The economic recovery under President Trump

#### GDP Growth under Trump

> Years from now they can make it even more generous if we can get the economy like it should be. The economy now is at 3%. Nobody thought it would be anywhere close. I think it could go to 4, 5, and maybe even 6%, ultimately.
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> -President Donald Trump
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### Effects of the "Tax Cuts and Jobs Act" of 2017 (TCJA)

In general, there is no link between corporate cuts and wage increases

#### Cost of TCJA

The tax cuts will expire for individuals in 2025. They remain permanent for corporations. Treasury’s latest analysis includes this scenario. In that case, the tax cuts would cost $2.3 trillion instead of $1.5 trillion over the next 10 years.﻿ A Politico report found that all additional revenue from increased growth would go toward paying for the cuts. The cost is too high for the tax cuts to pay for themselves. Instead, the deficit and debt would continue to grow.

#### General increase in the deficit

> Mr. Trump’s signature tax cut in 2017 added $3.1 trillion to the deficit over a decade, assuming extension of all provisions. This year he acquiesced to two budget deals — laced with extraneous spending and special-interest tax breaks — that will add another $2.2 trillion to the deficit over the decade. All told, measures passed under Mr. Trump’s watch caused the annual deficit to more than double; it will exceed $1 trillion in the current fiscal year. -The Year in Charts, NYT
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#### Change in fixed investments from the TCJA

In general, there isn't evidence for an investment boom from the TCJA.

> “Excluding energy and oil investment, investment growth is still below five percent on a year-by-year basis…lower than the typical expansion average”
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> -Rafael Bostic, President of the Federal Reserve Bank of Atlanta
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##### Corporate reinvestment in manufacturing

* American manufacturing orders are at the same velocity since 2016.

> The Trump administration’s $1.5 trillion cut tax package appeared to have no major impact on businesses’ capital investment or hiring plans, according to a survey released a year after the biggest overhaul of the U.S. tax code in more than 30 years.
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> The National Association of Business Economics’ (NABE) quarterly business conditions poll published on Monday found that while some companies reported accelerating investments because of lower corporate taxes, 84 percent of respondents said they had not changed plans. That compares to 81 percent in the previous survey published in October. -Reuters
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##### Corporate buybacks

> The 2017 law changed the federal tax code to give corporations an incentive to bring money they earned overseas back to the U.S. Previously, the tax penalty was so high that companies often chose to reinvest money overseas to avoid more taxes. It also cut the corporate tax from 35 to 21 percent, generating a corporate windfall that Republicans said companies would reinvest in their workers. Instead companies put much of the money toward stock buybacks rather than investments. Buybacks hit a record $1 trillion in 2018, a nearly 50 percent increase from the year before. -PBS
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Half of the $1 Trillion dollars were concentrated in 19 companies

..."[T]he money [from the TCJA] went to shareholders, who make up barely half the American public. Moreover, 84 percent of the value of stock market wealth is held by the richest 10 percent of us... As of July, however, more than half the corporate savings from the tax cut have gone to shareholders as either stock buybacks or dividends, compared to 18 percent going to job creation commitments, and just 7 percent going to employees in the form of wage increases, bonuses,or benefits." -Paul Solman PBS