Tax Cuts, Economic Growth, İnequality

Tax Cuts, Economic Growth

Trump’s Fiscal Recklessness Threatens Social Security And Medicare

While in Davos, Donald Trump was pressed on the larger budget deficits that his 2017 tax law created. In response, Trump hinted that he would look to cut Social Security, Medicare, and Medicaid in his 2nd term

24.1.2020

While in Davos, Donald Trump was pressed on the larger budget deficits that his 2017 tax law created. In response, Trump hinted that he would look to cut Social Security, Medicare, and Medicaid in his 2nd term

Donald Trump promised another round of tax cuts while in Davos. He boasted about strong economic growth , that wealth is no longer concentrated at the top and that revenues increased more than expected, presumably all because of the 2017 tax cuts . Alas, these claims are not supported by the data.

underlying argument went as follows. Giving corporations massive tax cuts and showering the richest households would make them flush with money to invest. This would lower the cost of investing and result in a spending boom on new manufacturing plants, office buildings, vehicle fleets and energy upgrades, among other things. More investment would then boost productivity growth, raise wages and increase employment. And because the tax cuts would unleash a torrent of investment and economic growth, they would even pay for themselves, Trump and his team claimed. To be clear, the entire argument in favor of trickle-down tax cuts rests on the assertion that making financial capital more readily available would boost productive investment. This argument was clearly untethered from reality in 2017 as the relevant data show. Interest rates were very low. Companies already had enough money because they had been highly profitable for almost a decade. They just decided to not use their riches to increase productivity, but to keep their shareholders happy. The Federal Reserve helpfully releases quarterly data on the finances of nonfinancial corporations, which are responsible for the overwhelming majority of investments. My calculations based on these data show that corporations already sat on $4.5 trillion (in 2019 dollars) in late 2017. This amounted to well over 10% of all of their assets and the highest such share since 2002 (see figure below). There is no doubt that the recipients of the corporate tax cuts already had a lot of money available before they got their windfall from Congress and the Trump administration. Corporations Continue to Hold Large Amounts of Cash Calculations Based on Federal Reserve, Financial Accounts of the United States The problem is that they just decided not to boost investments, once they got more money. Capital expenditures from nonfinancial corporations have remained pretty much where they had been for several years before the 2017 tax cuts (see figure below). And more recently they have declined. Corporate Investments Did Not Accelerate After The Tax Cuts Calculations Based On Federal Reserve, Financial Accounts Of The United States Where did the money go then? Companies instead used most of their profits to keep shareholders happy. On average, nonfinancial corporations have used almost all of their profits to pay out dividends and buy back their own shares, which reduces the number of shares and boosts stock prices. In the two years before the tax cuts went into effect, corporations spend 90.3% of all of their profits before taxes on dividend payouts and share repurchases. Since the tax cuts went into effect, such spending remained high and amounted to 91.2% in the third quarter of 2019 alone. Shareholders, not workers and the economy, are the real beneficiaries from corporate largess. But the tax cuts cannot deliver on the promises of faster growth and higher wages if companies don’t invest. In fact, economic growth got only a very temporary boost in the first half of 2018 and has slowed since then (see figure below). Productivity growth continues to underwhelm by historical standards. And wage growth has slowed over the past year, even as employment levels have gone up. Growth Got Only Small Temporary Boost From Tax Cuts Calculations Based On Bureau Of Economic Analysis, National Income and Product Accounts The benefits of continued economic growth have also remained concentrated at the top since workers and the economy have hardly benefited from the tax cuts even as the wealthy pull farther ahead. Federal Reserve data show that the wealthiest one percent of households owned 32.2% of all wealth by September 2019, pretty much the same as the 32.3% they owned in December 2017. And, looking at the share of wealth in terms of income going to the top one percent, it was 25.5% in September 2019, very close to their 25.7% share of income in December 2017. Wealth is still concentrating at the top just as it was when the tax cuts were enacted, contrary to what Donald Trump claims. In addition, with growth staying ho-hum, the tax cuts cannot pay for themselves. Even when accounting for projected macroeconomic changes, the Congressional Budget Office projected that the 2017 tax cuts Read more: Forbes

Big surprise. That was the goal from the start. The people voting for Trump are the same people who'll suffer the most. conman Congress has known for decades that soc scty & medicare reforms are needed to keep programs solvent. With donor to recipient ratio approaching 1:1, the ss system is not sustainable in current form & needs reform for future recipients. Cowards have refused to act. It’s past time!

POTUS this would be truly robbing from the poor to give to the rich, a travesty for the Country. Which he lied and said he wasn’t going to do just last night. I'd like to see this video because there is no way Trump is going to do that

Is Trump open to making Medicare cuts?The president this week appeared to go back on an early campaign promise of not touching entitlements. I would actually look at the correct source of SocialSecurity for their statements. The President shouldn't be allowed and isn't to touch this. Not only does it affect half of the country, it'd essentially put Million's at Risk of Loss of Home.etc. And his supporters who are on Mediacare or collect Social Security will still vote for him because.....Trump supporters 🤷🏽‍♂️ Fake news!!!!

Column: Trump opens door to Social Security cutsTrump signals he's open to Social Security and Medicare cuts, despite promising during the last presidential campaign to leave the programs alone. He better not. Gotta pay SpaceForceDoD somehow. 🙄 His base will still vote for him!

Trump says reforming Social Security and Medicare is 'the easiest of all things' as he appears open to cutting entitlement spendingAny initiative to cut spending on Social Security and Medicare would be a break from his 2016 campaign pledge to protect funding for those programs. As easy as coming up with a better health care plan than the ACA? But we're still waiting on the Republican plan for the last three+ years. Trump wouldn't be afraid to release it, now would he? Next to running a casino or a university

Trump now says he's open to entitlement cuts, including MedicarePresident Trump signaled this week that he's open to cutting federal entitlements to reduce the federal deficit, despite previously campaigning on protecting Medicare and Social Security Maybe he shouldn’t have passed the tax law that gave tax cuts to the rich. 😡 Paul Ryan's utimate dream may come true. Sickening!! ThomasTkalinske He has Joe's vote.

Trump is threatening a damaging new trade war with the United Kingdom after Brexit - Business InsiderDonald Trump is threatening a damaging new trade war with the United States' closest longstanding ally. Trump is just destroying the world God Bless America 👻 His face looks mentally unwell trump

Twitter reacts to Trump saying he's open to cuts in Medicare and other entitlement programsAfter the president promised that he would work to avoid cutting Social Security and other programs, he now says he's 'going to take a look' at cutting the programs. Campaign promises broken, vowed to not touch SS. Admitted on CNBC interview he is going to take a look at 'entitlement programs'. I hope his base is listening. trump lies. Trump2020Landslide impotus45 ImpeachmentTrial VoteThemAllOut2020 Impeach Trump and remove him from office 🤬 Would Trump be opened to paying for all of his golf trips and ALL of the expenses that go along with it? That will help offset proposed cuts to Medicare.



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