Tax Day has come and gone. How are those cuts working out?
Spoiler alert: They’re not. Republicans sold their rush-job bill as a way to boost an already strong economy; my colleague Holden Miller boasted they would be jet fuel for growth and touted the year-end bonuses and wage growth so many got.
I argued that most people weren’t seeing increased paychecks, that the bonuses were one-time and heavily concentrated in a couple industries, and that they weren’t lifting up the economy as promised. Actually, in the long term, they’re putting an already strong economy at risk.
Every month we get more fresh evidence of that.
Stocks are flat
Trump likes to brag when the stock market hits record highs, even though he has little to do with it. He fudges numbers or shuts up when it takes a nosedive — like when he makes unpresidential personal attacks on companies like Amazon.
When Congress passed the tax law just before Christmas, the Dow Jones Industrial Average was at 24,727. Four months later? As of this writing, it’s at 24,593 but closed a little higher yesterday. Basically, though, it’s bounced up and down and gone nowhere because the tax cuts didn’t matter.
The market had been rising steadily without them, and it’s still doing great — but no greater than before the tax cuts.
Unemployment is flat
When the tax cuts were passed — and for two months before that — the national unemployment rate was 4.1. Today? Still 4.1. Has been for six months straight, after gradually coming down each month since the recession.
If anything, you could accuse the tax cuts of freezing the rate in place. We’ve only ever been “stuck” at an unemployment rate like this once before — in 1968, after which unemployment spiked.
But more likely is that we’re at about full employment — there’s some natural churn in people quitting their jobs, hunting for jobs, and taking on new ones. There hasn’t been an unemployment figure lower than 4.1 percent since the end of 2000, the last year of Clinton’s presidency, where it hovered near 4 percent all year.
That’s not to say there aren’t still new jobs coming every month. And, in theory, those jobs should pay better — as employers compete for the same workers who already have jobs. But that doesn’t seem to be happening any faster than it was before tax cuts.
On top of that, the strong job numbers Trump cheered earlier this year have been revised downward to less impressive figures. (I’ve cautioned before about looking too closely at any one month’s job numbers, especially the newest number which is always subject to dramatic revision.)
Let’s not forget Trump promised 25 million jobs over 10 years thanks to his presidency, and in part to his tax plan. That means he needs to average 2.5 million a year.
So far we’ve got exactly 2.5 million — but for 14 months, not 12. So we’re behind track even in a solid economy, which is a little further behind than when I wrote about the issue last August, and despite a really strong February. Guess tax cuts aren’t doing the trick. Who knew economics could be so complicated?
We’re likely to fall much shorter of Trump’s goal if things get worse. And speaking of things getting worse…
The deficit is ballooning
The real measurable impact of the tax cuts is an explosion in the federal deficit, something Republicans — especially House Speaker Paul Ryan — used to actually care about when Obama was president.
Now, thanks to the tax cuts and Republican-controlled budgets, the annual deficit is going to top $1 trillion by 2020. The national debt, already above $21 trillion, will bounce up to $33 trillion by 2028.
“The fear among some economists is that rising deficits will drive up interest rates, raise borrowing costs for the private sector, tank stock prices and slow the economy, which would only drive the deficit higher,” The New York Times writes. Uh oh — at least we’ll have much higher wages and retirement savings thanks to the tax cuts. We’ll be able to deal with it, right?
Article last modified on July 12, 2018. Published by Debt.com, LLC . Mobile users may also access the AMP Version: So Far, Trump’s Tax Cuts Are Failing - AMP.
Article last modified on July 12, 2018. Published by Debt.com, LLC .