Surprise! Republican Tax Plan Only Good for Rich People

Economic Rocket Fuel!

Congressional Republicans were giddy in late 2017 when they finally did a thing after spending most of the year fumbling around with healthcare “reform” and generally accomplishing nothing. The Great Republican Tax Plan was touted as “rocket fuel” for the American economy that would spur American investments and corporate growth, which in turn would trickle down to the middle class, yada, yada…

As the New York Times reports, that didn’t really happen:

Republicans sold the 2017 tax law as “rocket fuel” for American investment and growth, saying that corporations — flush with cash from lower tax rates — would channel money back into the economy by building factories and offices and investing in equipment, which would help companies grow and provide winnings for workers…

But, so far, hard evidence of such an acceleration has yet to appear in economic data, which show more of a steady investment roll than a rapid escalation. And while there are pockets of the economy where investment is picking up — among large tech companies and in shale oil business, for example — corporate spending on buying back stock is increasing at a far faster clip, prompting a debate about whether the law is returning money to the overall economy or just rewarding a small segment of investors. [Pols emphasis]

Data on the gross domestic product, released Friday, showed that business investment grew at a 6.1 percent annual clip during the first three months of 2018, down from 7.2 percent during the first quarter last year. Excluding oil and gas investment, which is particularly volatile, the investment pace grew slightly over the past year.

While the first-quarter investment numbers were more robust than they were in 2015 and 2016 — when a bust in oil prices curtailed a large chunk of American corporate spending — they weren’t radically different from the roughly 5 percent rate of growth for business investment that has prevailed since 2010.

Senator Marco Rubio (R-Florida) is getting flogged by right-wing Republicans for daring to point out the obvious: The Republican tax plan ain’t doing shit for the economy. Check out this quote from Rubio in the current issue of The Economist:

“There is still a lot of thinking on the right that if big corporations are happy, they’re going to take the money they’re saving and reinvest it in American workers. In fact they bought back shares, a few gave out bonuses; there’s no evidence whatsoever that the money’s been massively poured back into the American worker.” [Pols emphasis]

Perhaps Rubio’s buddy, Sen. Cory Gardner, saw this coming; Gardner regularly praised the legislation as something of a Christmas miracle, but he was noticeably absent in defense of the tax bill in the aftermath of its passage (he has since returned to cheerleading the legislation). American voters, meanwhile, were well aware of the problems with this turd long before President Trump signed it into law.

Gardner has another two years to worry about the electoral consequences of his tax vote, but this bill is coming due in November for Republicans like Rep. Mike Coffman (R-Aurora) and Rep. Scott Tipton (R-Cortez). Coffman shrugged off concerns about rising debt and in January scolded critics of the tax plan, telling KNUS radio that the stock market would have crashed had Republicans not acted when they did. Tipton, meanwhile, never even seemed to bother with trying to understand the tax bill that Republican leadership told him to support.

What was once billed by the GOP as its signature achievement of 2017 is turning into an issue that Republican candidates may avoid discussing altogether this fall.

4 Community Comments, Facebook Comments

  1. Davie says:

    Here's Nobel Prize-winning economist Paul Krugman's assessment:

    …according to a survey by the Federal Reserve Bank of Atlanta. A vast majority of businesses say either that the tax law has had no effect on their investment plans, or that they are planning only a modest increase.

    In short, the effects of the Trump tax cut are already looking like the effects of the Brownback tax cut in Kansas, the Bush tax cut and every other much-hyped tax cut of the past three decades: big talk, big promises, but no results aside from a swollen budget deficit.

    You might think that the G.O.P. would eventually learn something from this experience, realize that tax cuts aren’t magical, and come up with some different ideas. But I guess it’s difficult for a man to understand something when his campaign contributions depend on his not understanding it.

    But as you say, since it was passed by the GOP, Col. Mikey is Okey Dokey with the resulting $1.85 trillion increase in the deficit.

  2. JohnInDenver says:

    Good thing there was that stimulus to encourage corporate investment and money in consumers' pockets.

    "Ford Motor Co posted a 4.7-percent decline in sales compared to April 2017, with retail sales to consumers down 2.6 percent. The No. 2 U.S. automaker said sales of its popular pickup trucks were up 0.9 percent, but SUV and passenger car sales were down 4.6 percent and 15 percent respectively. "

    " Nissan Motor Co Ltd's sales hit quite a bump, plunging 28 percent in April. "

    " Fiat Chrysler Automobiles (FCA) was alone among the top sellers in the U.S. market, posting overall sales increase of 5 percent in April. But retail sales to consumers were down 1 percent while lower-margin fleet sales to rental car companies and government agencies were up 5 percent. "

    And it wasn't from a lack of trying:  "Auto makers spent about $3,700 per vehicle in discounts and other incentives in April, about 5% higher than a year earlier, according to research firm LMC Automotive. "

  3. Diogenesdemar says:

    Damn liberals.  Fake News!  . . . 

    . . .  It’s good for foreigners too!!!

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