Expect the unexpected when the economy is involved
Back in 2017 Treasury Secretary Steve Mnuchin, among others, said the Tax Cuts & Jobs Act would pump up the nation’s gross domestic product to 3% (or more, as Trump said up to 6%) and quickly pay for itself. Trump himself called it “rocket fuel for the economy.”
I’m not a financial expert, but I do know that good times don’t go on forever. I like to plan for the future and dislike spending like there’s no tomorrow. Instead, I prefer being prepared for the inevitable unknowns that will arise. So I wonder what the recent “market correction” — now a bear market, maybe soon to become a recession — will do to the TC&JA forecast. Steve? Anyone?
I also know that greed usually wins out. The windfall that U.S. corporations enjoyed from the $1.9 trillion tax cut was supposed to generate capital investment in plants and equipment, as well as increased hiring and higher wages. If it did, we haven’t seen much of that here in Western Pennsylvania in general, and certainly not in Fayette County specifically. What did happen for sure were company stock buybacks, which inflated share prices and benefited management via bonuses.
We could have applied all that forgone tax revenue to help lower the national debt. We’re now at $23.3 trillion, with projections for it to exceed $31 trillion by the end of this decade. This is sheer lunacy, as we head down a path of both financial and ethical bankruptcy.
A Business Insider article last October was very prescient: “The mounting deficit is generating anxiety among budget experts who fear the government will have less room for emergency spending in a future economic slump.” Or, one might add, on a national emergency like a pandemic.
Bernard Quarrick
Uniontown.