Tag: Tax cut

U.S. Debt Load Seen Worse Than Italy’s by 2023, IMF Predicts
Social Security Disability

U.S. Debt Load Seen Worse Than Italy’s by 2023, IMF Predicts

Greenspan says tax cuts problematic because they’re unfunded Trump’s budget chief urges Congress to approve spending cuts Mamma Mia!
In five years, the U.S. government is forecast to have a bleaker debt profile than Italy, the perennial poor man of the Group of Seven industrial nations.
The U.S. will also place ahead of both Mozambique and Burundi in terms of the weight of its fiscal burden.
U.S. debt-to-GDP ratio projected to surpass Italy’s Expected debt-to-GDP ratios in G7 countries in 2023 Source: International Monetary Fund The numbers put renewed focus on the U.S. deteriorating budget after the enactment in December of $1.5 trillion in tax cuts, and the passage more recently of $300 billion in new spending.
The central bank’s most recent forecasts show a median estimate of 2.7 percent for this year’s expansion slowing to 2 percent in 2020, while the CBO sees GDP growth slowing from 3.3 percent this year to 1.8 percent in 2020.
Former Fed Chairman Alan Greenspan, speaking in an interview Wednesday with Tom Keene on Bloomberg Television, said lowering corporate tax rates was a good move.
“The trouble, unfortunately, is it’s unfunded,” he said, adding that Republicans should have done “spending cuts first before you try to do tax cuts.” Higher Spending Spending, meanwhile, is rising.
“This president, obviously, is not a president that’s interested in fiscal issues,” Senator Bob Corker, a Republican from Tennessee, said in Washington earlier on Wednesday.
“This issue is not going to be dealt with without a strong charismatic president who really wants to take it on.
Mulvaney said the CBO’s projection of the effects of December’s tax cuts, which sees them adding $1.9 trillion to deficits over about a decade, is way off base.

Analysis: Tax cuts, spending to raise deficit to $1T by 2020
Unemployment

Analysis: Tax cuts, spending to raise deficit to $1T by 2020

The combined effect of President Donald Trump’s tax cuts and last month’s budget-busting spending bill is sending the federal deficit toward the $1 trillion mark next year, according to a new analysis by the Congressional Budget Office.
Republicans once laced into President Barack Obama for trillion-dollar-plus deficits but mostly fell quiet on Monday’s news.
The administration had promised the cuts would pay for themselves.
Instead, Monday’s report estimates that the GOP tax bill, which is Republican-controlled Washington’s signature accomplishment under Trump, will add $1.8 trillion to the deficit over the coming decade, even after its positive effects on the economy are factored in.
The economic growth promises to drop the nationwide unemployment rate below 4 percent starting this year, CBO predicts, though interest rates would rise more rapidly than the agency had earlier predicted, countering some of the positive economic impact of the tax cuts.
The report paints an unrelentingly bleak picture of the federal deficit, predicting it will hit $804 billion this year, rise to just under $1 trillion for the upcoming budget year and permanently breach the $1 trillion mark in 2020 unless Congress stems the burst of red ink.
With conservatives complaining about the $1.3 trillion catchall spending bill — which blew through previous budget limits by $300 billion over this year and next — House GOP leaders have scheduled a vote this week on a proposed amendment to the Constitution to require a balanced federal budget.
Many economists believe that if deficits continue to rise and the national debt grows, government borrowing will “crowd out” private lending and force up interest rates.
And if interest rates go up, the government will have to pay much more to finance the more than $14 trillion in Treasury debt held by investors.
It warns that interest rates on government borrowing will spike, with the benchmark 10-year Treasury note, currently yielding 2.8 percent, will average a 3.0 percent interest rate this year and 3.7 percent next year.

The US government’s budget deficit is about to explode — and the Trump tax law and spending surge is to blame
Unemployment

The US government’s budget deficit is about to explode — and the Trump tax law and spending surge is to blame

The CBO also reports that economic growth will lower the unemployment rate below 4 percent.
WASHINGTON (AP) — The combined effects of President Trump’s tax cuts and last month’s budget-busting spending bill is sending the government’s budget deficit toward the $1 trillion mark next year, according to a new analysis by the Congressional Budget Office.
The CBO report says that that the twin tax and spending bills will push the budget deficit to $804 billion this year and just under $1 trillion for the upcoming budget year.
The administration had promised the cuts would pay for themselves.
The economic growth promises to drop the nationwide unemployment rate below 4 percent, CBO predicts.
The report paints an unrelentingly bleak picture of federal deficits, which would permanently breach the $1 trillion mark in 2020 unless Congress stems the burst of red ink.
Deficits would grow to $1.5 trillion by 2028 — and could exceed $2 trillion if the tax cuts are fully extended and if Washington doesn’t cut spending.
Republicans controlling Washington have largely lost interest in taking on the deficit, and the issue has fallen in prominence in recent years.
Now that conservatives complained about the $1.3 trillion catchall spending bill — which blew through previous budget limits by $300 billion over this year and next, House GOP leaders have scheduled a vote this week on a proposed amendment to the Constitution to require a balanced federal budget.
Many economists believe that if deficits continue to rise and the national debt grows, government borrowing will “crowd out” private lending and force up interest rates.

