Taxes

Trump’s core supporters are about to be handed the bill for tax reform

Key Points
  • President Trump's white working-class supporters don't gain much from the Republican tax cut push.
  • In a study following the 2016 election, Trump's core supporters expressed disdain for Wall Street and advocated higher, not lower, taxes on the wealthy.
  • The higher deficits that analysts forecast from the GOP proposals will only increase pressure to curb benefits such as Social Security.
Supporters listen as President-elect Donald Trump and Vice President-elect Mike Pence speak at U.S. Bank Arena on Dec. 1, 2016, in Cincinnati.
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President Donald Trump's white working-class supporters don't gain much from the Republican tax cut push. So far, they're among its strongest early supporters anyway.

But their personal loyalty to Trump and his party faces a big test from the tax cut debate — and spending cut debate soon to follow.

The House bill Republicans hope to pass Thursday, tax analysts for Congress say, will reduce effective tax rates twice as much for those earning $1 million or more as for those earning $100,000 or less. The Senate bill makes big tax cuts for corporations permanent but makes smaller ones for moderate-income families only temporary.

Those specifics contradict what Trump's base — heavily weighted toward older whites without college educations — has said it wants from Washington. In an in-depth study of voter attitudes after the 2016 election, his core supporters expressed disdain for Wall Street and advocated higher, not lower, taxes on the wealthy.

On the eve of 2018 elections, Democrats have begun a high-volume effort to highlight that contradiction in priorities. Even if they can't stop the tax bill, the stated plans of congressional Republicans and the Trump White House will give them fresh material.

"One thing we're going to be looking at very strongly is welfare reform," Trump told his Cabinet last month. "People are taking advantage of the system."

But this may diverge from racially charged welfare debates of the past, fueled by blue-collar whites resentful that their tax dollars financed benefit rolls containing disproportionate numbers of African-Americans. This time, benefits at risk include those largely benefitting blue-collar whites themselves.

One big target is Medicaid, which provides health care to low-income Americans. Republicans have sought to cut it by hundreds of billions of dollars in their proposals to repeal and replace Obamacare.

Low-income whites represent a majority of nonelderly Medicaid beneficiaries in numerous states Trump carried such as Ohio, Wisconsin, Michigan, West Virginia, Kentucky and Arkansas. They also represent a majority of elderly Medicaid beneficiaries receiving nursing home care financed by the federal government.

Trump has pledged not to cut Social Security benefits. But his budget director, Mick Mulvaney, persuaded him to seek reductions in Social Security disability benefits by arguing, as he explained to Politico, that "It's welfare."

In fact, policy experts in both parties see the disability program as swollen and ripe for reform. They say disability has become a damaging trap for millions with medical problems who still could work — but are forbidden from doing so once they qualify for its benefits.

Reductions will hit home with core Trump supporters in any case. Seven in 10 Social Security disability recipients are white, many of them aging, blue-collar workers displaced from good-paying jobs by competition from imports and other shifts in the global economy.

"It affects the white working-class guys as they get older," said Jason Turner, a conservative welfare expert. "That's the impetus for a lot of them asking for disability."

Trump has also pledged not to touch Medicare benefits. But Mulvaney told me earlier this year the administration would "talk about it" if congressional Republicans pass longstanding proposals to cut spending by converting Medicare to a "premium support" program for private insurance.

House Speaker Paul Ryan has been a principal advocate of that idea, as well as for curbing Social Security as baby boom retirements expand benefit rolls. Despite Trump's pledges, the speaker hasn't given up.

Indeed, the higher deficits that analysts forecast from the GOP tax proposals will only increase pressure to curb benefits.

"There's two things you have to do to get our fiscal house in order," Ryan told reporters last week. "Grow the economy, get people working and paying taxes, and deal with spending — especially entitlement spending."

"We've got a lot more work to do on that front," he concluded.

Seven in 10 Americans age 65 or older are white. One-third of them rely on Social Security to lift them out of poverty, according to Census data.

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