I don't pretend to know anything more about Steve Bannon than I've read in the newspapers and on the Internet. What I do know, however, is that if he is sincere in his desire to defeat the corrupt political establishment and build a coalition that "will govern for 50 years," he's going to have to find a way to climb down on his hard-line immigration policies in order to implement his economic strategy. That said, I expect Trump will settle on some way to minimize the damage he has done to himself and call on congress to get more involved in the hot-button immigration issue. In other words, he's going to have to punt if he wants to govern.
Bannon is the main architect of Trump's economic plan, a plan that has already earned broad public support, but a plan that won't succeed unless it is drastically changed. Here's why:
Trump's economic plan can be broken into three parts: Tax cuts, deregulation and fiscal stimulus.
As far as tax cuts, there are three main subsets:
1--The corporate tax rate, which Trump wants to drop from 35 percent to 15 percent.
2--A tax cut on the so-called "repatriation of funds"-- which lowers the rate on roughly $2 trillion of cash that's currently stashed overseas by uber-rich US businesses that have been evading US corporate taxes for years. Trump wants to give these tax dodgers a one-time "holiday" with a 10% penalty for companies that agree to bring their cash back to the US. Trump believes that the one-time tax break will increase business investment and employment in the US. Critics say the scheme will not work unless the economy strengthens and demand grows.
3--Trump also wants to reduce the top tax rate from 39.6% to 33%, while making modest reductions to the other brackets. Under the Trump plan, "a taxpayer who makes between $48,000 to $83,000 a year would save about $1,000 (while) people in the top 0.01%, making $3.7 million or more in a year, would receive $1 million in annual tax savings." (USA Today)
Here's a brief summary from economist Dean Baker:
"According to the analysis of the Tax Policy Center at the Brookings Institution and the Urban Institute, (Trump's) tax plan will reduce revenue by more than $9 trillion (close to 4 percent of GDP) over the course of the next decade. This tax cut plan would effectively add close to $800 billion to the annual deficit when it first takes effect, with the amount increasing over time...
"According to the Tax Policy Center, more than half of Trump's tax cuts will go to the richest one percent of the population. The richest 0.1 percent will get tax cuts that average almost $1.5 million annually. The Trump tax cut is consistent with the fundamental principle of the Republican Party, and unfortunately many Democrats, of putting as much money as possible in the pockets of the rich." (Republican deficit hawks abandon their religion, Smirking Chimp)
As you can see, most of the benefits from the proposed tax cuts go to the extremely rich. How does that fit with Trump's campaign promise:
"'I am proposing an across-the-board income-tax reduction, especially for middle-income Americans...The tax relief will be concentrated on the working and middle-class taxpayer. They will receive the biggest benefit -- it won't even be close.'
"The tax cuts look like a serious betrayal of Trump's supporters. They also look like a misguided, short-term strategy that will derail Bannon's plan for broad coalition based on a strong economic growth and rising wages. This latest iteration of 'trickle down' economics will not help him achieve that goal.
"Unfortunately, the other parts of Trump's economic plan are equally dismal. For example, Trump is determined to repeal many of the key provisions of the 2010 Dodd-Frank law, the toothless bill that Congress passed in order to prevent another financial meltdown. At present, Texas congressman, Jeb Hensarling -- an outspoken critic of Dodd-Frank appears to be the frontrunner in the competition for US Treasury Secretary. Hensarling, who just last week said 'Dodd-Frank was a grave mistake,' is pushing his own Wall Street-friendly Financial CHOICE act, which would replace the bill with a 'pro-growth, pro-consumer' alternative... that would protect the banks from 'growth-strangling regulation.'" (Housingwire)
Is that what we really need, more laws to protect the banks?? Check out this clip from Fortune Magazine:
"Hensarling wants to put the market in charge. His view is that encouraging banks to hold lots of capital (as Dodd-Frank does) goes far enough by itself to shore up the system, making banks far safer than the law's dense web of stress tests, complex limits on trading, and banning of mortgages and credit cards deemed 'abusive' by regulators. Now that Republicans control Congress and the White House, it's highly possible that the Hensarling manifesto, or a large part of it, will become law...
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