its centerpiece was a gigantic corporate tax cut, lowering the statutory corporate rate from 35 percent down to 21 percent. This cut accounted for about $1 trillion of the bill’s total $1.5 trillion cost, but Republicans said it really wasn’t about helping corporations at all.
.. No, the real target was the workers: Corporations would take the money and use it to create new jobs and raise the wages of those working for them, as trickle-down economics did its magical work.
Democrats, on the other hand, said it was a scam. They charged that workers would see only a fraction of the benefits, and instead corporations would use most of their windfall for things like stock buybacks, which increase share prices and benefit the wealthy people who own the vast majority of stocks.
.. even before the tax cut, corporations were making near-record profits and sitting on mountains of cash; if they wanted to invest, create jobs and raise wages, they already had the means to do it.
.. even before the tax cut passed, corporations were saying publicly that they intended to use the money for stock buybacks.
.. It’s true that some companies did give workers one-time bonuses. But it was essentially a PR move.
.. Walmart, for instance. It made a splashy announcement that it would be giving bonuses of up to $1,000 to workers, which sounded great. But then it turned out that you’d only get that much if you’d been working there for 20 years, and the average worker would get around $190.
.. the total value of Walmart’s bonuses was $400 million, which seems like a lot until you learn that over 10 years the value of the tax cut to the corporation will be $18 billion. In other words, about 2 percent of its tax cut is going to workers
.. Republicans make absurd claims in the knowledge that even if they get debunked in the occasional “news analysis” piece, on the whole they’ll be treated with complete seriousness, no matter how ridiculous they are.
.. lies about the future — and that’s what they are when you know that what you’re saying is utterly bogus — will not be policed with nearly the same vigor as lies about the past.
.. When Republicans said that their tax cut wouldn’t increase the deficit because it would create so much economic growth that revenue would actually increase, it was treated as a questionable claim, not an assertion on par with “If I flap my arms, I can fly to the moon”
.. Sure, Democrats will squawk, and all their criticisms and predictions will turn out to be right. But it hasn’t stopped you in the past, and it won’t in the future.
How Big a Bang for Trump’s Buck? (Wonkish)
I’m having a hard time figuring out exactly how big a stimulus we’re looking at, but it seems to be around 2 percent of GDP for fiscal 2019. With a multiplier of 0.5, that would add 1 percent to growth.
That said, I’d suggest that this is a bit high. For one thing, it’s not clear how much impact corporate tax cuts, which are the biggest item, will really have on spending. Meanwhile, unemployment is only 4 percent; given Okun’s Law, the usual relationship between growth and changes in unemployment, an extra 1 percent growth would bring unemployment down to 3.5%, which is really low by historical standards, so that the Fed would probably lean especially hard against this stimulus.
Tax Incentive Puts More Robots on Factory Floors
Recent changes in the tax code are encouraging many U.S. manufacturers to install robots and replace aging machines
The revised tax code allows companies to immediately deduct the entire cost of equipment purchases from their taxable income for the next five years. Previously, companies generally were allowed to write off only a portion of the cost in a single year.
The change is encouraging manufacturers to install robots and replace aging machines sooner than planned.
.. By effectively reducing the cost of automation, the tax overhaul puts “another arrow in the quiver of companies that want to go that route,”
.. Rick Toth, whose 66 employees at Toth Industries Inc. in Toledo, Ohio, make parts for heavy trucks and construction equipment, said the depreciation benefit has encouraged him to buy at least three computerized metal-fabrication machines this year for up to $400,000 each. Before the legislation passed, he planned to buy just one machine to handle the 10% to 15% boost in business he expects this year.
.. The benefit led executives at diaper- and tissue-maker Kimberly-Clark Corp. to move up plans to spend as much as $200 million to make one U.S. factory more productive. The plan, which awaits board approval, comes as the Kimberly-Clark plans to close 10 factories and lay off thousands of workers.
.. The continuing trend toward automation has pushed down manufacturing employment overall since the financial crisis but also has created some well-paying jobs that require years of training or an engineering degree.
.. Still, wages aren’t keeping up with the upswing in production. Even as U.S. unemployment lingers at a 17-year low of 4.1%, factory wages rose 2.2% annually last year, down from a 3% annual bump in 2016.
What Has Mitt Romney Learned?
Romney’s rhetoric on China and immigration was a more restrained version of Trump’s nationalist pitch, and here and there he tried to imitate Franklin Roosevelt’s promise, updated crudely by Trump, to be a traitor to his successful class.
.. the defining pitch of the Romney campaign was the tone-deaf “you built that,” which valorized entrepreneurs and ignored ordinary workers; the defining policy blueprint was a tax reform proposal that offered little or nothing to the middle class; and the defining gaffe was the famous “47 percent” line, in which Romney succumbed, before an audience of Richie Riches, to the Ayn Randian temptation to write off struggling Americans as losers.
.. that failure lay the opportunity that Trump intuited — for a Republican candidate who would rhetorically reject and even run against the kind of corporation-first conservatism that Romney seemed to embody and embrace.
.. Trump has mostly turned his back on his own economic populism
The best of the current Republicans (the Paul Ryans, the Ben Sasses, the Mitt Romneys) have certain common features that should be appealing to the electorate. They seem to have the home life of the family man. They have the discipline and diligence of the organization kid. They have the looks of the pretty boy. Yet the public still rejects them, because the voters find their ideas even more unpleasant than Donald Trump’s odious personality.
.. But he could also perform a service by showing that he has learned something from watching Trumpism succeed where his own campaign failed — which would mean steering a different and more populist course than those NeverTrump Republicans who pine for a party of the purest libertarianism, and those OkayFineTrump Republicans who are happy now that Trump has given them their corporate tax cut.
.. Right now there is a small caucus in the Republican Party for a different way, for a conservatism that seeks to cure itself of Romney Disease by becoming genuinely pro-worker rather than waiting for a worse demagogue than Trump to come along.