As is well known, we don’t think much of Congress.
They finally did the tax cut, but the hue and cry about adding to the deficit is alarming in that it betrays so much ignorance about history and macroeconomics.
First, history: when taxes were cut by Kennedy in the ’60s and Reagan in the 80s, the economy took off. If the line was held on spending, we got an economic surplus in four or five years from increased tax revenues. This seems lost on all the punditry, save possibly Rush Limbaugh. Might happen sooner in this case to breakeven, because they only have about 150 billion in lost revenues to make up. That’s about 10% of GDP.
And, Trump’s folks are beavering away cutting non-defense spending. How much we don’t know, but EPA has been gutted by Pruitt, Education the same by DeVos, and Tillerson, against all the Deep Staters at State, looks like he’s cutting, too. We don’t see increases out there, except in defense. They’re even rejiggering Medicaid.
Second piece of history: corporate taxes had to be cut, otherwise headquarters are going abroad to save taxes. This is new, as more companies are multinational. We would imagine some of the increased profits will go to employees, and some to buy new equipment. Not commented on much is the fact that a company can deduct ALL of machinery purchase prices made in 2018 from taxes. This in a big improvement!
C’mon media. I know economists are in short supply, but go find a few to commentate that know what they’re talking about.