Yale Fellow contends Trump tax reform falls short of the mark

Scott Benjamin

The Trump tax reform hasn’t created “the bump” that was expected, has not garnered enough tax money from the wealthy and has left the nation with a burgeoning budget deficit.

That evaluation comes from John Stoehr, who is a Yale Fellow, writes a daily e-mail column called The Editorial Board and contributes pieces to U.S. News & World Report, Washington Monthly and the New Haven Register.

A poll taken March 6-11 by Reuters-IPSOS indicated that of those surveyed only 21 percent are paying less in income tax this year following the tax overhaul that President Donald Trump signed in late 2017. The poll indicated that the tax reform package may not be as much of a talking point as the president had hoped heading toward the 2020 election.

Stoehr, who lives in the Westville section of New Haven, said the disappointing results were larger triggered by limits on deductions for state and municipal taxes.

“There also is a large national debt, which is worrisome,” he said in a phone interview.

Former Obama Treasury Department official Steve Rattner wrote in The New York Times that the deficit under the former president had gone down from $1 trillion in 2009 to $456 billion in 2015. Rattner stated that largely as the result of the Trump tax cut the deficit has grown to about $900 billion.

“There is this attitude that tax cuts pay for themselves, and that’s not the case,” Stoehr said.

He said it is appropriate to incur additional debt by using stimulus measures, such as Obama did in the early stages of the Great Recession. However, when the economy rebounds the country should be paying down its debt.

In a recent interview Connecticut Republican State Party Chairman J.R. Romano of Branford offered high praise for the president’s economic program.

“[Current] unemployment is among the lowest rates in history. Wages are going up for the first time in a long time.” The middle class “is getting the benefits of the economy.”

Romano said that the economic recovery will be a prime talking point in the president’s 2020 re-election campaign.

Stoehr believes the administration should focus on deficit reduction.

“When there is a recession it is appropriate to take on some debt and provide stimulus,” he said. “However, when you’re out of the recession, you should be paying down that debt.”

Stoehr said he agrees with former U.S. Rep. John Delaney (D-Md.) – the Democratic presidential candidate - who told The Washington Post that you can partly achieve that by “synchronizing capital gains tax rates with ordinary income tax rates.”

Stoehr said, “We should be taxing more of the capital gains of the wealthy. The money is there. There just isn’t enough political will to do that.”

CNBC.com has reported that Ray Dalio - the owner of Bridgewater Associates in Westport, the largest hedge fund in the world – has said the wealth game in the United States is so large that the president should declare “a national emergency.”

Cornell University economist Robert Frank has stated for years that many wealthy people are willing to pay more in taxes as long as they are still financially well ahead of the middle class.

However, Stoehr said some of the Democratic candidates for president appear to be less committed to reducing the budget deficit than Obama and former Democratic president Bill Clinton were.

Regarding other proposals by the Democratic presidential candidates, he said that a new administration could have an impact on reviving unions to boost wages for middle class workers.

Economist Paul Krugman recently wrote in his New York Times column that from 1973 to 2019 the percentage of private sector workers belonging to unions has dropped from 25 percent to six percent.

Krugman stated that Canada has the same rate of unionized private sector workers now that it had in 1973.

U.S. Sen. Elizabeth Warren (D-Mass.) has made unionization a major staple in her presidential platform.

Stoehr said a president could address the need for more collective bargaining by appointing union-friendly members to the Labor Relations Board and enacting anti-trust measures.

On another topic, Stoehr said Trump is “losing ground” after 12 Republican senators sought to block his attempt declare a national emergency so he could build the proposed wall along the Mexican-United States border.

“It’s a sign of weakness,” he added.

However, Stoehr said Trump remains “popular in the Republican Party.”

But, he said if former Ohio Gov. John Kasich or another challenger goes against Trump in the GOP primaries it will hurt his chances for re-election.

Journalist Jonathan Alter has said that every incumbent president in the modern era who faced a primary challenge – Gerald Ford in 1976, Jimmy Carter in 1980 and George H.S. Bush in 1992 – ended up losing in the general election

Regarding Obama, Stoehr said “he did more good than harm.”

He said most notably, Obama signed the Affordable Care Act, which had been a Democratic goal for decades, as well as the Dodd-Frank financial services legislation – co-sponsored by former U.S. Sen. Chris Dodd (D-East Haddam), which increased liquidity and capital requirements for banks following the 2008 financial crisis and again separated their commercial and investment portfolios.

Stoehr also commended Obama for “ending two wars.”

Obama left office in January 2017 with a 60 percent approval rating in a Washington Post/ABC News poll and since then he has been rated by journalists and scholars as the eighth best president of all time in a poll by the American Political Science Association and 12^th best out of the 45 chief executives in a similar survey conducted by C-SPAN.

Stoehr said he is critical of Obama for being too cautious in seeking a larger stimulus package when he initially took office. He believes the former president could have taken steps toward a stronger recovery from the recession.