U.S. Deficit to Surpass $1 Trillion Two Years Ahead of Estimates
Unemployment

U.S. Deficit to Surpass $1 Trillion Two Years Ahead of Estimates

Tax-cut, spending stimulus boosting interest rates, prices CBO raises 2018 U.S. economic growth forecast to 3.3% vs 2% The U.S. budget deficit will surpass $1 trillion by 2020, two years sooner than previously estimated, as tax cuts and spending increases signed by President Donald Trump do little to boost long-term economic growth, according to the Congressional Budget Office.
Deficits are growing as the Trump administration enacted a tax overhaul this year that will lower federal revenue and Congress approved a roughly $300 billion spending increase.
New Projections The report includes new projections for the effects of the tax legislation — saying it will increase the deficit by almost $1.9 trillion over the next 11 years, when accounting for its macroeconomic effects and increased debt-service costs.
The U.S. cumulative deficit — taking into account the new tax and spending legislation — will be $11.7 trillion from 2018 to 2027, about $1.6 trillion larger than the CBO projection in June.
The CBO forecast 2 percent less revenue and 1 percent more spending over the period, it said.
“Over the longer term, all of those effects, as well as the larger federal budget deficits resulting from the new laws, exert upward pressure on interest rates and prices.” The CBO predicts the federal funds rate will reach 2.4 percent in the fourth quarter of 2018, 3.4 percent by the end of next year and then peak at 4 percent in 2021.
In June, CBO forecast 2 percent growth this year.
The Trump 2019 budget request assumed that tax cuts would propel the economy to 3.1 percent growth this year and remain above 3 percent through 2024.
Because of that, deficits are likely to be even larger than CBO is projecting.
While the House will draft a budget resolution, the Senate has indicated it won’t take one up.

GOP tax message hits a snag
Unemployment

GOP tax message hits a snag

A CNBC poll this week stated that just 32 percent of working adults reported having more take-home pay due to the new law, a problem for Republicans hoping to run on the measure and the health of the economy in November.
“Republicans have to discipline themselves to stay on message,” said Americans for Tax Reform President Grover Norquist.
Tax experts said there are a number of reasons why people might not be reporting seeing an increase in their take-home pay.
The group said that people with income of below $25,000 will, on average, get a tax cut of only $60 over the course of the whole year.
It showed that people with higher incomes were more likely to notice an increase in take-home pay than low-income individuals — an outcome that Democrats could use against the GOP in their midterm campaign.
Another reason why people may not be reporting seeing paycheck boosts is that some of the benefits of the new tax law, such as the larger child tax credit, aren’t reflected in the new withholding tables.
Among the employed adults in the survey, Trump voters were more than twice as likely to say they had more take-home pay as a result of lower federal taxes (48 percent) than Clinton voters (22 percent).
Of those surveyed in the CNBC poll, only 60 percent were employed to begin with.
Among those, only 32 percent said that they noticed their income go up as a result of tax changes.
One bright point for Republicans in the CNBC poll is that, despite many people brushing aside the tax bill’s positive effect on their income, a large number maintained an overall positive outlook about their wages.

Taxpayers, You’ve Been Scammed
Welfare

Taxpayers, You’ve Been Scammed

“I’ll take care of everything,” he says, and orders you a hamburger.
Yet even before the tax cut, federal tax receipts were looking weak for an economy with low unemployment and a rising stock market — for example, far lower as a percentage of G.D.P.
The tax cut will push them lower still.
And we already know what will give, if Republicans get their way: programs that benefit working Americans.
Ryan celebrated the tax cut with a tweet about a teacher saving $1.50 a week on her taxes; that’s like saying you should feel grateful for a “gift” that’s actually being charged to your own credit card.
Meanwhile, about your companion’s steak dinner: Most of the tax cut actually consisted of huge tax breaks for corporations, which is in effect a big tax cut for stockholders.
Now, the tax cut’s defenders insist that it won’t really work that way, that the benefits of lower corporate taxes will trickle down to workers instead.
Well, the theory is that lower corporate taxes will draw in lots of money from overseas, which corporations will invest in new plants and equipment, which will drive up the demand for labor, which will raise wages.
For example, corporations with monopoly power won’t see lower taxes as a reason to invest more; they’ll just take the money.
But wait — weren’t there a lot of stories about companies using the tax cut to give their workers bonuses?

