From the floor of a suburban Cincinnati factory, a buoyant Donald Trump was extolling the virtues of his trillion-dollar tax cut for working families when Fox News abruptly cut away from the president.
The Dow was “cratering”, Shepard Smith, a Fox News host, announced on Monday. “No one has ever seen a point drop just like we just witnessed”.
It was an unpleasant split-screen moment for Mr Trump, who has tethered his reputation to a booming stock market and revving economy.
As Republicans prepare for the 2018 Congressional midterm elections, the stock market plunge was a setback just as polling evidence suggested their tax cuts were winning over voters.
Democrats have been counting on hostility to the president to drive turnout among their supporters in November’s midterm elections as they seek to make inroads on Capitol Hill. Yet opinion polls have raised questions about the likelihood of a blowout Democrat victory.
Since the Republicans passed their tax bill in December, the Democrats’ lead in the 2018 midterms has shrunk from 13 points to 6.6 points, according to a poll tracker from RealClearPolitics. Alongside strong figures for economic growth and job creation, the revival in Republican fortunes has been driven by improving perceptions of the tax reforms.
A poll by Monmouth University last week showed that while public opinion on the tax legislation was divided, with 44 per cent in favour and 44 per cent against, there has been a significant swing in support since December, when just 26 per cent of people approved.
Patrick Murray, director of the Monmouth University Polling Institute, said it was possible that opinion could improve further as employers build the Internal Revenue Service’s new tax tables into employees’ paychecks. Mr Murray said it was not just a question of the absolute change in pay but also individuals’ perceptions of whether they got “a fair share of the tax cut”.
Some voters have already made up their minds. In Effingham, Illinois, Tony Griffith responded to the tax reform by awarding each of the 60-plus workers at his trucking and moving companies with a $1,000 bonus doled out in $20 weekly instalments.
“When I saw that tax plan I knew right there, that we’d save $50,000 or $60,000 off our taxes next year,” he said, adding that the market rout felt like an expected, and shortlived, correction. As for the economy, “I’m just hoping it snowballs,” he said.
The apparent shift in public opinion on tax reform comes as Democrats seek to paint the GOP as a party intent on helping large companies and corporate bosses rather than ordinary voters, playing up the notion that the tax reforms are inequitable.
In recent days, Democrats have attacked Paul Ryan, the Republican House speaker, for posting a tweet he subsequently deleted in which he trumpeted that a Pennsylvania public high school secretary had been “pleasantly surprised” to see her pay go up by $1.50 a week on the back of the tax overhaul.
“Paul Ryan deleted his embarrassing tweet of a blatant admission because he and Republicans don’t want you to know the truth: the #GOPTaxScam is a gift to corporate America and the top 1% at your expense,” Nancy Pelosi, the House minority leader, tweeted.
Ms Pelosi, meanwhile, has been attacked by Mr Trump and other Republican politicians for suggesting that, while US corporations and millionaires were enjoying a “bonanza” from the tax cuts, working-class Americans were being given “crumbs”.
Chris Jackson, a pollster at Ipsos, said Mr Trump’s decision to link his performance so closely to that of the stock market was potentially risky, given the market is not fundamentally in the president’s control. However it would probably take a far more sustained equity market rout for the public mood to be significantly shifted.
Polling that preceded Monday’s plunge suggested attitudes to the economy have been positive. Two out of three voters surveyed by Quinnipiac last month, for instance, thought the economy was “excellent” or “good”. Consumer confidence surveys have also been strong: the January reading from the Conference Board was close to a 17-year high.
Yet history suggests Mr Trump’s approval ratings will also be critical in determining the outcome of the midterm elections, and here the picture for the Republicans remains grim. According to the RealClearPolitics tracker, Mr Trump’s approval is stuck at about 42 per cent, only a slight improvement from the lows of December.
Research from Gallup suggests that if a president’s approval rating is below 50 per cent, their party had tended to lose an average of 37 seats in the midterms.*
That is a sobering statistic for Mr Trump: according to Gallup, his average approval rating during his first year in office was about 10 percentage points below that of any other president.