Taxes

The GOP’s Tax Cuts Were Even Less Stimulative Than We Thought

JM Ashby
Written by JM Ashby

Republicans claimed their package of tax cuts for corporations and rich shareholders would send economic growth soaring as high as 4 percent. They claimed it would lead to a dramatic new wave of investment and higher wages for average Americans. They said it would lead to higher sustained growth than we ever saw under the Obama administration.

We already know that none of that happened, but this morning's report from the Commerce Department tied a nice bow on it.

Economic growth for 2018 -- the first full year that the GOP's tax cuts were on the books and a period when the effect of those tax cuts was suppose to be the most potent -- was drastically revised downward this morning.

WASHINGTON (AP) — The government says the U.S. economy grew more slowly in 2018 than it previously estimated, downgrading its estimate from 3% to 2.5%. President Donald Trump had frequently boasted of the 3% growth figure as evidence that his policies invigorated the economy.

The Commerce Department lowered its estimate of growth from the fourth quarter of 2017 to the fourth quarter of 2018 mainly because businesses spent less on buildings, equipment and software than it had earlier thought.

Investment was even weaker than earlier though.

Maybe -- I know this sounds crazy -- but maybe the economy would actually grow as much as 4 percent if we spent $1.5 trillion on infrastructure instead of tax cuts for people who don't need a tax cut.

Is the world a better place today because the richest people in the world gave themselves a payday by buying back their own stock?

  • Badgerite

    A 2.5 growth rate is hardly anything extraodinary and the bill for all of this spending the gop is doing on windfalls for corporate CEO’s, board members and shareholders is going to come due and will result in cut backs in government spending that will contrict the economy. I don’t think trump has ever known how to do anything other than spend money and evade the law.

  • muselet

    Maybe — I know this sounds crazy — but maybe the economy would actually grow as much as 4 percent if we spent $1.5 trillion on infrastructure instead of tax cuts for people who don’t need a tax cut.

    But … but … but … Socialamism! Big gummint! Unleash the magic of the free market!

    Bleagh.

    I’m with you. Invest in infrastructure (however defined), stop shoveling wealth upward and the economy will grow, or at least stop contracting quite so rapidly.

    Rs’ ability to ignore empirical evidence is breathtaking.

    –alopecia