The Lies of Trumponomics

Summary

---

The Political Scene | The New Yorker

Episode Summary: “The Lies of Trumponomics” (November 30, 2017)

Overview

In this episode, host Dorothy Wickenden (Executive Editor, The New Yorker) is joined by staff writer and political columnist John Cassidy to dissect the GOP's tax reform bill that was swiftly moving through the Senate at the time. The conversation frames this plan as a revival—albeit a distorted one—of Reagan-era tax reform and explores its deviations, impacts on inequality, fiscal responsibility, and the cynical political calculations driving it. They highlight the likelihood of ballooning deficits, the fate of bipartisanship, and the broader economic and political implications of so-called "Trumponomics."

---

Key Discussion Points & Insights

1. Comparing 2017 Tax Reform to Reagan’s 1986 Overhaul

• The current GOP tax push is self-consciously modeled on Reagan-era reform, but with clear differences:
  • 1986 bill was bipartisan and had extensive public hearings.

    “The other big difference from the 80s is the Democrats controlled the House when Reagan was in office, and so they had to deal with the Democrats. That's why it was a bipartisan bill, and that's why there were proper hearings and everything.” —John Cassidy (03:05)

  • The Reagan bill was “deficit neutral”; current plan will increase deficit by $1.5–$2.2 trillion over 10 years.
  • The 1986 bill offset lower corporate rates by cutting deductions; today’s plan includes “gimmicks,” with little real offset.
• The ideological consensus has faded. Today’s Republican Party moves unilaterally and prioritizes speed over scrutiny.

2. Deficit Concerns: The Disappearing “Hawk”

• Once vocal about deficits, Republicans largely ignore them when in power. The promise of "deficit neutrality" was quickly abandoned.

  • “The deficit hawk wing of the Republican Party is just getting a lot smaller. But it's large when they're in opposition...once they got into power...they basically abandoned that pledge.” —John Cassidy (05:59)

• Some senators (Bob Corker, John McCain) had histories of deficit concern, but most acquiesced.

3. Bipartisanship, Policy Design, and Political Expediency

• Past tax reform gained Democratic support by aiming for fairness and addressing corporate taxes with broad offsets.
• The 2017 bill is different: cuts are not fully offset, benefits are skewed to the wealthy and corporations.
• GOP rationale: Must deliver broad individual cuts for public appeal, but doing so bloats the deficit.

4. The Distributional Impact and Political Rhetoric

• Cassidy and Wickenden underscore that most individual tax cuts are temporary, while corporate cuts are permanent—despite rhetoric suggesting otherwise.

  • “There are some giveaways for everybody...but the personal tax cuts are all temporary. The corporate tax cuts are all permanent.” —John Cassidy (09:00)

• Trump’s campaign pledges to help the middle class are undercut by actual policy design.

  • “Trump, he only tells the truth by mistake. I think the bill couldn't have been engineered more explicitly to help people like Trump.” —John Cassidy (16:04)

• Example: Elimination of the Alternative Minimum Tax, hugely beneficial to wealthy individuals (including Trump).

5. Tax Cuts, Inequality, and the Welfare State

• Reagan-era personal tax cuts helped ignite the modern surge in inequality.

  • “The big personal tax cuts in the Reagan era, the start of the Reagan era, were really the beginning of the sort of modern surge in inequality that we've seen.” —John Cassidy (10:08)

• New proposals perpetuate or exacerbate trends in wealth concentration; little interest in genuine redistribution.
• Past efforts (like the ACA) made progress via redistribution, but were politically downplayed.

6. The Strategic “Bait-and-Switch” on Deficits and Entitlements

• Cassidy points out a conscious GOP strategy: cut taxes, increase the deficit, then use deficit concerns to justify cuts to Medicaid, Medicare, and Social Security.

  • “Karl Rove...basically admitted this in his Wall Street Journal column this week. And he acknowledges that there's going to be a rise in the deficit...he says the way to address that is not to change the taxes...We're going to have to tackle spending...Medicare, Social Security.” —John Cassidy (12:33)

7. Democratic Response and Political Calculus

• Democrats have held firm in opposition; unlike the ‘80s, none appear poised to cross party lines.
• The bill’s regressive character could be a potent campaign issue, but reversing tax cuts is always politically difficult.

