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It's the Tax Code, Stupid

The opinions expressed by columnists are their own and do not necessarily represent the views of

With midterm elections less than a year away, Republicans could earn a reprieve from the expected electoral losses as more Americans realize the benefits of the tax overhaul.


With not a single Democrat senator voting for the $1.5 trillion tax cut, and with Sen. Bob Corker, R-Tenn., “the only lawmaker to cross party lines,” politicians hailing from the left side of the aisle sought to hang Trump’s only legislative success so far as an albatross on fellow Republicans seeking re-election in November. As Politico reported, following the Senate’s 51-49 tax reform vote, “Democrats have vowed to make the legislation a liability for Republicans going into the 2018 mid-term election, arguing most of its benefits will go to wealthy individuals and corporations.”

But having lost so much lately, Democrats succumbed to hyperbole and unwisely pushed a doomsday scenario, with House Minority Leader, Nancy Pelosi, D-Calif., declaring in an on-camera press conference: “It is the end of the world. The debate on healthcare is like death — this is Armageddon. This is a very big deal.”

Liberal pundits and Hollywood types quickly followed the lead, proclaiming that America died with the passage of the Republican tax plan.

It would seem that the Democrats learned nothing from the Obamacare debacle: After they overpromised and under-delivered on Obamacare, the predictable downward spiral of the health insurance marketplace pushed the populace into the arms of Donald Trump. The same Democrats overpromised mightily on the destructive force of the tax overhaul, lowering the expectations of ordinary Americans. And that will allow Republicans to overdeliver on the promised tax relief.


Workers experienced the first benefits of the tax relief early, with several major companies awarding $1,000 bonuses or raising entry-level wages to $15 per hour. Democrats responded by doubling-down on their naysaying, by casting these savings as crumbs. But as employers began cutting the first paychecks of the year, workers felt firsthand the impact of the supposed “tax cuts for the wealthy,” with lower rates increasing their take-home pay. And with companies, such as Michigan’s DTE, reducing electric and gas rates by 3 percent in 2018, as a direct result of the Federal Tax Cuts and Jobs Act, the additional cash in the hands of middle-class Americans will continue to grow.

Now comes news from Reuters that a conservative network of organizations, including big players, such as the Koch brothers’ Americans for Prosperity, intend to dump as much as $400 million into the 2018 congressional races to promote the “benefits of the newly passed tax package.” These ads, though, might not be necessary given that the business press reports, on a near daily basis, the positive impact flowing from the Republican tax reform. And the economic impact is widespread, as the Wall Street Journal recently highlighted:


“Specialty drugmaker Amicus Therapeutics Inc. has decided to spend as much as $200 million on a new production facility in the U.S. instead of Europe. Kimberly-Clark Corp., maker of Kleenex tissues, is spending hundreds of millions of dollars to put new machinery in one of its U.S. factories, even as it closes others and cuts thousands of jobs. Aramark, the catering and uniform giant, expects to save nearly $500 million on two recently completed acquisitions...Along with announcing its repatriation of cash held overseas last week, Apple Inc. pledged to invest $30 billion in the U.S. that it had held abroad, despite having to pay $38 billion under a one-time tax on those accumulated foreign profits.”

By spurring this investment in the United States, the middle-class will benefit even more from the Republican tax plan as the economy grows exponentially. And any attempt by Democrats to paint this boon as voodoo-inspired trickled-down economics benefitting only the rich will fail because, after eight years of stagnation under former President Barack Obama, it isn’t a trickle of cash landing in the hands of the middle-class—it’s a cascade. That may be all the Koch brothers need to remind voters of come November: To paraphrase Ronald Reagan, “Are you better off today than you were two years ago?” For most Americans the answer will be an easy “yes,” especially since they had been told by the Left that it was the end of the world.


Margot Cleveland (@ProfMJCleveland) is a contributor to the Washington Examiner's Beltway Confidential blog. She served nearly 25 years as a permanent law clerk to a federal appellate judge, and is a former full-time faculty member and current adjunct professor for the college of business at the University of Notre Dame.

This column was reprinted with the author's permission. 

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