Thread: Economy is starting slow under Trump, but still in good shape

Economy is starting slow under Trump, but still in good shape

by Patrick Gillespie @CNNMoney
April 27, 2017: 12:06 AM ET

President Trump's economy isn't bursting out of the gates.

All signs are that it is starting 2017 with more of the same sluggish growth the U.S. experienced during President Obama's term. But as with the final years of Obama's presidency, there's reason to be optimistic about the current state of the economy under Trump.

The government will publish the first report of economic growth in the Trump era on Friday.

The Atlanta Federal Reserve is predicting 0.5% annual growth in the first three months of the year; private economists are forecasting 1.1%.

The Trump administration isn't really responsible for the slow growth yet. The reason: Many of his policies haven't become law, and none of them have had enough time to work through the economy.

"What happened in the first quarter of the year is entirely beyond credit or blame of the Trump administration or the 115th Congress," says Joseph Brusuelas, chief economist at RSM, an accounting firm. "That'll be a 2018 story."

Trump's proposals -- from tax cuts to infrastructure spending -- likely won't have an impact on the economy until next year if they get passed through Congress. That's a big "if," too.

But Friday's figure will illustrate Trump's uphill battle ahead. He's promised 4% annual growth. The Fed forecasts 2% growth for the next few years.

America's economic growth has been glacial since the Great Recession ended in 2009, averaging about 2% a year since 2010. During the late 1990s, annual growth hit a strong 4% a year.

Many factors have held down U.S. growth over that time. To name a few: A weak global economy, a strong dollar that hurt U.S. trade, and Americans who have become too hesitant to spend after a scarring recession.

One big difference so far this year is that Americans' optimism in the economy's future has improved dramatically. Confidence -- from consumers to big business -- has shot up, partially because of the hope underpinning Trump's policies.

But so far there's no evidence that it's leading to actual spending. Consumer spending, the real engine of growth, has been sluggish so far this year.

Some say that's a post-election wake up call.

"What we're seeing in this first quarter is the beginning of some genuine skepticism that all that optimism was overdone," says Bernard Baumohl, chief economist at the Economic Outlook Group, a research firm.

The problem isn't so much that things are getting worse. Experts stress the U.S. economy is in good shape overall: Unemployment is low, at 4.5%. Job growth is solid. Gas prices are low. Wage growth has picked up. Global economic risks are low for now too, which also helps boost business confidence.

The issue is whether the GOP-controlled White House and Congress can quickly pass new economic reforms this year that will truly boost the economy out of this slow-growth phase.

"That looks unlikely now," adds Bauhmohl. "There's this undercurrent of real concern that Washington is still broken."

One of Trump's proposals, infrastructure spending, could provide America with the shot in the arm it needs.

New infrastructure -- improving America's roads, bridges and rails -- would create construction jobs and help other workers (we're looking at you, morning commuters) get from point A to point B faster. Less time traveling means more time at work or at home -- more productive time.

But a grand infrastructure bill from Trump and Republicans in Congress isn't on the horizon this year. Repealing Obamacare, renegotiating NAFTA and cutting taxes are 2017 priorities.

So at least to start the Trump era, economic growth looks to be more of the same. It's important to remember that the first quarter number is notoriously low and often gets revised up a bit.

And keep in mind: overall, America is in solid shape.

"The economy is doing just fine," says Paul Ashworth, chief US economist at Capital Economics, a research firm. "I don't think there's any serious concerns about the US economy."

http://money.cnn.com/2017/04/27/news...dp-2017-trump/

New infrastructure -- improving America's roads, bridges and rails -- would create construction jobs and help other workers (we're looking at you, morning commuters) get from point A to point B faster. Less time traveling means more time at work or at home -- more productive time.

But a grand infrastructure bill from Trump and Republicans in Congress isn't on the horizon this year. Repealing Obamacare, renegotiating NAFTA and cutting taxes are 2017 priorities.

Fixing our infrastructure is different than new infrastructure. So that's not a quick fix to problems. That's why Trump's infrastructure program is over a 10 year period.

