The Weekly Standard
By Tony Mecia
May 16, 2018
As new economic indicators attest to the economy’s strength, Democrats continue to insist that last year’s tax law is a big failure.
In a hearing Wednesday before the House Ways and Means Committee on the effect of the law, Democrats stuck to the talking points they used in failing to block the bill: that it is a raw deal for American families and mortgages the future for the sake of the wealthy few. Republicans say the law is succeeding in unshackling the U.S. economy. That difference in perspective over the Trump administration’s signature legislative victory is expected to be a major theme in November’s midterm elections.
“It’s a great deal for the well-off, but a bad deal for most Americans,” said Rep. Richard Neal (D-Mass.), the ranking Democrat on the Ways and Means Committee. “… Trickle-down economics simply doesn’t work, and that’s what we’re talking about today.”
The trouble for Democrats, though, are the increasingly positive signs of the nation’s economic health. The Labor Department said this month that the nation’s unemployment rate hit a 17-year low, and consumer confidence is at a 17-year high. The Wall Street Journal reported Wednesday that business investment by large companies is thought to have surged 24 percent in the first quarter, the biggest first-quarter gain since the data started being kept more than 20 years ago.
“Tax reform did represent just the right type of rocket fuel our economy needed to take off after years of weak economic growth,” said David Farr, chief executive of Emerson Electric Co., a St. Louis-based manufacturer of electronic components. He testified that because of the tax changes, his company was able to hike wages by 3 percent, increase capital spending by 20 percent, and enhance employee benefits, retirement, and charitable contributions by $40 million. “You delivered. Tax reform is working. Thank you.”
He cited a survey by the National Association of Manufacturers that showed 86 percent of manufacturing companies plan to increase investment, 77 percent plan to increase hiring, and 72 percent plan to increase wages or benefits.
Democrats categorized those success stories as “anecdotal” and continued to press the claim that 80 percent of the tax cut’s benefits go to the top 1 percent of taxpayers. Even Politifact declined to back that claim and said it represents “cherry-picking by focusing on the tax bill’s impact by 2027, rather than the impact for the nearly a decade leading up to then.”
Among other changes, last year’s tax law cut individual and business tax rates. It also created incentives for companies to make investments in the United States instead of abroad. Some of the changes are set to expire in 10 years because of Senate budget rules. The bill passed with no Democratic votes in either chamber.
Democrats seem to welcome a debate over taxes this November. Last week, House minority leader Nancy Pelosi said she would seek to undo the tax cuts if Democrats win the House. She called it a “dark cloud over our children’s future.”
Polls show that support for the tax law has changed little since it was passed. A survey last month showed that 27 percent of Americans thought it was a good idea, 36 percent think it’s a bad idea, and the rest have no opinion.
Even the tax cuts’ biggest boosters say it is still early to gauge its effect. That’s especially true of the business cuts, since companies can take months or years to decide if new investments make sense. Those data don’t instantly materialize in economic reports.
“We’re not in the first inning of tax reform—we are on the first batter in the first inning of tax reform,” said House Ways and Means Chairman Kevin Brady (R-Texas).