We’re not even a month into Donald Trump’s new term and already, a cadre of Republican activists appears poised to fritter away his popularity and derail his administration’s agenda with a maximalist demand for a budget-busting tax cut. The Club for Growth, a free-enterprise advocacy group, says sustaining the big tax cut that President Trump signed into law during his first term must be Congress’s “top priority” because it “delivered record economic growth.”
That’s not true. Economic growth was lower in the year after the law’s passage than the year before. The two-year stretch that followed its passage saw slower growth than any other two-year period of the economic expansions in the 1990s and 2000s — not the kind of record anyone should be boasting about.
As a political matter, tax cuts simply are not a top priority for the American people broadly, the working class that now forms the core of the Republican coalition nor even the Republican Party itself. In a mid-January survey by Fox News, a grand total of 1 percent of voters said tax reform should now be President Trump’s top priority. A survey last year by my organization, American Compass, found that to lower the deficit, most working-class voters would want to see Congress raise taxes on corporations and on households with income about $250,000 before cutting spending. Even among Republicans, three-quarters of respondents believed that tax increases should be a part of any budget solution.
Most of that enormous tax cut from Mr. Trump’s first term is scheduled to expire this year. With the federal budget deficit much larger than it was eight years ago, genuine fiscal conservatives within the party oppose simply extending the cut for eight to 10 more years. But the anti-tax activists insist it’s the only way forward.
Special-interest pressure campaigns have been associated in recent years with “the groups,” as they are often called, activists that have pushed the Democratic Party far to the left of the typical voter on issues such as immigration, race, gender identity and climate change. But the Republican Party has its own special-interest groups — mirror images of the progressive ones, equally destructive of both its popularity and its prospects for getting anything done.
Alongside the Club for Growth, such groups as Grover Norquist’s Americans for Tax Reform and the Koch Network’s Americans for Prosperity have made it their mission to cut taxes continuously, regardless of what most voters prioritize or the federal budget can bear.
They preach tax cuts with the same desperate zeal as climate activists demanding a near-total elimination of carbon emissions. They oppose tax increases, no matter how large the deficit, with the same determination that open-borders advocates oppose any effort to restrict immigration. They insist that tax cuts spurred the late 1990s economic boom, though Bill Clinton raised taxes; that George W. Bush’s tax cuts in 2001 and 2003 paid for themselves, though tax revenues fell sharply; that Mr. Trump’s tax cuts in 2017 propelled growth, though growth slowed. They accuse anyone who suggests a need for more tax revenue of betraying conservatism — never mind that Ronald Reagan raised taxes repeatedly.
No question, groups like these are effective on both sides, applying pressure that constrains what elected leaders think they can say and warping the agendas they pursue. But the common denominator for their style of politics, and what makes it so harmful, is a reliance on bullying rather than argument to enforce ideological orthodoxy. The groups have no prospect or intention of winning on the merits, opting instead to call names and sic the social media horde on anyone who steps out of line. They make claims at odds with reality and use eagerness to repeat them as a test of loyalty. The result is politicians acting in seemingly irrational ways, to the detriment of their own standing with voters and against the interests of the country.
Seth Moulton, a Democratic representative from northern Massachusetts, said in November he believed that transgender athletes should not be allowed to play on his daughters’ sports teams, “but as a Democrat I’m supposed to be afraid to say that.” Sure enough, he was quickly “chastised” and “pilloried,” according to Rolling Stone, which he said “shows the Democratic Party is more interested in policing words and canceling people who disagree with a strict left-wing ideology on certain issues than actually engaging with the majority of voters.”
His colleague Jodey Arrington, the Texas Republican who heads the Budget Committee, received similar treatment a couple of months later. His offense? Mentioning higher corporate taxes as one of several possible ways to pay for tax cuts elsewhere. Having “sent people on and off Capitol Hill into a frenzy,” according to Punchbowl News, he claimed within hours that the inclusion had been accidental. As the Freedom Caucus policy chair, Chip Roy of Texas, has lamented, naming Americans for Tax Reform in particular, “we have ATR and a bunch of people flipping out on our side saying you can’t even have a conversation about taxes.”
The CNBC commentator and Ronald Reagan devotee Joe Kernen said that even contemplating higher taxes, as American Compass had done, amounted to “bonkers, walking, quacking uniparty progressivism,” an assertion seconded by David McIntosh, the president of Club for Growth. Americans for Prosperity is spending $20 million on “mobilizing millions of people” to keep anyone’s tax bill from nudging higher. Even the suggestion from some Trump advisers and congressional leaders to postpone the tax fight until Congress had moved forward on issues such as energy and immigration has come under fire. Mr. Norquist warned in December that any delay would cause Republicans to lose their majority in the House. Vote to extend the current rates as soon as possible, he said, “or else.”
President Joe Biden spent the early part of his term battling to advance a “Build Back Better” agenda that featured every progressive priority and attracted none of the necessary enthusiasm from the rest of the country. The fiscally irresponsible American Rescue Plan contributed to the inflation that sapped Mr. Biden’s popularity and overrode his other economic goals.
If Republicans spend the next year fighting over a tax bill that is a low priority outside the Beltway, they will stall the more promising elements of the Trump agenda and expose themselves as badly disconnected from the interests of the working class that put them in power. If the groups do eventually prevail, they will be responsible for another huge round of government borrowing, similar in scale to the one required by Mr. Biden’s inflation-fueling “rescue plan,” and likely to create similar headwinds for the economy.
Over the years, Republicans have asked one another (with some combination of befuddlement and glee) why the Democrats don’t just ignore the special-interest groups. Now they know. The question is whether they can do a better job tuning out the pressure. Whichever party figures that out first will be on its way to building a sustainable majority.
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