The priorities are right as he's laid them out. Congress snagged 2017 by not getting the health care bill out the door in March, but over the haul if they get it out this week or in a few days, that will cut the tax cuts loose and then you start seeing the fundamental policies for turning this mess around with new jobs with businesses already at the gate ready to cut loose, no planning, no figuring, they're just holding back for the two things they need right now which is repeal of the Obamacare mandates and the corporate/business tax cuts.

What none of these reporters talk about is the savings in welfare programs generated by good job creation. They talk about "economic growth and new taxes from that", which is true, but in terms of the deficit, the far greater number is the reduction in welfare spending for each new job created.

We spend almost $900 billion a year at the federal level on welfare and poverty programs including Medicaid. That doesn't include Social Security and Medicare because these are retirement accounts, not welfare or poverty programs.

When you add hours to work schedules, something that will happen immediately and automatically for hundreds of thousands of businesses the minute we repeal the mandates on Obamacare, you raise incomes to levels that do 2 things, it moves kids out of free school lunch, it moves the family off of food stamps, and yes it moves them off of Medicaid. This is the difference between 25 hours a week and 40 plus hours a week. When you move a low-wage earner to a higher wage earner, to an employer that offers health insurance through the company, you move that wage earner and the family off of free school lunch, food stamps, and Medicaid. When you move someone who is unemployed to a good job, you do the same thing. This all happens with the corporate and business tax cuts that bring our manufacturing companies back home where they belong while expanding those still here. These two policies, repealing the mandates of Obamacare and the corporate and business tax cuts, before we even get to trade and immigration will create millions of new jobs for people who are presently on Medicaid, Food Stamps, Free School Lunch, WIC, TANF, AFDC, HUD low income housing, and on and on and on, amassing a fortune in savings on welfare and poverty spending and will do so in due natural course, without any confrontation or political battles over cutting programs or entitlements for those who from time to time may need them.

So I hope the White House and Cabinet members working on the selling of these programs remembers to do the estimated math on these savings and tweets or announces them, because this is how you actually reduce the deficit while cutting taxes: JOBS, JOBS, JOBS.

Then when you remove illegal aliens from our population and fix our bad trade deals, you create even more jobs for Americans and generate real economic growth that pays for everything we need and much of what we want.

The FairTax is the best way to do this, but what is proposed if Congress will just back it will go along ways towards fixing our country which is all out of whack right now on everything, and putting US back on an even keel so we can rebuild our country in a sensible and proper manner.

Trump’s Tax Plan Is a Reckoning for Republican Deficit Hawks

By ALAN RAPPEPORT
APRIL 26, 2017

WASHINGTON — As President Trump’s top economic advisers faced a barrage of questions on Wednesday about the tax plan they had just unfurled, there was one that they struggled most to answer: how to keep the “massive tax cuts” they proposed from ballooning the federal deficit.

The White House insists that economic growth will cover the cost, which could be as high as $7 trillion over a decade. But the question will dog Republicans and could fracture their party as they face the prospect of endorsing a plan that many economists and budget analysts warn will increase the deficit. After years of fiscal hawkishness, conservatives now face a moment of truth about whether they truly believe America’s economy is drowning in debt.

Some skeptics are already ringing alarm bells, fearing that Republicans will sign on to what critics see as a dangerous plan composed by a president who called himself the King of Debt.

“It seems the administration is using economic growth like magic beans: the cheap solution to all our problems,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a nonpartisan group that advocates fiscal restraint. “But there is no golden goose at the top of the tax-cut beanstalk, just mountains of debt.”

Ms. MacGuineas’s group estimates that Mr. Trump’s plan could reduce federal tax revenue by $3 trillion to $7 trillion over a decade. The economy would need to grow at a rate of 4.5 percent — more than double its projected rate, an unlikely prospect — to make the plan self-financing.

While Mr. Trump and his team point to the growth linked to tax cuts passed by previous presidents, today’s economy is different from that of 1981 or 2001, when Presidents Ronald Reagan and George W. Bush cut tax rates.

The Congressional Budget Office projects that the federal debt will grow by $10 trillion over the next decade. By 2027, the deficit could reach $1.4 trillion, or 5 percent of the economy, it says.

The office’s predictions have been off before, and the impact of tax cuts on the economy is a matter of debate, as so many variables determine a country’s economic fortunes. But tax historians and veterans of previous tax fights are quick to point out that lower rates are not necessarily a panacea for slow growth.

