Donald Trump outlined his tax and economic plan in Detroit on August 8. He returned to it last week for the first time in five weeks. In between, he mentioned bits of it. But concentrate on it? Nope.
His neglect of this issue has been a mystery. Why would he sideline an issue on which he has an enormous advantage over Hillary Clinton? Trump would provide incentives for private investment, economic growth, and job creation, a policy that worked brilliantly for Presidents Kennedy and Reagan. Hillary would provide zero incentives for growth and rely on government spending to generate jobs, a policy that has never produced a robust economy.
The contrast, so favorable to Trump, begged for him to harp on it in speech after speech. But he held back, talking about everything from terrorism to child care and driving some of his closest allies crazy.
But Trump may have known something the rest of us didn’t. Or maybe he’s just been lucky. In either case, he has soared from well behind in the race a month ago to a tie with Clinton today—without unleashing his best issue. Now he is. He’s poised to drive home his plans for the economy in the final weeks of the campaign.
His ideas seem fresh and appealing, all the more so given Trump’s gift for salesmanship. He says things that Reagan would have balked at and Kennedy would never have considered. Like this in last week’s speech at the New York Economic Club: “Everything that is broken today can be fixed, and every failure can be turned into a great success. . . . It’s time to start thinking big once again.”
You can’t get much bigger than that. Except Trump overlooked the special link to Kennedy. It was at the Economic Club in 1962 that Kennedy announced his sweeping, across-the-board tax cuts to jolt the sagging economy. And jolt they did. JFK had initially thought government spending would do the trick. It didn’t. With tax cuts, the economy boomed.
Not only that, but reducing individual income tax rates became the model, as Lawrence Kudlow and Brian Domitrovic write in their new book, JFK and the Reagan Revolution. Congressman Jack Kemp fashioned the Kemp-Roth cuts in the 1970s to match JFK’s. The Reagan cuts imitated Kemp’s. And now Trump has taken up the cause.
“This election can be won on the tax issue,” says Grover Norquist of Americans for Tax Reform. Tax cuts are “the organizing principle of the Republican party,” he says. And it’s no coincidence that Trump’s tax cuts are similar to those in House speaker Paul Ryan’s agenda for 2017. On taxes, at least, they think alike.
And if Republicans of the Never-Trump school are to be lured into voting for Trump, it will be partly because of his economic policies. “My plan will embrace the truth that people flourish under a minimum government burden,” he told the Economic Club. His insistence on a military buildup might help too.
Trump loves grand promises. He delivers them in the manner of a real estate agent eager to make a sale by stressing the best possible scenario. He does this very well. He promised growth of 3.5 percent and 25 million new jobs over the next decade. While not Reaganesque in demeanor, Trump is Reagan-like in his optimism.
“If we lower our taxes, remove destructive regulations, unleash the vast treasure of American energy, and negotiate trade deals that put America first, then there is no limit to the number of jobs we can create and the amount of prosperity we can unleash,” he said.
To be specific, Trump would reduce seven income tax brackets to three—12, 25, and 33 percent. The corporate tax rate would drop to 15 percent from 35 percent, making American companies more competitive abroad and more likely to raise wages at home. He would allow companies to repatriate overseas profits at 10 percent. Treasury Secretary Jacob Lew has suggested a 28 percent corporate rate. Hillary Clinton hasn’t suggested any cut at all.
Trump insists this is “a working- and middle-class tax relief proposal,” not one that favors the rich. To make this happen, “we have strongly capped deductions for the wealthy and closed special interest loopholes,” he said. Which deductions and loopholes, he doesn’t specify. This was to keep the beneficiaries of the targeted deductions—charities or realtors, for instance—from mounting early opposition, a Trump adviser says.
Clinton will probably focus more on attacking Trump’s plans than touting her own. Democrats, including Clinton, have given up on economic growth. It’s a private sector thing in which some people are bound to get rich. She’s for tax hikes on the rich, the perfect disincentive to private investment and growth.
“I will work with both parties to pass a comprehensive plan to create the next generation of good jobs,” she said in June. “Now the heart of my plan will be the biggest investment in American infrastructure in decades, including establishing an infrastructure bank that will bring private sector dollars off the sidelines and put them to work there.”
There’s a name for this—crony capitalism. That’s not free market capitalism, nor is it in the tradition of JFK and Reagan. It’s following in the footsteps of President Obama, who has specialized in it. He spent $48 billion on infrastructure in his first term and proposed $73 billion more in his second.
But the main problem is it never works as predicted. “America needs an infrastructure renaissance, but we won’t get it by the federal government simply writing big checks,” Harvard economist Edward Glaeser wrote in City Journal. It often “gives the green light to bridges to nowhere, ill-considered high-speed rail projects and other boondoggles.” Also, Glaeser wrote, it’s not good “for fighting recessions.” Yet Clinton is stuck on it.
At the Economic Club, Trump repeated something he’d said the day before in Flint, Michigan: “It used to be cars were made in Flint and you couldn’t drink the water in Mexico. Now the cars are made in Mexico and you can’t drink the water in Flint.” A pretty good line, I’d say.
Fred Barnes is an executive editor at The Weekly Standard.
