Trumponomics by Stephen Moore

Author:Stephen Moore
Language: eng
Format: epub
Publisher: St. Martin's Press
Published: 2018-08-20T16:00:00+00:00

Steve argued that in exchange for a border-adjustment tax, the United States should eliminate all existing tariffs and duties, which now range from 2 percent on shoes to 25 percent on toys. This would eliminate all special-interest favoritism—the worst feature of trade protectionism.

These arguments may or may not have made sense as an economic matter, but as a political matter the BAT was a poison pill. Instead of focusing on the positive changes from tax reform, voters and conservative interest groups were focusing on this new Big Bad Tax. The business community was completely divided. As such, we all agreed very early on that the BAT had to go.

One of our contributions to the tax debate was to persuade the White House—which had been undecided on BAT—and, even more importantly, Paul Ryan and Kevin Brady, that the BAT had to be abandoned or tax reform would be stillborn. They finally threw in the towel, but not before Arthur personally went to Chairman Brady’s office at the end of July to stick the nail in the BAT coffin. They still grouse to us whenever we see them that they were right on the BAT. Perhaps in a technical sense, they were.

But what we all agree on was that while the economics were debatable, the politics of the moment were not. Including the BAT would have killed any prospect of passing the tax bill in the Senate. It had to go.

The Late Great Trump Tax Cut

It should be noted that in the spring and summer, Larry, Steve, and Arthur were working together but separately. Larry and Steve were going around Capitol Hill as a dynamic duo, while Arthur was doing his own meetings with legislators and members of the administration. One time in July, Arthur met with seven members of Congress individually in a 24-hour period to talk about the merits of the proposed tax reform. Working all angles was absolutely necessary because by late spring of 2017, the signature Trump/GOP growth issue—tax reform—was secure in some undisclosed location . . . probably bleeding to death in a ditch.

Republicans were starting to openly whisper they might have to put tax reform off until 2018. Wall Streeters were starting to discount the higher probability that tax reform wasn’t going to happen. Could it be that Republicans were going to blow a once-in-a-generation opportunity to rewrite and modernize tax law?

At this time, Arthur was working to spread his research on the corporate income tax rate to those in D.C. who would listen. In May, he met for an entire day with White House staffers to explain to the whole team the economic necessity of the 2017 tax reform. In June, he spoke in front of a roomful of members of Congress and delivered the same message. He came armed with an influential study which broke down the revenue-increasing behavioral effects of a reduction in the corporate income tax rate. This was crucial to get the deficit hawks on board.

On one of our various visits

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