TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Monday, November 12, 2018

NY Times: Booming Economy, Tax Cuts Did Not Save Republicans In Midterms

New York Times, The Economy Didn’t Save Republicans After All:

Neither strong growth nor a $1.5 trillion tax cut helped President Trump’s party in the midterm elections — by any number of measures.

Unemployment is abnormally low. Growth has sped up. A $1.5 trillion tax cut, signed by President Trump last year, is fueling consumer spending. Faced with strong Democratic enthusiasm and fund-raising, and hindered by an unpopular president, Republicans were counting on that economic strength to lift them at the polls, or at least limit the damage.

It didn’t. Republicans lost in House districts with low unemployment rates. They lost in districts that have gained manufacturing jobs. They lost in districts that got big tax cuts. And they lost overwhelmingly in the kind of affluent, educated suburbs that have experienced the strongest overall recovery — and that were once among the most reliable Republican districts.

Republicans had lost 30 net seats in the House as of Friday afternoon, and will probably lose a few more once all the votes are counted. It is possible, of course, that Republican losses might have been even larger were it not for the strong economy. But there was little sign of that in district-level results: Many of the Democrats’ pickups came in places where the economy, at least by standard measures, is strong.

All told, there was no apparent relationship between Republican candidates’ performance in Tuesday’s House races and the strength of the economy in those districts, an analysis of economic and electoral data shows.

For some candidates, the tax law was an impediment

When Republicans passed a $1.5 trillion tax cut late last year, they envisioned it as a centerpiece of their sales pitch for the midterms. But they may have miscalculated how potent an electoral weapon the tax law would become — against them.

Despite giving at least a modest tax cut to most households, the tax law has struggled to win majority support from voters. Several of its biggest champions lost their seats on Tuesday. They included four members of the House Ways and Means Committee, which wrote the law, most notably Peter Roskam of Illinois, the chairman of the tax policy subcommittee, and Erik Paulsen of Minnesota, the chairman of the Joint Economic Committee.

On average, Republican candidates did no better in districts where residents got larger tax cuts, as measured by estimates from the Tax Foundation, a conservative research group.

The law appears to have hurt Republicans in some high-income, high-tax districts, where many residents were angry about the law’s $10,000 cap on the deduction for state and local taxes. In Virginia’s 10th Congressional District — where the largest share of residents took the so-called SALT deduction in 2016, according to an analysis of Internal Revenue Service data — the Republican incumbent, Barbara Comstock, lost her seat. Her Democratic challenger, Jennifer Wexton, called the law the “Comstock-Trump tax scam.”

More broadly, Republican incumbents fared modestly worse than expected, relative to past elections, in districts where a large share of residents take that deduction.

https://taxprof.typepad.com/taxprof_blog/2018/11/ny-times-booming-economy-tax-cuts-did-not-save-republicans-in-midterms-.html

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Comments

It looks like the NYT didn't see the results of the Senate races.

Posted by: Chris P. | Nov 12, 2018 11:40:54 AM

Didn't bother reading.

They're called retirements, trash newspaper.
It's called incumbency advantage.

Posted by: NYT = Trash | Nov 12, 2018 12:23:09 PM

It's amazing what uniform anti-GOP MSM and NPR coverage can do. All they talk about is the SALT cap, no mention of lower rates.

Posted by: brad | Nov 12, 2018 2:09:08 PM

I'm fascinated by the Blue Wave nonsense. The total swing in this election—an off year election in which the Democrats had every conceivable election—was D+3 to D+7 in popular vote. They lost every major race in which Trump personally committed himself, including several they should have won. Their principal strategy is "we are going to have all sorts of investigations.” I sincerely hope they are better prepared in 2020.

Posted by: Mike Livingston | Nov 13, 2018 4:19:50 AM

It continues to amaze me that the Leftists don't recognize when their own media is putting a "spin" on. Or do they? If the NYT was to have been believed over the past 2 years, the GOP should have gone down in flames this mid-term, engulfed by a "Blue Wave." Didn't happen. Sure, the GOP could have done better. But according to the fellow travelers at the NYT, they should have done a lot worse. Seems like me these results are closer to a draw than a loss for the GOP.

Posted by: ruralcounsel | Nov 13, 2018 9:55:36 AM