It's official: Trump's tax cuts were an economic bust

[sandensea]

US GDP grew by 2.3% in 2019 - well below President Trump's promise of 3% growth.

The most recent GDP number also proved that the tax cuts championed by Trump and the GOP did nothing to substantially boost the economy.

Anyone who looked at history or has some knowledge about economics knew this would be the case.

The administration's bullish forecast was based on the belief that the tax cut passed by Trump and the Republicans at the end of 2017 would increase the economy's trend growth rate.

Trump and his economic team have long argued that the tax cuts — especially the big drop in the corporate rate from 35% to 21% would kick off a virtuous cycle delivering lasting growth above the roughly 2% that has prevailed for the past two decades.

GDP growth has instead averaged 2.6% since Trump took office. While slightly above the 2.3% average during President Obama's second term, real GDP growth reached 3% only in the middle two quarters of last year.

Thus far, moreover, none of the links on the supply-side chain are anywhere to be seen. To the contrary, real business investment has declined for three quarters in a row - the worst such stretch since the last recession.

The federal budget deficit meanwhile reached $984 billion - 26% higher than the 2018 deficit and 48% above 2017 levels.

At: https://www.businessinsider.com/trump-gop-tax-cuts-no-boost-us-economy-gdp-2020-1

[at140]

1. Obvious reason is.......

Lion's share of the tax cut money went to the top 10%, and those people were not going to go out and buy more items because they already have more items than they need.

If the tax cut was aimed squarely at the middle class, the economy would have grown more.

[Warpy]

3. It would grow most of all with that mone recirculated at the bottom

Every dollar recirculated at the bottom as minimum wage increases or food stamps has a multiplier of $1.70-$2.00 as labor is then hired to cope with better business.

It also tends to encourage entrepreneurship and rebuild the middle class.

Middle class tax cuts do nothing because we no longer have a large, stable middle class and what they're calling middle class doesn't pay enough in taxes for cuts to make a difference.

That tax cut horse has been dead for 30 years, but they keep right on flogging it.

[at140]

5. Depends on definition of middle class

Mine is anyone above poverty level upto $75k for family of 4.
You can call it the lower middle class.
People below poverty level have usually no tax obligation, so can not calculate tax cut.

[Warpy]

6. Missing the point

Tax cuts give middle income earners these days (whether or not you call them middle class, which they're not) pennies, while they give the 0.1% hundreds of thousands of dollars per year, which is why conservatives in government have been flogging away at that dead horse for so long. Tax cuts do absolutely nothing for middle income people and they do next to nothing for the economy as a whole.

That approach doesn't work unless you want to give more money to the already rich while continuing to starve the demand side of the economy.

It's done, kaput, stiick a fork in it and bury it, already.

[at140]

7. We can agree to disagree.....nt

[Warpy]

2. Corporations didn't invest in inrastructure, hire people, or raise wages

Typically, they increased salary and bonus packages at the top and bought more of their stock back, trying to pump the stock price.

I knew that would happen, that those cuts would result in more of a stock market increase but nothing else.

I am so very sick of being right about tax cuts and corporate behavior.

They did boost the deficit into the stratosphere. Bet they'll use that to wail that we can no longer afford Social Security.

[keithbvadu2]

4. They were a great success for his billionaire pals.

They were a great success for his billionaire pals.