  • “Who wants to run on raising taxes?...you’ve all got $1,000 more in your pocket this year than you did last year.” —John Cassidy (15:04)

---

Notable Quotes & Memorable Moments

• “The only way that Republicans think they can get these unpopular policies through is by doing it quickly, before there's...media scrutiny, much public outrage, and much time for the opponents to get organized.”
  —John Cassidy (03:05)

• “If you cut tax rates, especially if you cut tax rates at the top...it gives them a big incentive to increase their own salaries, et cetera.”
  —John Cassidy (10:08)

• “Trump, he only tells the truth by mistake. I think the bill couldn't have been engineered more explicitly to help people like Trump.”
  —John Cassidy (16:04)

• “The only thing left really in the American tax code that catches people with huge deductions...is the alternative minimum tax. And they're getting rid of that too...just a huge giveaway to very wealthy people with clever accountants.”
  —John Cassidy (16:50)

---

Timestamps for Key Segments

• 01:16 — Introduction by Dorothy Wickenden; framing the episode’s focus on tax reform
• 02:47 — John Cassidy compares Reagan’s bipartisan approach with the current GOP strategy
• 03:57 — Deep dive: economic and policy context then vs. now
• 05:01 — Paul Ryan’s deficit promises and the current reality
• 06:53 — Bipartisanship: why 1986 was different and why no current Democrats will support the bill
• 08:16 — The GOP’s plan: why they can’t keep it deficit neutral and the myth of trickle-down growth
• 10:08 — Rising inequality as an enduring legacy of tax reform
• 11:14 — How the ACA tried (quietly) to reduce inequality
• 12:21 — The strategic setup: tax cuts now, spending cuts later
• 13:32 — Democratic strategy and the prospects for reversal or political backlash
• 15:56 — Trump’s messaging: selling the bill with misleading populist rhetoric
• 16:04–17:19 — Discussion of Trump’s personal stake and the alternative minimum tax

---

Overall Tone

Candid, deeply analytical, and pointedly critical—especially regarding Republican cynicism, the abandonment of deficit principles, and the degree to which the bill serves elite interests under the mask of Trumpist populism. The discussion’s tone is informed but skeptical, foregrounding facts, history, and the unvarnished politics of the moment.

---

Transcript

[A]

As summer draws to a close and the kids go back to school, I know I'm going to want to keep in touch with my kids at a price I can afford. Back to school Shopping can be a hassle, but your phone plan shouldn't be. That's why I made the switch to Mint Mobile. For a limited time, Mint mobile is offering three months of unlimited premium wireless service for 15 bucks a month. So while other parents are sweating overage charges, I have a little bit more room in my budget for cool back to school threads. Say bye bye to your overpriced wireless plan's jaw dropping monthly bills and unexpected overages, Mint Mobile is here to rescue you. All plans come with high speed data and unlimited talk and text delivered on the nation's largest 5G network. Use your own phone with any Mint Mobile plan and bring your phone number along with all your existing contacts. Dish overpriced wireless and get three months of premium wireless service from Mint Mobile for 15 bucks a month. This year. Skip breaking a sweat and breaking the bank. Get this new customer offer and your three month unlimited wireless plan for just 15 bucks a month at mintmobile.com newyorker that's that's mintmobile.com new yorker upfront payment of $45 required, equivalent to $15 a month limited time new customer offer for first three months only. Speeds may slow above 35 gigabytes on unlimited plan taxes and fees extra. See Mint Mobile for details.

[B]

This is the Political Scene, a weekly conversation with New Yorker writers and editors about politics. It's Thursday, November 30th. I'm Dorothy Wickenden, executive editor of the New Yorker. Yesterday, Senate Republicans voted to bring their tax bill to the floor. In August, President Trump cited Ronald Reagan as an inspiration for the plan. In an address to The Nation in 1985, President Reagan made the case for the second major tax overhaul of his administration.

[C]

Over the course of this century, our tax system has been modified dozens of times and in hundreds of ways. Yet most of those changes didn't improve the system. They made it more like Washington itself. Complicated, unfair, cluttered with gobbledygook and loopholes designed for those with the power and influence to hire high priced legal and.

[B]

Tax advisors, he went on to say.

[C]

A great national debate now begins. It should not be a partisan debate for the authors of tax reform come from both parties and all of us want greater fairness, incentives and simplicity in taxation.

[B]

The bill passed with support from both parties the following year. John Cassidy joins me to discuss what Donald Trump and today's GOP took from Reagan's plan and just how far they've deviated from the ideas of fairness and bipartisanship. We'll also talk about what honest tax reform would look like and whether it would even be possible today. Hi, John.

[D]

Hi, Dorothy.

[B]

So it feels like we're back to the future here. Three decades later, Republicans are returning to Reaganomics, and they don't make any secret about that. So why are they hustling this bill through without giving the Democrats, or the public for that matter, an opportunity to weigh in?

