Trump Teases Another Massive Tax Cut

Plus, why the $4 trillion bailout may not be enough  [The Fisc](   By Yuval Rosenberg and Michael Rainey Hospitalized but Hunting for Votes: Trump Teases Another Massive Tax Cut President Trump just left the Walter Reed Medical Center to return to the White House — a decision that’s astonishing outside experts and raising additional questions about his condition, his care and the White House’s transparency about both. “Don’t be afraid of Covid. Don’t let it dominate your life,” the president tweeted in, depending on your perspective, a classic display of Trumpian bravado or a mind-boggingly reckless and insensitive exhortation in the face of a pandemic that has cost more than 200,000 lives. He added that he feels better than he did 20 years ago. Trump’s doctors said that while he wasn’t fully recovered he met the requirements to be discharged and go back to the White House. “Though he may not entirely be out of the woods yet, the team and I agree that all our evaluations, and most importantly his clinical status, support the president’s safe return home, where he’ll be surrounded by world-class medical care 24-7,” Dr. Sean Conley, Trump’s personal physician, told reporters at an afternoon briefing. Other doctors called the move ill-advised. “For someone sick enough to have required remdesivir and dexamethasone, I can’t think of a situation in which a patient would be okay to leave on day three, even with the White House’s medical capacity,” Dr. Robert Wachter, chairman of the University of California at San Francisco’s department of medicine, [told The Washington Post]( before Trump announced his return home. Others also questioned the decision to discharge Trump, given the risks he still faces, the mix of medications he’s being given and the likelihood that he’s still contagious and will be heading to a White House environment that may have already been host to a superspreader event and where there will inevitably be many other people close by. Trump promises another tax cut: Even as Trump heads home, it was clear during his hospital stay that the president was very much in campaign mode. To wit: Trump on Monday morning issued a frenzied series of all-caps tweets seeking to drum up votes. They included: - STOCK MARKET HIGHS. VOTE! - LAW & ORDER. VOTE! - RELIGIOUS LIBERTY. VOTE! - BIGGEST TAX CUT EVER, AND ANOTHER ONE COMING. VOTE! - 401(K). VOTE! - SPACE FORCE. VOTE! - BETTER & CHEAPER HEALTHCARE. VOTE! - PROTECT PREEXISTING CONDITIONS. VOTE! The reality: On health care, Trump is again promising [more than he has delivered](. And on taxes, he is again falsely describing his 2017 cuts as the largest ever. While Trump has dangled the promise of additional cuts repeatedly in recent years, congressional action would be necessary to enact the sizable middle-class tax cut that Trump has teased. It’s not likely Trump can reach a tax cut deal with Democrats if they retain control of the House. “I can’t imagine them finding agreement on any kind of major tax reform since their agendas are close to diametrically opposed,” Seth Hanlon, a senior fellow at the Democratic-aligned Center for American Progress, told [The Wall Street Journal]( recently. Trump has previously considered cutting the capital gains rate and pledged to forgive payroll taxes deferred this year by his executive action. Stephen Moore, an outside economic adviser to Trump, told the [Washington Examiner]( that he met with the president and his economic team 10 days ago and discussed a tax cut for 2021. "He said he wants to lower the income tax percent to 15 from 22, create a tax-free savings account for the middle class, and revive the payroll tax cut idea. The goal is to get help for folks who make less than $100,000 a year," Moore told the Examiner. He added that there’s a "high likelihood" Trump will announce a specific tax cut plan before the election. Trump’s tweetstorm also included a claim that Democrats would enact a “massive tax increase, the biggest in the history of our country.” (Trump’s tweet was, again, in capital letters, but we’re sparing you the eyesore.) Democratic presidential candidate Joe Biden has said he would not raise taxes on people making less than $400,000. Pelosi Presses, but Still No Stimulus Deal House Speaker Nancy Pelosi (D-CA) spoke with Treasury Secretary Steven Mnuchin for about an hour on Monday as negotiations over an economic stimulus bill continued. “The two discussed the justifications for various numbers and plan to exchange paper today in preparation for another phone call tomorrow,” a Pelosi aide said. Asked if she expected to reach a deal this week, Pelosi said, “One way or another — depends on if they really want to crush the virus, honor our heroes and put money in the pockets of the American people.” Pelosi is pushing for the $2.2 trillion relief package passed in the House last week, while Mnuchin has offered a package worth $1.6 trillion. Pelosi said last week that President Trump’s diagnosis with Covid-19 could make it easier to make a deal, since both sides could now agree on the severity of the situation and the need for a substantial response. While it’s not clear that fiscal conservatives in Congress agree, Trump appears to still be interested in reaching an agreement. “OUR GREAT USA WANTS & NEEDS STIMULUS,” he [tweeted]( Saturday. “WORK TOGETHER AND GET IT DONE.” [‘Doomed to Fail’: Why a $4 Trillion Bailout May Not Be Enough] The roughly $4 trillion spent in response to the coronavirus pandemic has become the costliest economic rescue effort in U.S. history, surpassing even the staggering cost of 18 years of war in Afghanistan. But according to an analysis in The Washington Post Monday, a substantial portion of the