Trump's Tax Cuts For Rich F*ckwads Cost Half A Trillion Bucks More Than We Knew, Oops!
President Goodbrain's Big Fat Tax Cuts for Rich Fuckwads bill was the only thing Republicans got done during Donald Trump's historic first year in office, and boy, were they ever gonna do wonderful things for the economy and make everyone prosperous forever! Just as long as by "everyone" you mean big corporations and the already rich. The rest of us got boned! A new analysis of the economic effects of the tax cut at Bloomberg found cuts to the corporate tax rate resulted in a lot of tax savings for businesses (and corresponding growth of the national debt), but very little improvement for the economy as a whole. Once adjusted for that flood of tax savings, the overall benefit was actually a bit lower than growth projections before the tax cut. But at least we'll be paying for that corporate tax cut binge forever!
Bloomberg banking columnist Stephen Gandel moneysplains the tax cuts were just AWESOME for big corporations, but kinda shitty for the ol' national bottom line:
In late 2017, soon before Congress passed the tax cut [...] the Joint Committee on Taxation estimated it would cost $1.4 trillion over 10 years. White House officials criticized that estimate as being too high. In fact, it wasn't nearly high enough. My current estimate, now that companies have completed 2018, is nearly $2 trillion, and that's just for the S&P 500.
Those cuts were terrific for corporate profits, which jumped by 24 percent in 2018, but Gandel estimates roughly half that income growth "came not from an improvement in operations but from lower corporate tax bills" -- so hooray for profits. Say, Johnny, what do our viewers have to give the S&P 500 thanks to Republican generosity? "S&P 500 companies saved $144 billion, or $395 million a day, in taxes in 2018." Which, as others have pointed out, the companies mostly plowed into stock buybacks, pumping up their stock value and enriching investors, but not actually improving wages or adding jobs. Funny, there are only so many yachts and upgraded bizjets the filthy rich can blow money on!
Oh, sure, we handed corporations $600 billion more than the government's projections, but how about ALL THAT ECONOMIC BOOMINGNESS?
In October 2016, analysts estimated that the companies in the S&P 500 would earn a collective $146.80 a share in 2018. Those earnings are now looking as if they will come in a good deal higher at $159.20 a share. That includes the tax cut, which lifted earnings by nearly $15.70 a share. Exclude the tax impact, and S&P 500 companies actually earned less last year, $143.50 a share, than they were expected to before Trump was elected president. That suggests that the tax cut hasn't provided much income growth outside the actual tax savings.
And nah, the stock market as a whole isn't doing much better either, says Gandel, falling about $2.3 trillion short of what Gandel would expect from earnings since Trump took office plus the tax cut bump. Good growth, but not fantastic growth, and at least some of it due to Trump's market-unfriendly trade war and government shutdown. His conclusion, which you would probably never have expected based on the endless prosperity that previous tax cuts didn't create:
The tax cuts provided a short-term boost, but given how large the Trump Discount has swelled, it is harder and harder for investors to notice.
Well then! At least now that the debt will be much larger, Republicans will have an excellent excuse to go after Social Security and Medicare!
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Doktor Zoom's real name is Marty Kelley, and he lives in the wilds of Boise, Idaho. He is not a medical doctor, but does have a real PhD in Rhetoric. You should definitely donate some money to this little mommyblog where he has finally found acceptance and cat pictures. He is on maternity leave until 2033. Here is his Twitter, also. His quest to avoid prolixity is not going so great.