WASHINGTON, December 23, 2017:. President Trump and the GOP have delivered on a campaign promise with the recent tax cut. Thir goal is to stimulate the long-stagnant American economy by passing tax cuts whose primary purpose is to significantly increase economic growth.
Unfortunately, the Democrats and the mainstream media (MSM) are twisting and turning facts in order to misrepresent the tax cut and their effects.
The Dems and the MSM media say that this tax cut goal is only to give big tax cuts to the wealthy and to corporations while resulting in the middle class paying more.
“This is a middle-class con job,” saays Senator Ron Wyden (D, OR).
Nancy Pelosi (D, CA) calls the new law, a
“monumental, brazen theft from the middle-class.”
She claims the bill raises taxes on 86 million American families. She says 83% of benefits go the wealthiest 1% and that 13 million Americans will lose their health insurance.
The GOP will own this law.
The Dems say that this law, which they claim is unpopular, will be even more unpopular by November 2018 which will allow the Dems to gain control of the House of Representatives and perhaps the Senate. That may allow them to reverse this law and, they hope, impeach the president.
The Dems are even more delusional than they have been in the past.
By November 2018, the GOP will gladly own this law. , especially since not one Democrat in Congress voted in favor of it. In fact, the results will be so positive that the GOP may end up with 60 Senate seats and add to their majority in the House.
Let’s look at the reality of the tax cut and its effects.
Economic growth is about to soar.
For the past 11 years, the US economy has been stuck in slow growth. The historic growth rate for the US, depending on the time period, averages about 3.5% annually. Since 2006, and under the Obama administration, growth is a faint 2%.
This has created the problems of stagnant incomes, underemployment, increases in discouraged workers and a reduction in capital formation.
Part of the reason for slow growth has to do with burdensome and counter-productive regulations imposed by the Obama administration.
President Trump has cut those regulations. In addition, Trump has instilled confidence in all sectors of the economy and he has increased Americans wealth. Ask anyone with an investment based 401K plan.
The economy grew at more than 3% in the 2nd and 3rd quarters of this year. The figures for the current 4th quarter will not be available until the end of January, but preliminary data suggests 4th quarter growth will easily exceed 4%.
Next year the effects of the tax cut will be felt. In 2018 the economy will likely grow 4 ½% to 5%. It is possible that growth could hit 6% annually for the next two or three years.
This is exactly what happened when similar tax cuts in 1964 and 1981 were implemented.
Tax law cuts do not add to the deficit.
Dems and MSM claim that the tax cut will add $1.5 trillion to the deficit over the next decade. Simply, that’s a bunch of poppycock. After every major tax cut, tax revenue increased or stayed the same for a year or so, then tax revenue increased at a faster rate than before the tax cut.
The $1.5 Trillion deficit assumes economic growth averages of 2.2%. If growth hits 2.9% there is a $300 billion surplus. If growth hits the historical average of 3.5%, the 10-year surplus jumps to $2 trillion.
Any large deficits that followed prior tax cut were a result of vast increases in spending, not losses in revenue.
Dems and MSM say tax cut will favor the wealthy and corporations.
Under the tax law, every taxpayer will see a reduction in their tax liability, except those who have been offsetting their high state taxes by paying less federal income tax. Every taxpayer will get a 5% to 10% tax rate reduction.
Obviously, if someone is paying $50,000 per year in federal tax, the cut will be larger than the one received by someone who pays only $5,000 per year.
About 85% of Americans will see a tax cut.
The real benefit of the tax cut to the middle class, is the increase in opportunity which they will see when the economy is growing at a 4% or better rate.
Millions of underemployed college grads who, because of the slow growth economy of the last eleven years have taken jobs for which they are overqualified, will see new opportunities that require the critical thinking skills acquired in college. The new opportunities will increase their incomes and create openings for other workers.
That means the roughly 6 million discouraged workers who left the labor force because of lack of opportunity, will come back and find good jobs waiting for them.
“The rising tide will lift all boats” – President John Kennedy about 1960 tax cut.
Despite what the delusional Democrats and the mainstream media may say, this tax cut will stimulate demand in the consumer sector and will increase supply in the business sector. The reduction of the corporate tax rate from 35% to 21% will create the capital business needs to expand and to increase the demand for labor which increases wages.
By November the economy will be growing at a sustained rate which exceeds 4%. Interest rates will be higher but inflation will remain below the 3% target. The high growth rates will bring about an economic prosperity that Americans haven’t experienced in two decades.
Although the sitting president’s party has had losses in mid-term elections, things will be different. The GOP candidates will simply note that their Democratic opponent voted against the tax cut and against economic prosperity.
And who wants to be represented in Congress by an elected official who votes no to economic prosperity?