Trump Loves the Middle Class. Up to a Point.
President Donald Trump has his tax plan in hand, and he says it will do lots of great things for the middle class.
"Our framework includes our explicit commitment that tax reform will protect low-income and middle-income households, not the wealthy and well-connected," he said in Indiana last week when he rolled out the plan. "And it’s not good for me, believe me."
We all should know by now that whenever the president punctuates a statement with "believe me," that’s the signal to be suspicious. The phrase is one of Trump’s tics, and I suspect that he uses it when deep down inside he doesn't even believe himself.
The Tax Policy Center, a nonpartisan research group, believes that Trump’s plan would actually produce only middling tax cuts for low-income and middle-income earners. Upper-middle-income workers would get a tax hike, with the wealthiest Americans getting a windfall.
In other words, your tax plan is good for you, Mr. President, believe me.
The Republicans' tax plan is short on detail, so lots of fill-in-the-blank analysis is needed to assess how it would affect the distribution of the income tax burden and tax collection more generally. White House officials like Gary Cohn and Steve Mnuchin have tripped over themselves and each other trying to describe what it does and doesn’t do for the middle class. For thoughtful overviews of the plan’s parameters, read my Bloomberg View colleagues Tyler Cowen, Justin Fox, Barry Ritholtz and Michael R. Strain.
Whatever form the tax plan ends up taking, Trump's courtship of the middle class reflects something more than his desire to make good on campaign promises. It’s also a measure of how well he understands and relies upon his appeal to middle-class Americans. That appeal predates his candidacy and presidency and was on vivid display during the reality TV run that “The Apprentice” enjoyed after it debuted in 2004.
"I love those people," Trump told CBS last year. "Those are my people. I love those people. I really do. I love the policemen. I love the firemen. For whatever reason, and it is strange. But somehow, I've always had great relationships with the workers."
Middle-class consumers have also been the foundation of significant parts of Trump’s business life, despite his emphasis over the years on the idea that his brand is a luxury brand. He sells expensive condominiums to well-heeled buyers, certainly, but he has also sold ties, shirts, suits and other Trump-branded menswear to middle-market shoppers through Macy’s. Wealthy buyers might want to live in a Trump condo, but they don’t want to wear Trump clothes, eat Trump steaks or read Trump magazines.
For as much as Trump liked to hobnob with high-rollers who visited his casinos, the bread-and-butter of his business – as it has been for the entire gambling industry in recent decades – was middle-class daytrippers playing slot machines.
Trump corralled those visitors by the busload and offered them affordable buffets and lowbrow entertainment once they arrived in Atlantic City. A large portion of the middle-class and working-class gamblers Trump hosted came for fun; the most lucrative, repeat customers Trump and his competitors pursued were often compulsive gamblers. (As Trump’s casino business went through its first round of problems in the late 1980s and early 1990s, he also shortchanged working-class and middle-class contractors and vendors to whom he owed money; he continued to stiff contractors and workers at his casinos in subsequent years.)
Trump’s children have the same affinity for middle-class consumers as their father. His eldest sons, Donald Jr. and Eric, have launched a new hotel brand, American Idea, that will target budget travelers in midwestern and southern states. The kids say they got the idea for the new chain after campaigning for Trump in small towns and witnessing the enthusiasm for their father in those locales. (Trump hasn’t fully distanced himself financially or managerially from the family business, so these new ventures that trade off of his political magnetism also potentially produce profits that flow back to his wallet.)
The Trump family’s commercial and political interests in the middle class may not square with its policy interests, however. As Greg Sargent pointed out recently in the Washington Post, White House efforts to overturn Obamacare and its current tax proposal suggest that Team Trump isn’t all that committed to policies that secure the economic well-being of middle-income earners. "If anyone views Trump supporters with profound contempt, it’s Trump and his advisers," Sargent wrote.
Trump is likely to have none of this.
"This is a revolutionary change and the biggest winners will be the everyday American workers as jobs start pouring into our country, as companies start competing for American labor, and as wages start going up at levels that you haven’t seen in many years," Trump said last week. "This is the right tax cut, and this is the right time. Democrats and Republicans in Congress should come together, finally, to deliver this giant win for the American people and begin a middle-class miracle — it's called a middle-class miracle — once again. It's also called a miracle for our great companies; a miracle for the middle class, for the working person."
We'll see. The details of the tax plan Trump tries to push through Congress will demonstrate whether he truly supports average Americans – or, like a classic grifter, if he’s willing, instead, to profess his love for his marks right up until the moment that he fleeces them.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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Jonathan Landman at email@example.com