Trump’s Tax Cut Challenge

After 9 plus months in office, Donald Trump has accomplished little. He’s very unpopular and has failed to fulfill his major campaign promises,  Major Republican donors are withdrawing  funding.  In response, Trump has embarked on a desperate campaign to cut taxes. Even though Republicans control Congress, tax reform faces an uphill battle.

According to the political website 538 (https://projects.fivethirtyeight.com/trump-approval-ratings/) Trump’s popularity has remained stable for five months; it’s currently at 56.4 percent disapprove and 38 percent approve.  Nonetheless, Trump’s base is sticking with him; the latest Gallup Poll indicates that 78 percent of Republicans approve of Trump.

Trump’s poor performance has affected the Republican Party.  In the aftermath of the GOP’s latest failure to “repeal and replace” Obamacare, GOP fundraising has tanked (https://www.nytimes.com/2017/09/22/us/politics/republican-donors-obamacare-repeal.html?_r=0)

In a desperate effort to assuage the biggest Republican donors, Trump and the GOP congressional leadership have embarked on a tax-reform initiative that promises big tax cuts for corporations and billionaires.  (Senator Elizabeth Warren says that, over ten years, Trump’s plan will add $2 trillion to the deficit.)  Given the composition of the Republican base, it’s not a sure thing that the GOP tax-reform initiative will succeed.

Recently Pew Research (http://www.people-press.org/2017/10/24/political-typology-reveals-deep-fissures-on-the-right-and-left/) updated their landmark study of American political behavior.  Pew Research divides Republican voters into four segments: Core Conservatives, Country First Conservatives , Market Skeptics, and New Era Enterprisers; for a total of 42 percent of the electorate.  To push tax reform through Congress, Trump needs to unite these four segments.

Trump’s problem is that he has made different promises to each group.  Core Conservatives (13 percent ) are deeply skeptical of the social safety net and favor lower tax rates on corporations and high-income individuals. This is the most politically active of the four Republican groups and is primarily composed of non-Hispanic white men.

The key Core Conservative issue is tax reform.  Representative GOP Core Conservative politicians are Senate Majority Leader Mitch McConnell and Speaker of the House Paul Ryan. Most of the support for Trump’s tax reform initiative will come from Core Conservatives.

Country First Conservatives (6 percent) are older and less educated than other Republican-leaning typology groups.  They are predominantly white non-Hispanic and and, of the four groups, the staunchest supporters of President Trump.

Pew Research says the key Country-First Conservative issue is immigration.  Pew notes that no (zero) Country-First Conservatives agreed with this poll statement: “Immigrants today strengthen our country because of their hard work and talents.”  “Nearly two-thirds of Country First Conservatives… say that ‘if America is too open to people from all over the world, we risk losing our identity as a nation.'”

Country-First Conservatives have vastly different attitudes about corporate taxes than do Core Conservatives; only 35 percent of Country-First Conservatives want to see business taxes lowered.   (Representative Country-First Conservatives are Iowa Congressman Steve King and Texas Senator Ted Cruz.)

Pew Research doesn’t assign a distinct category to Conservative Evangelical Christians.  Members of this group — which overwhelmingly supports Trump — are split between Core Conservatives and Country-First Conservatives.  According to Pew Research, “68% of Country First Conservatives… say that it’s necessary to believe in God in order to be moral and have good values.”  44 percent of Core Conservative share this sentiment.

Identification as a conservative evangelical is an important consideration because the most important issue for this group is not tax reform but rather the set of issues that evangelicals lump under “religious liberty.”  (When conservative evangelicals talk of “religious liberty” they usually mean the freedom to discriminate against a particular group — gays, blacks, immigrants, whomever — on the basis of a fervent religious belief.)

Market Skeptics (12 percent) stand out from other Republican-oriented groups in their negative views of the economic system: “An overwhelming majority say it ‘unfairly favors powerful interests.’ Most also say businesses make too much profit, and they are the most likely Republican-leaning group to want to raise taxes on corporations (55%).” This is the Republican group least inclined to support tax cuts for corporations and billionaires.

The key issue for Market Skeptics is reduction in the size of government.  Many would call them Libertarians; Kentucky Senator Rand Paul is a representative member of this group.

New Era Enterprisers (11 percent) are a catchall GOP category.   They are younger and less socially conservative than the other groups.  “While they are not affluent, a large majority (72%) say they are generally satisfied with their financial situation.”  Interestingly, this is Republican group least approving of Trump’s conduct in office: 39 percent view it negatively and 38 percent have mixed feelings.

After Core Conservatives, New Era Enterprisers are most likely to support tax reform.  They believe the economic system is fair and have a positive view of corporations.

Summary: To push tax reform through Congress, Trump needs to unite the four segments of the Republican Party.  Given the Pew Research data, that appears to be a difficult task.  A key element of the tax-reform proposals are substantial cuts for billionaires and corporations.

It appears that only two-thirds of Republican voters approve of the proposed tax-reform plan (Core Conservatives and New Era Enterprisers).  Given that Republicans will get no Democratic support for their tax-reform initiative, it’s reasonable to assume that Trump and the GOP leaders don’t have the votes they need.