[D]

Well, I mean, the obvious reason they're hustling it through is because they don't think it's very popular. The polls show it's not very popular. The other big difference from the 80s is the Democrats controlled the House when Reagan was in office, and so they had to deal with the Democrats. That's why it was a bipartisan bill, and that's why there were proper hearings and everything. Obviously, American politics got a lot more hyper partisan. We saw it in the healthcare bill. The only way that Republicans think they can get these unpopular policies through is by doing it quickly, before there's enough much media scrutiny, much public outrage, and much time for the opponents to get organized.

[B]

I don't know if you saw the piece in the Economist recently. It did its own takedown of the current tax plan and compared it to the 86 bill, which it called among the most revered pieces of legislation in the annals of modern American economic policymaking. So how do economists today look back at the successes and failures of that bill?

[D]

Right. I mean, I wouldn't go that far. The Economist obviously has always been in favor of low taxes and sort of free market economics. They like the bill, but certainly the Reagan bill was better than this one. What the Reagan bill did is basically reduce the corporate tax rate from 45% to 35%, but it was explicitly deficit neutral. So obviously, if you cut the tax rate from 45 to 35, you lose a lot of revenues. What they did to offset was get rid of a lot of the deductions in the tax code, and it did turn out to be broadly or not completely deficit neutral. That's very different from what we've got now, where the Republican bill is going to increase the deficit by 1.5 trillion over 10 years. But there's a lot of gimmicks in there. The Committee for a Responsible Federal Budget, which is a sort of hawkish organization in Washington, reckons that if you take out those gimmicks, it's actually a $2.2 trillion deficit boondoggle over the next 10 years. So that's very different to the Reagan tax money. It's also, interestingly enough, very different to what Paul Ryan was promising in his Roadmap for America. I just looked back at that this morning and confirmed that he and his.

[B]

Roadmap for America remind us what that was.

[D]

Well, that was sort of the document which made Paul Ryan's career really. Remember, he came out of nowhere with this sort of plan for America. It was a bit like a sort of Contract for America in the 90s, but supposedly more solidly based on sort of research. And he basically said, the entitlements are killing us. So a lot of his plan was about reducing entitlements, but there was also a big tax side to it which explicitly said would be deficit neutral. And the Republicans just haven't done that. Obviously they said they would, they said they would, but as soon as they got into office, they've forgotten about the deficit, said it'll be offset by faster growth. I don't think anybody really believes that. They think higher deficits is the price to be paid for lower taxes. And also the argument that if their deficits go up, you will force the government to cut spending. So a lot of people think this is part of a sort of long run plan to attack the welfare state.

[B]

But what happened to the deficit hawks in Congress? And there still are a few of them.

[D]

Well, there still are a few, yeah. I mean, Bob Corker is sort of posing as a deficit hawk here. John McCain voted against the Bush tax coats back in 2002, saying that they were too irresponsible. So if he's going to be consistent, he should really vote against this one. But the deficit hawk wing of the Republican Party is just getting a lot smaller. But it's large when they're in opposition because then they can say, oh, Obama administration is doubling the national debt. It's terrible. But once they got into power and they had to buy off various parts of their coalition, they basically abandoned that pledge.

[B]

You mentioned that one of the things that was different in 1986 is that the Democrats controlled the House. But it is interesting to look at that period. They did work with Reagan to pass the bill and the majority of Senate Democrats voted for it, including Joe Biden, Al Gore, John Kerry. Why did that bill enjoy such bipartisan support?

[D]

Well, I think even now there is some support on the Democratic side for the idea of simplifying the tax code and bringing down the corporate rate as a way of attracting More capital into the U.S. other countries around the world have been slashing their corporate tax rates. The Irish have gone all the way down to 12.5%. Britain's gone to 20%. But I think if it was a more reasonable plan, if they'd written it in a way that was deficit neutral and that wasn't so slanted towards giveaways to the top of the income distribution, they might well have won over a few Democrats in the United States.

[B]

And why didn't they do that? And what happened to Paul Ryan's initial idea?

[D]

Well, I think there are two things here. Number one, the business tax cut side of the plan, just cutting the corporate tax rate as by as much as they want to do. Trump insisted on a 20% rate, basically because I think he just liked round numbers. And 20% sounded like a round number and he can say it's lower than the OECD average and, you know, money will pour in. So that was one thing. But the other thing is even the Republicans realized, I think, that you can just have a huge tax cut for businesses, that if you're going to do that to make it in any way popular, you need to cut taxes for everybody else, too. So when they added the personal taxes to the corporate tax side, they basically couldn't keep it deficit neutral. So they decided to abandon that pledge and make the argument that the reduced revenues would be made up by a surge in economic growth, which virtually no reputable economists believe.

