John McCain, in a repudiation of President Donald Trump, warned the United States this week against turning toward a "half-baked, spurious nationalism." In high dudgeon, Mr. Trump returned fire, telling the Arizona senator who happens to be suffering from brain cancer to be careful because "at some point I fight back, and it won't be pretty."
But he won't have to retaliate yet. Mr. McCain, whose vote crippled the President's chances of overturning Obamacare, announced he would back a budget resolution that is a key stepping stone toward the implementation of an axe-the-tax plan critical to the Trump agenda.
A large lightening of the levies would mark Mr. Trump's first big accomplishment. It would help unify the Republicans, rallying them behind him. It might also ease the pressure on the President to take other bold strokes to implement his election agenda – such as abandoning the North American free-trade agreement.
It would also mark a return of the Republicans to the codswallop of "voodoo economics." We recall this was the putdown unsuccessfully employed by George Bush Sr. against the supply-side economics of Ronald Reagan in their 1980 fight for the Republican nomination.
The Trump tax plan, according to most economists, will balloon the debt and deficit and substantially benefit the rich. Any pretense of it serving a populist agenda is pure poppycock.
But the economy is rocking along well under Mr. Trump. The stock market smiles. Business is seen as his strong suit and Mr. Trump, seldom burdened by the labour of thought, is an effective snake-oil salesman.
His tax plan is driven by one of his more remarkable samplings of fiction. It is the notion, as he claimed yet again this week, that the United States is "the world's highest-taxed nation." It is nowhere near that. Compared to its peers in the developed world, studies show it ranks in the lower-taxed tier.
The plan follows the Bush-Reagan template in that it seizes on the old economic creed that deep tax cuts pay for themselves by triggering big increases in economic growth. Most studies show only modest growth results while the cuts bring on substantially increased deficits and debt, particularly in conservative governments, which – as is the case with Mr. Trump's – are hawkish on military spending.
Treasury Secretary Steve Mnuchin predicts "this tax plan will cut down the deficits by a trillion dollars." That kind of thinking, says Douglas Holtz-Eakin, a Republican who once headed the Congressional Budget Office, is "detached from empirical reality."
The plan decreases the top income tax rate to 35 per cent from 39.5 per cent. It deeply slashes corporate taxes. It does away with the estate tax. It provides lots of loopholes for the rich and famous.
The non-partisan Tax Policy Center says it will most benefit those at the top of heap, the 1-per-centers, while the poor and middle class get comparatively little.
The Oracle of Omaha, investment guru Warren Buffett, says the proposal to repeal the estate tax would be a "terrible mistake" unnecessarily benefiting the wealthiest Americans. As for slashing the corporate rate, he says there are a lot of American businesses and "I don't think any of them are non-competitive in the world because of the corporate tax rate."
Lawrence Summers, a liberally inclined former president of Harvard University, penned an article titled "An Atrocity Of A Tax Plan," saying the claims of Mr. Trump's economic team are "some combination of ignorant, disingenuous and dishonest."
Given the widespread belief that the economic system is rigged in favour of the wealthy, given the divide in the United States between the ruling class and middle-class Americans who feel exploited by elites, one might think the Grand Old Party's plan would be igniting populist protest.
Thus far, not much. Tax cuts still carry weight among voters, as does Mr. Trump's business reputation, as does his wild comparative claim on his country's current tax rate.
What doesn't carry a lot of weight are empirical realities. This being the case, the axe-the-tax scheme, if implemented, could provide Mr. Trump with a lifeline.