Froma Harrop: From real estate to the presidency and back
In Hawaii, “aloha” also means “goodbye.” President Trump could not have missed the less-than-enthusiastic greeting during his brief touchdown in the U.S. state where — facts are facts — Barack Obama was born. Demonstrators there seemed to be following a new pattern among Trump foes, replacing raw anger with mockery. His fans, meanwhile, were greatly outnumbered.
Daughter Ivanka, once a media star in Japan, just gave a speech in Tokyo to a half-empty hall. Ushers pushed attendees toward the front to give the appearance of a crowd.
Something has changed for the real estate developer turned president. Interest in his presidency and, even worse for him, fear of his wrath are clearly draining. Trump can still do grave damage to the country, but he seems less of an unremovable force.
In any case, there’s always the real estate. That explains a few things. It explains why the presidential tweeting fingers went limp after 13 federal agencies presented a report totally dismissing his position that global warming — if it exists and if it is a problem — has little to do with human activity. Some lower-downs were left with the job of casting aspersions on the scientific consensus, but there was no frontal assault by the ringmaster.
Was it growing public concern that the administration is not addressing a cause of increasingly violent hurricanes and fires? Perhaps. More plausible is that Trump and his Wall Street comrades want no distractions from proposals to slash their taxes. Pushing more of the nation’s tax burden onto other shoulders requires concerted effort.
Those shoulders, it appears, would belong to many in the middle and upper-middle classes. Eliminating the deduction for property taxes is one means to this end. Another would be killing the deduction for big medical expenses.
Even so, the tax reform package on the table would raise the deficit by an estimated $1.5 trillion this decade and possibly more in the years to follow. And though some in the middle class would see modest declines in their tax bills, the soaring national debt would come at a price many don’t realize. For starters, someone would have to pay it off.
In addition, the national debt is the club with which many conservatives try to whack such middle-class programs as Medicare and Social Security. Their strategy is simple: Slash the revenues that sustain these programs and then announce that the programs are unsustainable.
Especially hard hit would be middle- and upper-middle-class residents in expensive states. But for at least one rich developer in Manhattan, the tax proposals, if enacted, would constitute nothing less than a Champagne bath in a golden tub.
During the campaign, Trump vowed to end the “carried interest” outrage — a loophole that lets developers and hedge funders pay taxes on their fees at the lower capital gains rate. As a result, their tax rates are often below those paid by the police guarding their estates. In the current debate, House Republicans would leave the carried interest deal almost unchanged.
The House tax bill would limit the interest expenses companies may deduct on their commercial loans, the exception being — guess who — companies engaged in commercial real estate.
It would also end the tax deferral for personal property exchanges for most every group except for one: commercial real estate developers.
Ronald Reagan’s 1986 tax plan, praised by conservatives (and now Trump) as the gold standard for tax reform, did not favor real estate interests. People forget that in 1991, Trump stormed to Washington denouncing the Reagan reforms as “an absolute catastrophe for the country.”
That oversight has been fixed. Trump and the Wall Street bigs now have tax “reforms” finely tailored to their specifications. All hail the real estate mogul in chief.