[B]

Isn't Trump betraying the most fundamental promise of his campaign, that he was going to drain the swamp, come up with policies that benefited the middle class? He was going to attack Wall Street. I mean, just go through it.

[D]

Yeah, Well, I mean, his argument, obviously he's making the sort of Republican argument that if business investing more wages will go up, capital flooding from all over the world, instead of having 2% growth, which is what we've basically had for the last 10 years, growth will go to 3%. Trump even talks 4%. It's not very realistic, but in fact, it's not realistic at all. But that's the way he sells. Now, if you just look at the total distributional tables put out by the Joint Committee on Taxation, other places, then it looks like a very aggressive bill, especially if you extend it to 2027. There are some giveaways for everybody in the first few years, but the personal tax cuts are all temporary. The corporate tax cuts are all permanent. On the one hand, they're saying, well, that's very serious. We have to do that because of the deficit, on the other hand, they're basically saying Congress is never going to allow these personal tax cuts to expire. You know, trust us, they'll be extended in 2023 and 2025.

[B]

America is changing and so is the world.

[D]

But what's happening in America isn't just the cause of global upheaval. It's also a symptom of disruption that's happening everywhere.

[A]

I'm Asma Khalid in Washington, D.C. i'm.

[D]

Tristan Redman in London, and this is the Global story.

[A]

Every weekday, we'll bring you a story from this intersection where the world and America meet.

[D]

Listen on BBC.com or wherever you get your podcasts.

[B]

People talk a lot about the new Gilded Age, and it seems as though income inequality is worse than it's ever been in American history, going back to Reaganomics. Was that one of the drivers of this rising disparity between.

[D]

It certainly was. I mean, one of the things we've learned, I think, in the last 30 years is that if you cut tax rates, especially if you cut tax rates at the, the top chief executives, entrepreneurs, et cetera, they know they're going to keep a lot more of the money they earn. So it gives them a big incentive to increase their own salaries, et cetera. I think it's a very reasonable argument to make that the big personal tax cuts in the Reagan era, the start of the Reagan era, were really the beginning of the sort of modern surge in inequality that we've seen. And that's the great irony here, of course. I mean, over the last 10 years, last five years anyway, the great debate has been about how to reduce inequality. But Barack Obama declared it the great challenge of the age. I think the phrase he used was rising inequality.

[B]

And the Affordable Care act was supposed to address that.

[D]

The Affordable Care act was a very progressive policy. I mean, it basically was a health care policy which enabled more than 20 million mostly middle lower class people to get health insurance. And it was largely financed by an increase in taxes on the very wealthy. But the White House didn't broadcast that aspect of it, that it was an explicitly redistributionary program. I think Obama didn't think that would be very popular.

[B]

Trump this month urged senators to repeal that bill's requirement that Americans have health insurance and to use the proceeds to slash the top tax rate. Is that going to still take place?

[D]

As things stand, Trump seems to have backed off that one. And Ivanka Trump seems to have won. If you get rid of the individual mandate, fewer people will buy health insurance. So there'll be fewer people using the Obamacare subsidies. That reduces the deficit. So there's about $300 billion here to play with if you're a Republican tax WR. Trump said let's take that money and as you say, reduce the top tax rates. Ivanka, according to all the reports, has opposed that. And Marco Rubio and Mike Lee, the Republican senators, have been on her side saying let's take the money instead and expand the child tax credit for middle income families and actually pretty rich ones as well. The Senate bill as it exists now appears to reflect that thinking more than Trump's thinking. It looks like the top rate will be either 38% instead of 39.6, but Trump wanted to bring it all the way down to 35. So that's a sort of minor victory for the sort of forces of less unreasonableness.

[B]

But down the road, if the deficit is exploded, as it sounds as though it could well be, won't Republicans then make the argument that they've made in the past to cut Medicaid in particular and Medicare?

[D]

Of course they will. I mean, this is a whole bait and switch argument here. I mean, amazing enough, Karl Rove, the Republican strategist, actually basically admitted this in his Wall Street Journal column this week. And he bas acknowledges that there's going to be a rise in the deficit and rise in public debt and we're going to address that. But he says the way to address that is not to change the taxes, which of course will be reduced. We're going to have to tackle spending. And he talks about tackling entitlement spending, Medicare, Social Security in a Republican sort of game plan. This is all setting up the next stage, which is Social Security reform, Medicare reform, the other half of the Paul Ryan road map.