spending hasn’t gotten to the institutions and individuals that need it most, leaving millions of Americans exposed to an ongoing viral pandemic in an economy that is still struggling to get back on its feet. Here’s how the approximately $4 trillion spent on the coronavirus bailout breaks down, according to the Post analysis, which is based on data from the Committee for a Responsible Federal Budget: - $2.3 trillion for businesses, including $651 billion in tax breaks, $454 billion for the Federal Reserve for market stabilization and $670 billion for small business assistance. - $884 billion for individuals, including $293 billion for stimulus checks and $286 billion in enhanced unemployment benefits. - $634 billion to directly fight the pandemic, including money for testing and tracing. - $253 billion for state governments and agencies, to help cover the cost of protective equipment and first responders, among other things. Who gets help? One problem with the bailout is that a good portion of the funds have been used to support businesses that may not have needed much assistance, including companies that built up cash cushions even as they laid off workers. “The legislation bestowed billions in benefits on companies and wealthy individuals largely unscathed by the pandemic,” the Post said, “while at the same time allowing special aid for unemployed workers to expire over the summer and leaving some local public health efforts struggling for money to conduct testing and other prevention efforts.” The wrong timeframe: Another major problem is that while lawmakers responded quickly in the early days of the pandemic, pumping hundreds of billions into the economy to keep businesses and individuals afloat, they failed to recognize that the coronavirus required a long-term response. “Too many people were fighting the last war and not recognizing the new circumstances we were facing,” economist Paul Romer told the Post. “They missed this point: For any other recession, this may have been a very good response. But because of this virus, it was doomed to fail.” The only way to end the recession, Romer and many other experts have said, is to get control of the virus. Failure to do so means the recession cannot end. “This is why the stimulus money was a waste: It got people back out there, but it also increased the rate of spread of the virus,” Romer said. “It was really totally ineffective to stimulate the economy without implementing measures to restrain the spread of the virus.” [Read the full analysis at The Washington Post](. Op-Ed of the Day: Trump’s $6.6 Billion in Debt “President Trump has, to a remarkable degree, fulfilled his 2016 campaign promises — and the country’s fiscal health is worse for it,” Maya MacGuineas, president of the Committee for Responsible Federal Budget, writes at [The Washington Post](. MacGuineas says that, over his first three years in office, Trump signed off on $3.9 trillion in borrowing for new tax cuts and spending over the decade ending in 2026­­­­­­­­ — creating deficits that were unprecedented during times of solid economic growth. Then the pandemic struck. “Adding in covid-19 relief measures, the president has enacted a total of $6.6 trillion in new borrowing in his first term,” MacGuineas writes. “Yes, we need to borrow to address the current crisis. But we didn’t have to enter this crisis with trillion-dollar deficits; and we don’t need to continue with massive deficits afterward either.” [Read more at The Washington Post.]( Send your tips and feedback to yrosenberg@thefiscaltimes.com. Follow us on Twitter: [@yuvalrosenberg]( [@mdrainey]( and [@TheFiscalTimes](. And please tell your friends they can [sign up here]( for their own copy of this newsletter. News - [Most Americans Say Trump Acted Irresponsibly and Distrust White House on His Health]( – CNN - [Trump Aides Unsure They Can Keep Him Contained at White House]( – Bloomberg - [Severity of Trump's Illness Unclear Four Weeks Ahead of Election]( – Reuters - [Trump Spokeswoman McEnany, Other White House Staffers Test Positive for COVID-19]( – Reuters - [Trump Didn’t Disclose First Positive Covid-19 Test While Awaiting a Second Test on Thursday]( – Wall Street Journal - [CDC Says Coronavirus Can Spread Through Airborne Transmission]( – The Hill - [Trump Official Pressured CDC to Change Report on COVID and Kids]( – Politico - [States Overpaid Coronavirus Unemployment Claims, and They Want the Money Back]( – Wall Street Journal - [Economists Growing Less Optimistic About Outlook for U.S. Economy]( – MarketWatch - [Six Months In, the Shape(s) of the Economic Crisis]( – New York Times - [Covid Hits College Budgets]( – Politico - [The Covid Economy Carves Deep Divide Between Haves and Have-Nots]( – Wall Street Journal Views and Analysis - [Why Biden Would Start Tax Increases at $400,000 a Year]( – Richard Rubin, Wall Street Journal - [14 Lingering Questions About Donald Trump, Coronavirus and the Future of His Presidency]( – Chris Cillizza, CNN - [GOP Elites Thought They Could Buy Their Way Out of a Pandemic]( – Eric Levitz, New York - [The Debt Is Huge Because Trump Kept His Promises]( – Maya MacGuineas, Washington Post - [K-Shaped Recoveries End Well for Everybody]( – Michael R. Strain, Bloomberg - [‘The Coal Industry Is Back,’ Trump Proclaimed. It Wasn’t]( – Eric Lipton, New York Times - [The Stock-Market Disconnect]( – Kenneth Rogoff, Project Syndicate Copyright © 2020 The Fiscal Times, All rights reserved. You are receiving this newsletter because you subscribed at our website, [thefiscaltimes.com]( or through Facebook. The Fiscal Times, 399 Park Avenue, 14th Floor, New York, NY 10022, United States Want to change how you receive these emails? [Update your preferences]( or [unsubscribe](