Remarks

To Survive the Russia Scandal, Trump Should Embrace His Populist Roots

The president should take a lesson from his embattled forebears and renew his connection to those who elected him.

Last week, Jonathan Swan of Axios delivered a fascinating scoop buried by the tidal wave of Russia stories and yet still relevant to whether Trump can endure them: Steve Bannon, the president’s chief strategist, has been agitating in White House meetings to raise — not lower — marginal tax rates for the wealthiest Americans. This is noteworthy for several reasons. Republicans are traditionally unified around cutting taxes, especially for the rich. The GOP controls the White House and both houses of Congress, so they have the power, at least in theory, to pass their tax-cutting agenda without Democratic support. And even the suggestion that wealthy Americans might shoulder a greater portion of the tax burden has been inimical to Republican leaders for at least a generation.

So it didn’t come as a shock when prominent Republican officials summarily dismissed the idea. On ABC’s This Week, Treasury Secretary Steve Mnuchin, Bannon’s colleague, called Swan’s scoop a “false leak,” whatever that is. But the report wasn’t false, nor was the idea unreasonable.

Bannon wasn’t proposing a massive hike. Right now, the top marginal rate is 39.6 percent. Swan reports that Bannon wants the top tax to “have a 4 in front of it.” My own sources say the number he was pushing for was 40 percent, so a raise of just 0.4 percentage points over the current rate. 

That’s so small a tax hike that it’s probably better classified as political symbolism than a serious revenue-raiser. But that’s the point: Trump won the GOP nomination, and then the White House, by running against Ayn Rand-style conservative orthodoxy that places a premium on cutting high-end marginal tax rates and instead espousing a kind of lunch-pail economic populism that proved highly popular with voters — including many rank-and-file Republicans. 

Trump’s success as a candidate shouldn’t have come as such a shock. Public opinion polls consistently show that upwards of 60 percent of Americans support placing a higher tax burden on the rich. That number includes a plurality of Republicans. An April 2016 Gallup poll found that 45 percent of Republicans believe that upper-income Americans pay “too little” in federal taxes (vs. 32 percent who believe they pay their “fair share” and only 20 percent who think they pay “too much”). Trump’s genius as a candidate was that he spoke to those 45 percent by promising to improve their economic fortunes.

As president, however, Trump hasn’t followed through. Not by a long shot. Instead, he’s governed as something much closer to a doctrinaire Paul Ryan conservative. Trump’s first big legislative gambit was an Obamacare repeal bill that’s designed to pay for major tax cuts that are overwhelmingly geared toward high earners. That’s not the only reason the House and Senate repeal bills are wildly unpopular. But it’s a big one. 

A symbolic tax increase on the wealthy, whatever its drawbacks, would almost certainly appeal to the kinds  of people who turned out for Trump (and for Bernie Sanders, too). The fact that most Republicans vehemently disagree is a sign that no such tax increase is likely, but it’s hardly a sign of political wisdom. Indeed, on July 11, Senate Republicans decided not to repeal an Obamacare tax on high earners, even though an earlier version of their health-care bill would have eliminated it. 

With Trump’s Russian collusion scandal getting worse by the day, especially after his son Donald Trump Jr.’s released emails, a renewed focus on populism might be too little, too late. But it could also serve as a bulwark against Trump’s hardcore supporters abandoning him in disgust or frustration. That would be politically deadly. Trump can’t stop the Russia probe, or the “deep state” leaks, or the expanding roster of aides and family members from being pulled into the vortex of the scandal. 

But barring some new development, Trump can take a lesson from a scandal-plagued president of the recent past, Bill Clinton, and weather the flurry of negative headlines by making clear to ordinary Americans that he’s laboring on their behalf, not that of the wealthy. In fact, that may be his best shot at survival. 

    Joshua Green
    Bloomberg Businessweek Columnist
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