Gary Cohn and Steven Mnuchin arrived in Washington this year after long, successful careers in business.
Cohn served as a hero in Malcolm Gladwell’s best-selling 2013 book, “David and Goliath.” He was one of the plucky Davids, who had overcome his struggles with dyslexia and risen to become No. 2 at Goldman Sachs. When Cohn joined the Trump administration, many corporate executives were relieved, seeing him as a steadying influence.
Mnuchin didn’t reach Cohn’s heights on Wall Street, but he did make partner at Goldman Sachs and was its chief information officer. He later went to Hollywood, where he financed hits like the “X-Men” franchise and “Avatar.”
Now, unfortunately, both Cohn and Mnuchin are endangering their reputations in their attempts to sell a tax cut.
I realize that the two men have already ruined their reputations with many of President Donald Trump’s critics, simply by working for Trump. But those opinions don’t matter much to Cohn and Mnuchin. If they did, the two never would have joined the administration – Cohn as chief White House economic adviser, Mnuchin as Treasury secretary.
Within the administration, there are real differences among how top officials have behaved and how they are perceived. Several – Tom Price, Reince Priebus, Sean Spicer and Rex Tillerson – have badly sullied their standing with virtually everyone outside the administration. After long careers, they have turned themselves into punch lines.
The clearest exception is Jim Mattis, the defense secretary. Mattis has done so partly by avoiding scandal and minimizing conflicts with Trump. But he has also been careful to set his own ethical boundaries. Can you recall a single time when Mattis has said something outright untrue? I can’t. That’s how he has retained his dignity in the eyes of so many people.
Cohn and Mnuchin have started to risk theirs. This column is a plea to them: Please stop, for everyone’s sake, including yours.
In the early stages of promoting Trump’s tax cut, they have made a series of statements that are blatantly false – not merely shadings of truth or questionable claims but outright up-is-down falsehoods mocked by various fact-checkers. The statements make the two look more like Trump press secretaries than serious business executives whom members of Congress can trust.
They fall into two main categories. The first is who benefits from the tax plan. “Wealthy Americans are not getting a tax cut,” Cohn said on “Good Morning America.” He was echoing a promise that Mnuchin had made before the inauguration: “Any reductions we have in upper-income taxes will be offset by less deductions, so that there will be no absolute tax cut for the upper class.”
No one needs to read a sophisticated analysis (although you can do that, as well) to know these claims are ridiculous. Trump’s tax plan is reducing the top income-tax rate to 35 percent, from 39.6 percent. It is deeply cutting corporate taxes, which benefits people who own a lot of stock. It is eliminating the estate tax.
Want to guess how many families in New York state – population 20 million – are wealthy enough that they’re likely to pay any estate tax next year, according to an estimate based on IRS data? Just 470. The number is so low in Montana, Vermont, West Virginia and four other states – likely fewer than 10 families in each – that the IRS doesn’t provide details, to avoid privacy concerns.
There is no way to make up for tax cuts this large by eliminating deductions, as Mnuchin claimed. The administration isn’t trying very hard, anyway. The deductions for charitable donations and mortgage interest, including on second homes, will remain.
Then there are the two men’s deficit claims. “This tax plan will cut down the deficits by a trillion dollars,” Mnuchin said. Cohn claimed that “we can pay for the entire tax cut through growth.” These may seem marginally more defensive, because they’re predictions. But they’re silly predictions, not so different from my vowing to lose weight by eating more ice cream.
The Harvard economist Greg Mankiw coined the phrase “charlatans and cranks” specifically to describe people who claim that tax cuts pay for themselves. And Mankiw is a conservative who’s worked for George W. Bush and Mitt Romney.
It is not too late for Cohn and Mnuchin to take a different approach. Doing so still won’t win over many people to their tax plan (including me). But they can make a free-market case for lower taxes that is based on something other than lies.
Neither one of them has yet turned 60 years old. These won’t be their last jobs. In the daily scrum, I’m sure that pleasing their boss must seem like the most important possible thing. But their reputation and their personal code of ethics deserve some consideration too. The Jim Mattis route is a lot better than the punch line route.