When former President Ronald Reagan gave his State of the Union address to a joint session of Congress in January 1983, he addressed a House majority controlled overwhelming by Democrats and a Senate controlled narrowly by Republicans. House Democrats had gained 26 seats in the previous midterm elections and had a 269-166 majority in the House, and political pundits all said the president would be forced to compromise with House Democrats and pare back his agenda.
The large new House Democratic majority was intent on checking the “Reagan Revolution,” and their number one goal was to rollback the president’s historic tax cuts enacted in 1981. In his speech to Congress, Reagan pledged to work with Congress and seek bipartisan solutions on a number of issues. But he was forceful and clear on his tax cuts, stating “I will oppose any efforts to undo the basic tax reforms that we have already enacted.”
With his tax cuts in place the economy came roaring back, economic growth surged, and Reagan won 49 states in 1984.
President Trump will be facing a similar situation when he presents his State of the Union address Tuesday night. House Democrats have a big new majority, and all the political experts say Trump will be forced to compromise with congressional Democrats if he wants to get anything done.
Just as in 1983, congressional Democrats want to undo Trump’s tax reform bill, including its corporate tax rate cut to 21 percent. The corporate rate cut, along with the individual rate cuts, was the centerpiece of the tax reform bill, and it has already put the economy on the path toward long-term economic growth. It also has become a favorite target of congressional Democrats, who want the increased revenue to spend on their priorities.
Last year, a majority of House Democrats sponsored legislation to raise the corporate tax rate to 28 percent. Senate Democrats rolled out an infrastructure plan that raised the corporate tax rate. This year, House Budget Committee Chairman John Yarmuth, D-Ky., has already said that the House budget resolution will call for a corporate tax rate increase to 28 percent.
All of these efforts to increase the corporate tax rate could be having a chilling effect on capital investment, increasing uncertainty and curbing potential economic growth.
In his State of the Union address, President Trump should be as forceful and clear as Reagan was in 1983, and let Congress know in no uncertain terms that “I will oppose any efforts to undo” the tax cuts and reforms enacted in 2017.
This one statement will send a loud and clear message to business leaders, financial markets, and the public that he will not let Congress undo the positive benefits of his job-producing, pro-growth tax cuts.
Bruce Thompson is a Washington consultant. During the Reagan administration, he was assistant secretary of Treasury for legislative affairs.