[B]

You know, we used to talk about gridlock in Congress, but now it seems that we've reached a point of complete legislative. I mean, we've just been discussing everything that the cynicism that this bill represents on the part of Republicans. But what about Democrats? Are they not being equally cynical in watching this catastrophe unfold and then trying to exploit it to their political end?

[D]

Yeah, I think the Democrats have held pretty solid on this. I mean, as you say, in the 80s, they supported tax reform. In the past, the sort of Blue Dog Democrats, there was always a handful at the very least of senators and a lot of a big chunk of congressmen who would vote for lower taxes because they, they know it's popular in their districts. In this case, it looks like certainly in the Senate, the Republican bill is going to get zero support from the Democratic side. Have they opposed it as vehemently as they opposed the health care bill? No, I don't think it has, although there has been some resistance. But there's not been the sort of mass protests and following senators round that you got then.

[B]

But it's because people there would be dying as we.

[D]

Exactly. Is it just a more emotive subject? And you could roll out sick people, old people who would suffer terribly from health care bill. And it was just very hard for people like Susan Collins in Maine and Lisa Murkowski in Alaska to support this bill, which was clearly going to harm a large number of their own constituents in the short run as well as the long run. But in the last couple of days, both Murkowski and Collins have indicated they're very likely to support the bill. They feel they can afford to support this one because they're not going to get the backlash in their districts that they did from the health care bill.

[B]

We're talking on Thursday, and it sounds as though there's going to be a vote today. Assuming that it's going to pass, then they have to reconcile their version with the House version. But let's assume for the moment that some version of this tax reform passes. Isn't it incredibly difficult to undo even the worst legislation once it's passed into law?

[D]

Yeah, I mean, obviously. Well, there's two issues. Number one, this does cut taxes in the short term. So it's going to be, who wants to run on raising taxes? You know, I don't think Chuck Schumer's going to be sort of saying, let's reverse the personal tax cuts in this. And B, of course, the Democrats, it's all very well trying to oppose this, and they had a great victory in healthcare. But, you know, you have to start winning some elections if you're gonna roll back the Republicans. Democrats desperately need to win either the House or the Senate in the 2018 midterms. And this does give them an issue in the sense it's a big giveaway to the rich. If they can't run on that, you know, what can they run on? So there may be some Democratic strategists who are saying, look, we can take this and win in the sub, along with the healthcare votes, et cetera. But Trump is going to be making the argument, look, I did what I said I did. I cut taxes. You know, you've all got $1,000 more in your pocket this year than you did last year.

[B]

And also lying, by the way, as he already is once again out there as he pushes this saying that, oh the Richard, they're going to be hurt really badly by this.

[D]

I mean, Trump, he only tells the truth by mistake. I think the bill couldn't have been engineered more explicitly to help people like Trump. Most of his business is set up in terms of limited partnerships, so called pass through businesses. And the one tax return we saw from Trump, which was 2005, I think he had I think 60 million or $70 million in pass through income. So he gains enormously from the reduction in the pass through rate and he also gains enormously from, and this really, this drives me crazy that it's not getting more attention is the abolition of the alternative minimum tax on your tax return. You go through all the stages and it says you owe this if you owe less than what the IRS considers reasonable for your gross income, on your net income, et cetera, because you've got too many deduct, you're hit by something called the alternative minimum tax. In the Trump's case, I think he was originally he owed about $6 million in the return we've seen and the alternative minimum tax bumped it up to something like 36 million or something. The only thing left really in the American tax code that catches people with huge deductions, rich people who gain the system like Trump, is the alternative minimum tax. And they're getting rid of that too. And if there's not the backstop of the alternative minimum tax anymore, it's just a huge giveaway to very wealthy people with clever accountants.

[B]

Thanks so much, John.

[D]

Thank you.

[B]

John Cassidy is a staff writer and a political columnist for newyorker.com, this has been the political scene from the New Yorker. You can subscribe to this and other New Yorker podcasts by searching for the New Yorker in your podcast app and find more political analysis and commentary on new yorker.com feel free to rate and review the political scene on Apple Podcasts. This podcast is is produced by Alex Barron for newyorker.com with help from Hannah Wilentz. I'm Dorothy Wickenden.

[E]

Right now we are living through some of the most tumultuous political times our country has ever known. I'm David Remnick and each week on the New Yorker Radio Hour, I'll try to make sense of what's happening alongside politicians and thinkers like Cory Booker, Nancy Pelosi, Liz Cheney, Tim Waltz, Ketanji Brown Jackson, Newt Gingrich, Robert F. Kennedy Jr. Charlamagne, tha go, and so many more. That's all in the New Yorker Radio Hour wherever you listen to podcasts.

[D]

From PRX.