The Tax Pivot

Trumpcare Eulogy:  Yesterday was supposed to be all about tax reform but oddly enough Trump couldn’t pivot without first making several strange and untrue comments about health care and Puerto Rico.  Just one day after the Graham-Cassidy plan was pulled for lack of support, Trump said that they had the necessary 50 votes but couldn’t proceed right now because one Senator was in the hospital dealing with a serious medical condition and two others just needed more time to process their decision.  He then promised that they would get back to health care in January or maybe February or maybe March as soon as they finished tax reform.  The so-called hospitalized Senator was 80 year old Tom Cochran from Mississippi, who is home recuperating from surgery but is not in the hospital.  In any case Cochran’s absence from Washington is irrelevant, Graham-Cassidy did not have the needed votes and it’s highly unlikely that tax reform will speed through the legislative process by January or February and March may be a stretch as well.  Trump then went on to say that he would be announcing a major executive order to allow the sale of health insurance across state lines, a practice that sounds good but doesn’t really work.  Insurers can already sell across state lines as long as they comply with state regulations and consumer protection laws.  Attempts by Wyoming, Maine and Georgia to encourage across state sales have failed because insurance companies have shown little interest in selling insurance or creating provider networks in states where they have no customers. Nevertheless, the populist sounding promise, combined with the assertion that health care reform was just around the corner must help Trump deal with bitter disappointment about nine months wasted on the Trumpcare legislative catastrophe. Trump also asserted that all was proceeding nicely in Puerto Rico, a claim that would surprise millions of the suffering Puerto Ricans who are in the throes of a huge humanitarian crisis if only they had the ability to hear his statement. Because he doesn’t want to upset the shipping industry, Trump announced that he has no plans to lift the restrictions of the Jones Act, a law which restricts foreign carriers from shipping goods from one US port to another. Trump lifted the Jones Act to help out Houston and Florida after hurricane Harvey but Puerto Rico isn’t Houston or Florida, isn’t “red” and is the home of Puerto Ricans  so Trump, oblivious to the optics, has decided an exception isn’t necessary.  Needless to say, Puerto Rico Governor Rosello disagrees, he wants ships, he wants them now.  Before finally, pivoting to tax reform, Trump mumbled something about turning to Democrats to work on health care reform.  It would be nice if that was his one truthful statement.   

Tax Reform:  With Indiana’s red state Democratic Senator Donnelly dragged along for the ride, Trump went to Indianapolis to announce his much anticipated tax reform plan.  The plan that Trump calls a “once in a generation opportunity” calls for cutting the corporate tax rate from 35% to 20% and makes it easier for corporations to repatriate overseas earnings. Among other things It collapses the seven individual income tax brackets into three ranging from 12% to 35 %, doubles the standard deduction, eliminates the marriage penalty and eliminates the deduction for state and local taxes. Though Trump says that his tax reform plan “was not good for me,” the plan also eliminates inheritance taxes and the alternative minimum tax.  We’ve still not seen Trump’s tax returns but the one page that was mysteriously released earlier in the year showed that Trump was bigly impacted by the AMT and obviously, were he to kick the bucket, his family would hugely benefit from the elimination of the inheritance tax so that statement is highly suspect.  At this point no one is talking about how and who will pay the $2.2 trillion cost of the plan.  The “big six” group of tax writers, Treasury Secretary Mnuchin, economic advisor Cohn, House Speaker Ryan, House Ways and Means Chair Brady, Senate Majority Leader McConnell and Senate Finance Chief Orrin Hatch know, but they aren’t telling. yet.  In any case, it’s way too early to get too excited or exorcised about any of the provisions included in this version of Trump’s plan because it’s just a starting point, the devil will be in the details and so far the details are missing. As Lindsey Graham, who knows a lot about failed legislation, said yesterday the difference between success as a party, a one or two term presidency and surviving the 2018 mid-term elections lies in tax reform.  Hold on tight the battle has just begun.

Calling Human Resources:  Rather than draining the swamp the Trump team is filling it up daily.  Health Secretary Price is facing a lot of criticism and scrutiny over the more than $300,000 he has spent on private airplane travel.  It doesn’t help that the driving force for a number of his trips was personal priorities, including private golf outings, visits to his private properties and lunch with his son.  When asked if he will be fired for his plane transgressions, Trump said “we’ll see,” the answer he gave when he was asked about Steve Bannon’s role in the White House shortly before Bannon was given the boot.  Interior Secretary Zinke isn’t doing much to improve employee morale at the Department of the Interior, he’s announced that at least 30% of Interior employees are disloyal, and by disloyal he may mean that they actually believe in science and climate change.  He is doing his best to make their lives miserable.  EPA Secretary Pruitt is spending $25,000 building a private “cone of silence” in his office for all those super-secret conversations he’s been having with T.H.R.U.S.H. and various chemical companies.   He’s also been flying private, racking up about $58,000 to date.   Chuck Rosenberg, the acting head of the Drug Enforcement Agency, one of the good guys, announced that he’s resigning because he’s become convinced that Trump has little respect for the law.  In his parting remarks to his staff he told them that they should continue to “persevere in the face of adversity” and do great things, he will be cheering them on from the sidelines.

Social Media Footnote:  It’s Twitter’s turn in the hot seat.  Attention is now focusing on the number of fake accounts pushing  #fakenews.  Facebook’s Mark Zuckerberg acknowledged that his company was wrong to initially dismiss concerns about the use of his platform to push false news, he also pushed back against Trump’s recent accusations that Facebook has always been “anti-Trump.” Those accusations may be Trump’s way of acknowledging that his team used social media to push fake stories because when it comes to Trump the truth frequently lies in his counterpunches.  The Russian #fakenews stream continues, current stories have shifted from Hillary and the  Muslim menace to “horrific” attacks by mostly Black athletes on the US flag.