The GOP tax cuts could still give Trump a huge boost in 2020 - even though the law is polling miserably
- Republicans and economists are confident President Trump's strong approval ratings on the economy put him in a good position to win re-election in 2020.
- This is despite the Tax Cuts and Jobs Act receiving very low favorability and most Americans incorrectly thinking their taxes were not cut last year.
- But the economy is overall quite strong, suggesting Trump can reap the rewards against whoever becomes the Democratic presidential nominee.
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WASHINGTON - After its first year in effect, the Tax Cuts and Jobs Act (TCJA), which passed entirely on Republican support, is still unpopular.
But Republicans close to President Donald Trump are not sweating the fact that his signature legislative accomplishment has bad favorability numbers with the public, instead expressing confidence that one of the outcomes from the bill - a strong economy - puts the commander-in-chief in prime position to win re-election in 2020.
Few Americans believe they received a tax cut as a result of the TCJA last year, despite the fact that most certainly did, including more than 80% of the middle class. How that happened is not a mystery. The cuts were primarily reflected in Americans' paychecks spread out across the whole year, not in a single, large tax refund in 2019.
Democrats also fueled the tax cuts' unpopularity by seizing on early data that showed smaller than average tax refunds, despite the fact that refund size is not necessarily evidence of a tax cut or increase.
But Tax Day 2019 is over with, and now Republicans are looking ahead with optimism on the economy. As of April, the unemployment rate is 3.8%, the lowest in nearly 50 years. Most Americans rate the economy as good, with a large number of people approving of Trump's handling of the economy. In a recent CBS poll, only 11% of Americans said Trump's policies had no effect on the economy.
Many economists have attributed the strength of the US economy in 2018 at least in part to the TCJA's cuts. So while people may not like to tax law itself, they do like stronger economy.
And since the economy routinely plays a role as one of the most important factors in a president's reelection chances, aides to Trump are confident the issue can push him over the finish line in 2020.
"I think if you look at all the sentiment measures that matter, they're through the roof. If you look at the most recent retail sales data, people are feeling great and they're out there buying stuff," White House National Economic Council Chairman Kevin Hassett told INSIDER. "And in the end, if you're forecasting the economy, that's the sentiment that matters."
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Hassett added that because Americans do not particularly like pay taxes to begin with, it is often a difficult subject to discuss. But he reiterated his emphasis on the overall economic approval for Trump.
"And so all the sentiment data that help you forecast the economy is very very positive," he said. "I can say that I just filed my taxes. I'm a little grumpy about taxes so if you ask me anything about taxes, I'll probably be in a sour mood when I answer."
Some prominent economists feel the same as well.
Yale economist Ray Fair, whose model predicts election outcomes using economic data, has Trump not just winning, but winning by a lot.
"Even if you have a mediocre but not great economy - and that's more or less consensus for between now and the election - that has a Trump victory and by a not-trivial margin," Fair told Politico. Fair also noted that Trump could be on pace to win 54% of the popular vote.
Goldman Sachs analysts Blake Taylor and Alec Phillips wrote in a report released earlier in April that Trump's chances of winning re-election are quite high, citing the strong economy and the power of incumbency as key components.
"The advantage of first term incumbency and the relatively strong economic performance ahead of the presidential election suggest that President Trump is more likely to win a second term than the eventual Democratic candidate is to defeat him," Phillips and Blake said.
With the economy continuing to grow and unemployment shrinking to record lows, Trump is poised to win again. But the large Democratic field of candidates and the ever-changing economic picture can always shake things up.