The New Yorker:

The passage of a highly regressive budget-busting measure demonstrates anew that Donald Trump’s populism is a dangerous sham.

By John Cassidy

Sometimes, the small details tell a larger story. On February 6th, a couple of weeks after Donald Trump returned to the White House, he met with Republican lawmakers to discuss his tax and spending plans. He was looking to extend the huge pro-business tax cuts that Republicans had pushed through during his first term and to enact a pair of more populist proposals he had campaigned on in 2024: exempting tips and seniors’ Social Security payments from federal taxes. But, as the budget deficit stood at about 6.4 per cent of G.D.P., a very high figure historically, the President and other G.O.P. leaders were under pressure to find revenue raisers and spending cuts that would offset the cost of the policies.

Shortly after the meeting, the White House press secretary, Karoline Leavitt, told reporters that the Administration wanted to eliminate a notorious tax loophole from which some of the richest financiers in the country had benefitted for decades. The loophole, known as the carried-interest deduction, allowed managers of hedge funds and private-equity funds to classify some of their earnings as investment gains that are taxed at a much lower rate than regular income, thus reducing their over-all tax liabilities. Getting rid of it offered not only the prospective benefit of raising money but also an opportunity to boost Trump’s populist credentials.

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