Trump Inflates Size of Tax Cuts by $4 Trillion in Speech to Farmers

NASHVILLE, Tenn. — President Donald Trump delivered an economic victory lap during a speech to farmers on Monday in which he vastly overstated the size of the tax cuts passed by Congress late in 2017 and played up a rollback of regulations on U.S. businesses.

Declaring that the “American dream is roaring back to life,” Trump — who has made clear that he likes big numbers — claimed that the tax overhaul cut taxes by $5.5 trillion when, in fact, the legislation will reduce the overall tax burden on individuals and companies over the next decade by $1.5 trillion, or $4 trillion less than what he cited.

“We have just signed into law the most significant tax cuts and reforms in American history — it’s a total of $5.5 trillion in tax cuts,” Trump said, adding that most of those benefits would go to “working families, small businesses and — who? — the family farmers.”

Trump apparently chose to highlight just one side of the ledger — the total amount of tax reductions in the bill that he signed in December — without counting the amount of taxes that were increased in the same legislation to help pay for the bill. White House officials declined to respond to questions about the president’s $5.5 trillion figure.

The new law cut taxes on businesses and individuals but also eliminated many breaks that companies and families rely on to lower their tax burden, effectively raising taxes on some. For instance, while the tax bill cut the corporate rate to 21 percent from 35 percent, it also eliminated several business tax breaks, including one used by some farmers. The bill also scaled back many individual tax breaks, such as the state and local tax deduction and the mortgage interest deduction, to help keep the overall cost of the bill to $1.5 trillion.

The inaccurate boast was part of a speech in which the president sought to underscore the benefits that middle-class families would receive as part of the tax overhaul, which he described as “massive tax cuts” after “years of crushing taxes, crippling regulations and corrupt politics.” To applause from thousands of farmers in the audience, Trump said the tax cut would exempt most family farms from the estate tax.

“From now on, most family farms and small business owners will be spared — and it really is the word punishment — of the deeply unfair estate tax known as the death tax, so you can keep your farms in the family,” Trump said.

In reality, only about 80 small businesses and farms would fall under the estate-tax tent this year, according to the nonpartisan Tax Policy Center. The new law, which exempts more estates from the tax, will primarily benefit the richest Americans. The president drew thunderous applause by celebrating the reversal of a regulation known as the Waters of the United States, which many rural landowners had opposed.

“We are streamlining regulations that have blocked cutting-edge biotechnology, setting free our farmers to innovate, thrive, and grow,” he said. “Oh, you are so happy you voted for me. You are so lucky I gave you that privilege.”

The president used the speech to offer a preview of the political message he will deliver to voters as lawmakers prepare for the midterm elections in November. Democrats in Congress, he warned, will try to reverse the tax cuts — which passed entirely along party lines without a single Democratic vote — if they seized the majority this year.

“If the Democrats ever had the chance, the first thing they would do is get rid of it and raise up your taxes, sometimes by up to 40, 50, 60 percent more than you have right now,” Trump said.

The $5.5 trillion tax figure began circulating last month in a White House news release playing up Trump’s accomplishments for the year. It claimed the tax bill “provides $5.5 trillion in tax cuts, of which $3.2 trillion, or nearly 60 percent, goes to families.”

That, too, is misleading: Individuals receive a net tax cut of $1.1 trillion over 10 years under the new law, according to the Joint Committee on Taxation. And that falls to less than $1 trillion when excluding tax cuts for business income from so-called pass-through companies, which are taxed through the individual code.

The White House’s cherry-picking is also raising hackles among some economists. At a meeting of economists in Philadelphia over the weekend, Kevin Hassett, the chairman of the White House Council of Economic Advisers, drew criticism from liberal economists for claims that centered on one tax cut in the bill while excluding a related tax increase. Hassett showed a slide indicating that a large portion of the fiscal cost of the bill was related to its expansion of the child tax credit — without mentioning the elimination of dependent exemptions, which essentially offset the gains from the child credit for many families.

Trump’s speech to the annual Farm Bureau convention, the first for a president in more than two decades, came as the administration released a report about the need to improve America’s rural economy. The report proposed a new focus on issues such as expanding rural access to broadband, improvements to health services in farming communities, workforce training and the use of biotechnology.

“Unleashing the potential and ingenuity of rural communities is an integral part of making America great again,” the 43-page report states.

The president called for the document in an executive order in April and federal officials convened discussion groups with farmers around the country. The agriculture secretary, Sonny Perdue, said in the report that “while other sectors of the American economy have largely recovered from the Great Recession, rural America has lagged in almost every indicator.”

On Monday, Perdue told the farmers that the report detailed “the problems that we aim to solve.”

But even as the administration promotes its efforts on behalf of farmers, some of those tending the fields are not so sure of Washington’s approach. They worry that the president’s trade policies have the potential to negatively affect their ability to export their products around the world. And some are angry about new tax provisions that could actually lower tax benefits for small, low-earning farms.

Advocates for farmers and trade analysts say Trump’s protectionist approach to trade has the potential to shrink the market for food producers in the United States. The president withdrew the country from the Trans-Pacific Partnership, a trade deal with Asian nations. And he has threatened to pull the U.S. from the North American Free Trade Agreement, which has bolstered exports of meat, grains and other commodities. Many of Trump’s supporters in the 2016 presidential election come from farming communities. But some now question whether the president’s trade policies are contributing to an advantage for their foreign competitors in countries that are continuing to form trade pacts around the world.

Trump has promised to negotiate better one-on-one trade deals with other nations, but he has yet to demonstrate much progress toward that goal. In the speech on Monday, he again pledged to negotiate new and better trade deals, particularly with Canada and Mexico.

“We are reviewing all of our trade agreements to make sure they are fair and reciprocal,” he said. “We are going to make it fair for you people again.”

After the speech, the president traveled to Atlanta to watch the College Football Playoff national championship game between Alabama and Georgia.