“This is fool’s gold that you’ll cut taxes, everybody will work harder, more money will come and you’ll erase the fiscal impact,” said Steve Bell, who was a Republican staff director of the Senate Budget Committee from 1981 to 1986. “It never happens.”

Joseph J. Thorndike, director of the Tax History Project at Tax Analysts, said the Trump plan appeared to have strong parallels with Reagan’s 1981 cuts. Mr. Thorndike recalled that the Reagan administration soon realized the problem of the red ink it was facing and started looking for new sources of revenue.

“This looks like ’81, where they said, ‘Deficit be damned, we want to do a tax cut,’” Mr. Thorndike said. “It’s a cautionary tale.”

Twenty years later, the Bush tax cuts, which reduced the top individual tax rates and increased the standard deduction for low-income households, took place in a different environment. Mr. Bush made the case that it was time to spend the nation’s surplus to jump-start a flagging economy.

“It’s very important to recognize that the fiscal situation today is not what it was in 2001,” said Scott Greenberg of the Tax Foundation, a nonpartisan group. “Instead of facing a large projected surplus, the country faces a large projected deficit.”

The White House’s outline was too thin on details to allow for a concrete analysis of how much deficits would grow. There were no specifics about what income would fall into the three, instead of seven, individual tax brackets. The explanation of how the mammoth switch to a territorial corporate tax system would work was vague. There was no word on how low the tax on repatriated foreign corporate earnings would be. And Gary D. Cohn, the director of the president’s National Economic Council, could not say how much of a tax cut a middle-income American would get.

The debate over the impact of the plan is only beginning. If Republicans are not able to make the cuts revenue-neutral — that is, causing no increase in the deficit — they will need the support of Democrats to get 60 votes in the Senate and make the legislation permanent under budget reconciliation rules. Otherwise, any changes to the tax code will expire in 10 years.

While Republicans in the House, Senate and Trump administration have said they do not want to add to the deficit, there is a growing acknowledgment of the possibility that they will need to settle for temporary tax cuts. Treasury Secretary Steven Mnuchin said Wednesday that short-term cuts were better than nothing. And Senator Orrin G. Hatch of Utah, the influential Republican chairman of the Senate Finance Committee, said this week that he could live with cuts that added to the deficit if it meant getting the economy moving faster.

Republican budget hawks will need to decide whether they want to stick to the arguments of fiscal responsibility that they used to bludgeon Democrats during the Obama era. One of those hawks, Senator Patrick J. Toomey of Pennsylvania, said Wednesday, “Rather than conforming to arbitrary budget constraints, the president’s plan rightfully aims to jump-start investment, which will produce significantly more revenue for the Treasury over the long term than any revenue-neutral tax plan could generate.”

Mick Mulvaney, director of the Office of Management and Budget, who was a fierce critic of deficits when he was a member of Congress, offered a glimpse of the rationale his former colleagues might embrace. “As a conservative, that bothers me a little bit,” he said Tuesday on CNN of the possibility that Mr. Trump’s tax plan would increase the deficit. “But we also look at deficits through sort of a different lens.”

For Democrats, now out of power, the reversal is bitterly ironic, and several lawmakers assailed the president for, they said, preparing to cripple the country with debt.

“I’m not the first to observe that a Republican Congress only cares about the deficit when a Democrat is in the White House,” said Alan B. Krueger, the Princeton economist who was chairman of President Barack Obama’s Council of Economic Advisers. “It may be that Dick Cheney is right and that deficits don’t matter to the public, but they do matter to the economy.”

But for Republicans who have been craving big tax cuts for years, confidence was high that the worries about deficits were overwrought.

“This is a thing of beauty, a thing of wonder,” Grover Norquist, the president of Americans for Tax Reform, said of Mr. Trump’s one-page plan. “Growth, growth, growth!”

https://www.nytimes.com/2017/04/26/u...t-deficit.html

See, another article about the tax cuts, everyone talks about the growth, yes, that's true, but not in any of the many articles I posted on other threads about the tax cuts did anyone reporter, Republican or Democrat mention about the reduction in spending on welfare and poverty programs because of the job creation from the growth.

