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10/30/2018 5:40 am  #1

Trump tax cuts fail to spark investment boom

Trump tax cuts fail to spark investment boom

The wait goes on for the business investment boom that Republicans promised the corporate tax cut would unleash. 

That warning sign flashed beneath the Friday headline that the economy continued to expand at a brisk 3.5 percent through the third quarter. 

It suggests that an economy that just recorded its most robust growth in back-to-back quarters since 2014 may be running on a sugar high that’s close to burning off. And it points to the possibility of a worst-case scenario for the tax cut’s boosters — that the law is failing in its central goal of encouraging the sort of business spending (on improved technology, more efficient factories and the like) that will end up boosting productivity, thereby creating more widespread prosperity. 

Specifically, business investment edged up by a meager 0.8 percent during the three-month period, accounting for just .12 percent of total GDP growth. As the New York Times’s Ben Casselman points out, increased spending on intellectual property accounted for most of that activity. Spending on commercial buildings fell by nearly 8 percent after climbing 14.5 percent in the second quarter:

It’d be unwise to draw sweeping conclusions from a single report. Independent economists defending the tax cut say it will take years for its full benefits to manifest. But business investment should be on the leading edge of the virtuous cycle the law aimed to spark. And Council of Economic Advisers Chairman Kevin Hassett argued in a presentation from the White House briefing room last month that a new private spending boom initiated by the tax cut was not only well underway and observable in the data but also yielding a pay bump for workers. 

Instead, spending by both consumers and the federal government helped drive third-quarter growth. But the Federal Reserve, for one, expects a slowdown in the months ahead, predicting 2.5 percent growth next year that will cool further to 2 percent in 2020.  

“The big picture… is how little Trump has done to change our long-term economic outlook. His tax cut certainly seems to have juiced growth this past year, but since it wasn’t paid for, it has also made the Federal Reserve raise rates enough that its net effect should be pretty close to zero by the end of the next year or so,” Matt O’Brien writes for The Post’s Wonkblog. “Unless, of course, companies do start investing far, far more than they are right now.”

We live in a time in which decent and otherwise sensible people are surrendering too easily to the hectoring of morons or extremists. 

10/30/2018 7:25 am  #2

Re: Trump tax cuts fail to spark investment boom

The ONLY ones who got the big boost --- the PERMANENT Big Business giveaway ! 

And... as noted many of them put that money to work in stock buybacks and shareholder dividends. 

The cost ?  
A cool $Trillion added to our deficit for our kids to pay. 


"Do not confuse motion and progress, A rocking horse keeps moving but does not make any progress"

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