It appears that the long-awaited Republican tax reform plan will be signed by President Trump by Christmas. It grants a large, permanent tax reduction to wealthy individuals (like Trump) and corporations, and a much smaller, temporary tax cut to the middle class.
They’re Republicans…what did you expect?
Of course, the genius behind this tax reform plan is that it is supposed to jump-start the American economy. If it does, it will be the first “trickle-down” economic stimulus to have ever done so…despite numerous attempts.
Even figuring in the GOP-projected economic boom that will surely be generated by this tax cut (yeah, that’s going to happen!), the plan will balloon our National Debt by $1.5 trillion in ten years. If those pie-in-the-sky revenue projections are off, skies the limit!
What we know for sure are two things: (1) The wealthiest 1 percent of American households will become wealthier; and, (2) Donald Trump will declare that the plan is, and has, achieved its purpose…even if it fails to do so. Because that is what he does…he lies alot.
And, in the event that there is a catastrophic failure, like a stock market crash or banking meltdown (like the one ten years ago under President Bush), we can pretty much assume right now that the blame will go to: (1) Barack Obama; (2) Hillary Clinton; or, (3) both of them. Basically, whatever conspiracy that Fox News comes up with.
As has been previously noted, the last time large tax cuts were given to corporations (in the misguided hope that they would invest the “found money” in the economy), the windfall was used primarily to buy back stock. This will probably happen again, which will not stimulate economic growth. But, large GOP donors will be ecstatic.
A problem that Americans are going to have over the next several years is determining exactly what the effect of the tax plan is. This is because the Federal agencies that generate economic reports are now managed by Trump appointees, and, if there is anything that we’ve learned about Trumpism, it’s that facts are not germane to a discussion about anything. The truth, as seen by this President, is anything that he wants it to be, and, by extension, anything that does not conform to the Trump reality is “fake”. So, economists are probably going to be seeing some “funny numbers” cropping up in Federal digests over the next year or two, spoon-fed to the Prez by Fox News “experts”.
For example, yesterday the President was bragging that, under his Presidency, the stock market has set a record performance for the first year of a presidency…up 21 percent. Actually, though, several of his predecessors did better, including George Bush Sr., John F, Kennedy, and Franklin Roosevelt. In fact, the current Bull Market on Wall Street is 103 months old; Trump can claim credit for 11 months, at best, while the other 92 months belong to Barack Obama.
It is problematic to use the stock market as an indicator of the overall economy, particular in the first year of a presidency, because the policy impact of the new administration hasn’t yet been felt. Nobel Prize-winning economist Paul Krugman notes that the first year’s “achievements” are normally attributed to the outgoing administration’s policies. According to Krugman, the economy has been adding jobs for about five years, is near full-employment, and the rate of increase is leveling off. It remains to be seen if the Trump tax reform initiative will have any impact on the overall jobs picture.
The rosy promise of the GOP tax reform measure has also already been factored into the Wall Street gains of 21 percent in 2017. Unless something substantial occurs to further the enthusiasm, the current Dow Jones levels could represent a “bubble”; i.e nearing the top of the curve. If Americans have learned anything over the past one hundred years, it’s the old axiom of “what goes up, must come down”. So, it’s not a matter of if the Stock Market will readjust itself, it’s a matter of when that will occur.
President Trump will brag about its performance until the day after the inevitable major adjustment or worse.
Then, he’ll blame it on the usual suspects: (1) Obama; (2) Hillary; or, generically (3) the Democrats.
And Fox News will agree with him. You can take that prediction to the bank.