bit bothered by some of this, or so says the gossip ring in the White House – but because it is weakening his political clout in the tax bill, not because he is worried about Mr Mueller arriving in the West Wing with a set of cuffs.

This won’t do for the press though, who would like a good story.  Possibly they may yet get one – George Papadopolous, another of the vast number of “special advisors” who climbed aboard the Trump campaign bandwagon as it started to gather speed has admitted that he lied to FBI agents about his attempts to find dirt on Mrs Clinton and her campaign.  Could this be the smoking gun?   Could it lead to the President, or at least to the Presidential family?  Mr Trump does not seem too bothered by this one either; but maybe he is good at being cool under pressure.

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