Fear: Trump in the White House(96)

About $4 trillion, Trump said, even more—possibly $5 trillion.

Cohn had a chart that showed it was $2.6 trillion.

At one point the president proposed raising the top income tax rates—currently 39.6 percent at the highest bracket—for earners in exchange for drastically lowering the corporate rate.

“I’ll take the personal top rate to 44 percent if I can get the corporate rate to 15 percent,” Trump said.

Cohn knew that was crazy, though he realized Trump, with all his real estate and other deductions, had probably never, or rarely, paid the full 39.6 percent.

“Sir,” Cohn continued, “you can’t take the top rate up. You just can’t.”

“What do you mean?”

“You’re a Republican,” explained Cohn, who was a Democrat. Republicans were always for lower personal income tax rates. Republicans were the party of Reagan, who had lowered the top federal income tax rate from 70 percent to 28 percent. “You will get absolutely destroyed if you take the top rate up.”

Trump seemed to understand.

Cohn had a packet of Goldman Sachs–style charts and tables to educate the president on taxes. Trump was not interested and did not read it.

At a meeting in the Oval Office, Trump wanted to know what the new individual income tax rates would be.

“I like these big round numbers,” he said. “Ten percent, 20 percent, 25 percent.” Good, solid numbers that would be easy to sell.

Mnuchin, Cohn and Office of Management and Budget Director Mick Mulvaney said there needed to be analysis, study and discussion on the impact on revenue, the deficit and the relation to expected federal spending.

“I want to know what the numbers are going to be,” Trump said, throwing out numbers again. “I think they ought to be 10, 20 and 25.”

He dismissed any effort to crunch the numbers. A small change in rates could have a surprising impact on taxes collected by the U.S. Treasury.

“I don’t care about any of that,” Trump said. Solid, round numbers were key. “That’s what people can understand,” he said. “That’s how I’m going to sell it.”



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The central feature of Cohn’s tax reform packet was on the first page: “Increasing economic growth from 2 percent to 3 percent” would create $3 trillion in budget savings over 10 years.

“Sir, if we can get from 2 to 3 percent, that’s all we’ve got to do, we could pay for the tax plan,” Cohn said. The more economic growth, the more taxes the government would collect. Simple in theory, but it would be hard, perhaps impossible, to get 3 percent growth—often a Republican fantasy.

Trump liked the idea. He was infatuated with the simplicity and started using variations of high economic growth in speeches.

Cohn tried to explain that during the Reagan era the U.S. economy had been very competitive and other countries had begun cutting their taxes. There was plenty of history and technical detail.

“I don’t give a shit about that,” Trump said.



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On Monday nights, Speaker Paul Ryan hosted an Italian buffet in his conference room for the six main tax reform players representing Congress and the administration. Known as the “Big Six,” they were Ryan, McConnell, House Ways and Means Committee chairman Kevin Brady, chairman of the Senate Finance Committee Orrin Hatch, Mnuchin and Cohn. The group was a Democrat’s nightmare—five conservative Republicans and the former president of Goldman Sachs revising the tax code.

The group came up with four principles: simplification of the tax code, tax relief for middle-income families, job creation and wage growth, and bringing back and taxing the trillions of corporate dollars stashed overseas.

Cohn’s approach to the congressional leadership was to treat them like gold. In his decades in the client service business at Goldman, everyone was treated as the most important client. He had told his clients there, “I’m available 24/7. You want to talk, we talk.” The customer was always first, and only the customer counted. Now the congressional leadership was, for the moment, the only customer.

Mnuchin had alienated some Republican House members early on in the administration by insisting they had to vote for certain continuing budget resolutions and for the debt ceiling, the limit on how much the government could borrow.

OMB director Mick Mulvaney, who had served six years in the House, reported to Cohn that one Republican told Mnuchin: Mr. Secretary, the last time someone told me what I had to do, I was 18. It was my dad. And I never listened to him again, either.

Later, Mnuchin proposed capping the amount of business income a taxpayer could pay at the lower personal income tax rates—known as “pass-throughs.” He said some 95 percent of the pass-through tax returns were below $350,000 in annual income.

No, Ryan and Brady said. That was the dumbest idea they had ever heard. Mnuchin had not accounted for the other 5 percent of pass-through tax returns, which included huge mega-donors to the Republican Party like the Koch brothers.

Mnuchin went behind Ryan’s and Brady’s backs to try to enlist some House Republicans.

Mulvaney threw a note on Cohn’s desk: If you want to get tax reform done, keep Mnuchin out of the Capitol.

Cohn reported this to Kelly. As the tax negotiations intensified in November, Mnuchin went on a tour of the country, speaking and selling the tax plan alongside Ivanka in California on November 5 and 6 and New Jersey on November 13, and on his own in Ohio on November 14.