This is a serious oversight. You must mention and calculate into the numbers, the massive savings in welfare spending. That alone more than covers the corporate tax cuts and the growth will more than cover the business and personal income tax cuts and probably the infrastructure bill as well.

It is funny though listening to DemoQuacks wail about "deficits". Isn't that funny??!!!! In 8 years DemoQuacks and their Stupid Leader Obama doubled the debt that all prior Presidents since the beginning of our country created, and of course, all of that was created by the income tax system.

And yes, Trump and all the billionaires will benefit from the corporate and business tax cuts. That is a given. That is a fact. They will benefit the same as every other business or corporation that builds, produces, provides services, creates, manufactures, sells and works to do something for a profit. We've had a entire history of politicians that cumulatively have left US with $20 trillion in debt, 94 million working age Americans out of the work force, 100 million on some form of welfare, and $800 billion a year in annual trade deficits.

Time to try a new approach and balance our trade deficits, put Americans back to work and see what happens to that debt. My bet is it'll start shrinking before our eyes. It will be fun to watch the debt clock go down for a change, wouldn't it? I think so.

And yes, get these DACA's out of here. I'm fed up with listening to them, looking at them, hearing about them and paying for them. GET THEM OUT OF HERE.

I'm kind of curious what the unemployment rate report shows next Friday. I'm thinking it's going to be good news, once again. And with the nicer weather, construction jobs as well are starting to pick up.

The economy rides on math, simple hard core numbers. It can propel in certain areas based on confidence, anticipation, optimism and expectations, but if you don't deliver, it retreats, just like a kid that sees a candy store and runs over expecting with great anticipation to buy some sweets, but if the child gets there and the door is locked or the shelves are empty, they don't put their coins on the counter and wait around for someone to open it up or for a delivery truck to supply the shelves, they leave disappointed and walk over to the malt shop for an ice cream cone, but if the malt shop closed at noon and it's 3 pm after school, our little economists head home very disappointed and make some Kool-Aid from packets their mom bought 3 months ago.

It's no different with the US economy. Our economy is broken, too many people, not enough jobs, not enough manufacturing, not enough high wages, not enough investment capital, not enough money. It can't fix itself. We have to reverse the policies that caused this disaster.

People In (illegal and excess immigration) + Jobs Out (free trade treason) = BANKRUPT NATION

You add the highest corporate tax structure in the world to mandates for the most expensive health care in the world and we're in a dive to the bottom. The only reason we even show 1 to 2 percent growth is because we're running the economy on consumer, housing and public debt.

The solutions are simple. There's 5 easy steps to fix the US Economy. Here they are, I've posted them for years, but will post them again:

Judy's Five Steps to Fix the US Economy

1. Stop Illegal Immigration and Reduce Legal Immigration
2. Pass the FairTax
3. Protect Our Trade
4. End the War on Drugs
5. Drill Baby Drill, But Do It Right

It's not complicated, it's really very simple. It's a reversal of failed policies to realign our math, money and numbers with the laws of the universe in a free nation of free people who have a cup of common sense, a pound of intelligence and a stick of loyalty to their own country and citizens.

Soooo simple.

If we don't do #1, in 20 more years our first language will be Spanish, and we will be second class citizens in our own country.

No doubt about it. I mean have you listened recently to some of the accents of members of the US Congress??!! What the heck is going on??!! Why haven't they been in the US long enough to have an American accent? Very disturbing.

And the other benefits of Number 1 are so numerous. You reduce welfare, poverty, open up jobs for Americans, cut government spending at all levels, unclog hospitals and schools, end a lot of crime, push wages up, and restore the Constitutional Promise of "domestic tranquility". Yes, this is a promise in the Preamble of the US Constitution: domestic tranquility. It is one of the 6 reasons we formed a government to do certain things for US.

Yet, we've got illegal aliens and their gangs and gypsies and thieves and scabs running all over our country, protesting in the streets, shutting down our own free speech, making demands, buying up our politicians with drug money, sucking on welfare and public services, taking up all the dialogue and space of our free press with their stupid issues, disrupting our peace, harmony and domestic tranquility.

IT MUST END.

Deport them all, get them all out of here, rapid deport, 2 questions, if no and no, then out you go. Period.