After nine months of (what we were told was) very hard work, we finally have the closest thing to something of a tax plan from the Trump's chief tax architects; Gary Cohn and Steve Mnuchin.
Taken as a whole, the sparse nine-page document proposes much of what we expected to see: streamlining seven brackets into three, elimination of state and local deductions, repeal of the estate tax, major reductions on corporate rates and very real inducement for American companies to bring money back from overseas. It also proposes reforms that make it very difficult to pass politically, like effectively raising taxes on middle-class Americans while providing substantial relief to the wealthiest ones. It also more than likely creates a deficit so steep that the Senate will not be able to fit it inside a passable budget resolution now that repeal and replace has died on the vine.
What really caught our eye however was the total absence of the phrase "carried interest" in the document. Trump leaned in very hard on the notion of punishing those paper-pushin' "hedge fund guys" during the election, but this tax plan doesn't specifically eliminate the carried interest loophole and in fact generally actually benefits anyone still running a hedge fund. So it now seems that Trump's populist rage against asset managers has officially abated.
But why, you ask?
In addition to the fact that this administration has the ideological follow-through of an armless man swinging a heavy bat, the reprieve for hedge funders in this plan likely exists because it was formulated by a hedge fund veteran (Mnuchin), and a man destined to open his own hedge fund in the very near future (Cohn).
Steve Mnuchin is the very model of a modern Wall Street animal. The idea that he was ever going to propose a tax policy that did anything other than reward uber-wealthy financiers and then try to make up for that revenue loss elsewhere is fucking comical. Considering that the man is a human pass-through, everything in this plan benefits Stevie Mnooks. EVERYthing.
And then there's Gary Cohn. The former secondary face of Goldman Sachs will obviously benefit mightily from this plan, as will his former colleagues and his former firm. But if you really want to see what makes Gary's bald pate glow with excitement, cast your eyes to his near future. Despite recent reports, it is hard to imagine that Cohn is really back in line to replace Janet Yellen at The Fed. He's pissed Trump off once and survived, but it is beyond reason to imagine that he won't somehow do it again before February 2018. Gary Cohn's days inside The Beltway are numbered, meaning that we draw ever closer to watching Big Gary raise capital for his first bond fund at WhoLloyd Asset Management.
Mnuchin and Cohn can as much do away with carried interest loophole as their boss can do away with bronzer and self-delusion. These are guys who live to create wealth. A tax plan that punishes them for that in any way is an unfair thing to expect from Steve and Gary. The fact that they both come from Goldman Sachs doesn't make them instinctually more venal or nefarious, it just makes them better at getting what they want and more aware of their ability to get it.
Legend has it that JFK was once dead-set on including a line about the inherent duty of America's wealthiest to pay their fair share in a State of the Union speech but was prevented from doing so by his senior advisor Ted Sorenson. Sorenson allegedly explained to the president that the greatest flaw of the American Dream was that the working poor were always planning for the inevitable moment that they would become rich, and therefore did not like hearing about the wealthy paying more.
What President Trump seems to be learning from his chief economic advisors is that you can't do away with the carried interest loophole when the guys writing your tax plan are worried about that coming day when they find themselves at the helm of a profitable hedge fund.