Tax cuts collide with inflation as voters weigh Trump's economy in the midterms

RALEIGH, N.C. (AP) — Standing behind a downtown bar, Evan Duke smiled when he thought about no longer paying federal income tax on the hundreds of dollars in tips he earns on a busy night pouring beers and mixing drinks.

But the 30-year-old said he cannot afford health insurance and worries about how higher costs for rent, food and fuel are affecting him and the patrons who slip cash into the jar at Pearl & Peril.

“It’s kind of messy right now,” Duke said.

Duke's dilemma is an economic microcosm of Donald Trump's second presidency. Although the Republican president has tried to put more money in middle-class pockets with tax cuts, the benefits are being eroded as prices keep rising, especially during the war with Iran. The latest numbers, released Tuesday, showed the rate of inflation continued to climb.

It's a financial tug-of-war shaping people’s lives as they consider the upcoming midterm elections, which will determine control of Congress during the final two years of Trump's tenure.

All of these economic issues have been center stage in the battleground state of North Carolina and its U.S. Senate race. Michael Whatley, the Republican nominee and former national party chairman, is championing Trump's tax overhaul. Roy Cooper, the Democratic candidate and a former governor, is panning Trump's management of the U.S. economy.

Duke, a registered independent, isn't sure who he'll support. Like a lot of Americans who vote with their wallets, he expects to decide based on “how things are going at the time.”

“I’ve got to do more research,” he said.

Polar opposite views of the same law

The dividing line is what Trump called “the one big beautiful bill,” his signature legislation that cuts taxes but also reduces funding for public programs like Medicaid.

When Whatley recently appeared with Vice President JD Vance in Rocky Mount, he said the midterm elections were about “protecting no tax on tips, no tax on overtime, no tax on Social Security.”

Some of the claims were an exaggeration. For example, the legislation does not entirely eliminate federal levies on overtime. But his remarks showed how much Republicans want voters to see the legislation as a “working families tax cut,” as they've taken to calling it.

“I don’t know about you, but I sure trust you to spend your money better than a federal government in D.C.,” Whatley said.

Tracy Brill, 62, a Trump supporter in the audience, said she was willing to cope with rising costs due to the war.

“The course he’s taken is spot on,” she said, adding that “I believe the other presidents didn’t do what they should have done.”

Cooper and Democrats have focused their pitch around what they call the “affordability crisis.” They emphasize health care costs and Republicans’ refusal to extend expanded subsidies for Affordable Care Act premiums. And they highlight housing and utility prices, hikes on consumer goods affected by Trump’s tariffs, and ripple effects from the president’s Iran war on everything from fuel and farmer’s fertilizer costs to groceries.

“It seems like everything that Washington is doing is driving up costs across the board,” Cooper said in Greensboro.

It's a convenient turnabout for Democrats. President Joe Biden and his party had previously faced blame for inflation, which Trump capitalized on in his comeback campaign, but now Republicans shoulder the brunt of voters' angst.

Republicans have a larger margin in the U.S. Senate than in the U.S. House, but Democrats believe economic dissatisfaction gives them a shot at full control of Congress. North Carolina is a top target along with Maine, Ohio and Alaska. There are even hopes that Iowa and Texas could be competitive, too.

Economic anxiety adds to Republicans' challenge

Democrats have long struggled to win Senate seats in North Carolina, but they believe they have a better shot this year because Republican incumbent Thom Tillis is retiring.

Cooper also enjoys a centrist reputation and has won six statewide elections already, including two gubernatorial contests in cycles when Trump carried North Carolina. Whatley has deep ties in Republican circles as a former lobbyist and longtime party leader, but he’s not yet well known to voters.

Phyllis Aycock, a 79-year-old antiques store owner in Nash County, is leaning toward Cooper even after voting for Trump three times. She said she regrets her most recent vote for the president.

“It’s the whole trickle-down effect,” Aycock said, explaining that economic uncertainty and inflation, including premium hikes on health insurance that supplements her Medicare and cancels out Social Security cost-of-living adjustments and any tax breaks she's received during Trump’s tenure.

She said she wonders whether Trump “even thinks about the cause-and-effect of what he does or what he doesn’t do, how it directly affects us, and when I say ‘us,’ I definitely mean the middle-class, lower-class working people, the blue collar, the ones that pay the taxes.”

“It just seems like there’s no relief for us, like it’s all for the guy who has everything already,” she said.

Aycock and her son, Michael, said they’ve seen foot traffic and purchases at their store decrease, which sits a few doors down from the law office where Cooper and his father once practiced. The elder Aycock said she doesn’t know Cooper personally but has voted for him before and would consider doing so again.

As for Whatley, she’s heard only fealty to Trump. She tightened her lips, then said, “I’m worried he’s just a yes man. We’ve got enough of those.”

Cooper leans on North Carolina's Medicaid expansion

During Cooper's second term as governor, he convinced the Republican-run Legislature to expand Medicaid — a government insurance program for low-income or disabled adults and children in poor or working-class households — under President Barack Obama's Affordable Care Act. Cooper talks about that program alongside his criticism of Republicans' refusal to extend pandemic-era subsidies for private insurance plans.

The issue has drawn supporters like Emily Miller, a 43-year-old from Greensboro who volunteers on various voter turnout efforts that benefit Democrats.

“Medicaid and the Affordable Care Act absolutely have saved my life,” said Miller, who has physical health problems. As a Kentucky and then North Carolina resident, she leaned on the 2010 law’s benefits between her time as a public schoolteacher and her return to the workforce as an education consultant.

When she didn't have a full-time job, Miller said, she required expensive medical care, including some inpatient mental health services. She said her part-time jobs at the time would not have covered private insurance costs, much less direct market rates for her treatment.

“I’m very grateful I’ve gotten back to a place where I’ve got a career again,” Miller said, with employer-based coverage. “I’m an example of exactly what this system is supposed to do. It was a bridge. And so many people, people who are working, are struggling like that.”

Miller is also skeptical that people will benefit from Trump's legislation to cut taxes on overtime pay.

“I had an overtime-eligible job,” she said, “and I had bosses who would send us home before we got those extra hours.”

Yet for Cooper to win, he also needs to energize apathetic voters, including some Democrats.

James Outlaw, a 60-year-old in rural Bertie County, said he'll probably vote in November but doesn't see things improving regardless of the outcome.

“It won’t get no better,” he said, as he filled in his lotto numbers at a local convenience store. “Never does.”

Duke's decision

Back behind the bar in downtown Raleigh, Duke looked forward to the coming weekend, which would bring thirstier crowds and, hopefully, more tips.

He said he appreciates getting “a few thousand dollars” from the tax breaks, and he said he’d “at least look at” Whatley, the Republican candidate. But he also thinks of the back-of-the-house workers who don't earn tips and won't benefit from it.

As for his lack of health insurance, Duke said that's not enough to guarantee his vote for Cooper, even as he remembered the Democratic nominee as “a pretty good governor.”

“I’m healthy, and I can pay rent,” he said.

That may be the outlook Republicans need as they urge voters to be patient. While speaking in Rocky Mount, Vance assured the audience that Trump wouldn’t let the economy languish.

“He constantly is pressing on the gas,” Vance said. “He wants us to do more.”