The Federal Reserve is already looking very different under Jerome Powell than it did under Janet Yellen
Unemployment

The Federal Reserve is already looking very different under Jerome Powell than it did under Janet Yellen

Thomson Reuters New Federal Reserve Chair Jerome Powell vowed continuity with his precedessor, Janet Yellen, but struck a much different tone in testimony.
Yellen appeared skeptical of the likely benefits from tax cuts while Powell, who was appointed by President Donald Trump, was confident it will boost growth.
Powell avoided even indirect answers to questions on social issues like race, gender, inequality and immigration, which Yellen was often happy to explore.
Chalk it up to the basic differences in outlook between a labor economist and a business executive.
The Federal Reserve’s new chair, Jerome Powell, struck a very different tone from his predecessor during his first congressional testimony since taking over for Janet Yellen at the start of this month — despite the reassurances of policy continuity that often accompany a high-profile change of guard. “My personal outlook for the economy has strengthened since December,” he said, citing the tax cuts, which he said could bolster economic growth for as many as two years.
Not my job Asked multiple times about the persistence of elevated rates of black unemployment compared to that of whites, Powell said there was little the Fed could do beyond pursuing its mandate, neglecting to mention a large division of Fed community development experts directly dedicated to exploring and researching issues like poverty and race.
And while, like her predecessors, Yellen was often forced to duck politicians’ questions that sought to seek her direct endorsement for specific policies, she would at least address the issues at hand in a big picture way.
Democrat Keith Ellison asked specifically and repeatedly about the economic effects of removing a large segment of workers from the population.
Powell demurred: “We of course don’t do immigration policy at the Fed.”

The Trump budget’s crushing cruelty
Social Security Disability

The Trump budget’s crushing cruelty

House Democrats are slamming President Donald Trump’s proposed FY 2019 Budget, as well as his infrastructure proposal, with one Democrat saying “the American people got a pretty nasty valentine.”
(Feb. 14) AP On Monday, President Donald Trump released his proposed budget for 2019.
And the American people understand it,” Vermont’s independent senator, Bernie Sanders, said, railing against Charles and David Koch, the two billionaire industrialist brothers who have poured hundreds of millions of dollars into U.S. elections in order to promote their far-right agenda.
This is not a budget, as candidate Donald Trump talked about, that takes on the political establishment.
She explained on the “Democracy Now!” news hour: “Strike one was to actually transfer $1.3 trillion in wealth from working people and the poor to the wealthiest through the GOP tax scam.
To their credit, they are finally saying, in this budget, that those GOP tax cuts don’t pay for themselves, because they’re projecting these enormous deficits as a result of the tax cuts.
Strike two is that they’re essentially going to balloon the deficit, $7 trillion over 10 years, a trillion dollars next year alone.
A spending bill, passed with bipartisan support Feb. 9 in order to avoid a government shutdown, increased military spending, a Trump priority, as well as spending in domestic programs, which the Democrats wanted.
It also raised federal borrowing limits and spending caps.
Of course, these are the same people who said Trump had no chance of being elected.

U.S. holiday spending surges to 12-year high, helped by tax cuts
Unemployment

U.S. holiday spending surges to 12-year high, helped by tax cuts

Low unemployment and high consumer confidence helped deliver a gift to retailers this holiday; record high spending.
Here’s a look at the current climate and expectations for the rest of 2017.
U.S. holiday spending jumped 5.5 percent – its biggest gain since 2005 – spurred by stronger employment, rising consumer confidence and expectations of higher wages and bonuses after the recent tax bill, the National Retail Federation said on Friday.
Sales in November and December rose to $691.9 billion, compared with $655.8 billion the previous year, excluding sales at restaurants, automobile dealers and gasoline stations.
The NRF previously forecast sales would rise 3.6 to 4 percent for the period.
Holiday sales can account for up to 40 percent of annual sales for some stores.
NRF Chief Economist Jack Kleinhenz said a number of factors contributed to surging consumer confidence including a pickup in income, a rising stock market, unemployment levels at 17-year lows and the timing of the tax cuts. “When that got passed and companies started to announce bonuses and wage increases, the consumer felt very much more at ease going into the holiday season and spending,” Kleinhenz said in an interview, adding the possible tax cuts had not been accounted for in the NRF’s forecast.
Kleinhenz also said retailers had the right mix of inventory, pricing and staffing to help connect with shoppers.
Struggling with competition from Amazon and off-price stores, traditional retailers have worked hard to address changing consumer habits by lowering prices, sprucing up physical stores and websites and improving delivery options.

Bernie Sanders Clarifies Comments About Middle-Class Tax Cuts In GOP Bill
Social Security Disability

Bernie Sanders Clarifies Comments About Middle-Class Tax Cuts In GOP Bill

“Next year, 91 percent of middle-income Americans will receive a tax cut.
Isn’t that a good thing?” host Jake Tapper asked Sanders.
“Yeah, it is a very good thing,” Sanders responded.
“And that’s why we should’ve made the tax cuts for the middle class permanent.” Some Republicans delighted in the idea that they had caught Sanders owning up to the bill’s perks.
“When Bernie comes back to town, he should pledge to vote with Republicans in ten years to make the tax cuts permanent for the middle class.” But Sanders maintained on Wednesday that the legislation’s modest middle-class benefits do not outweigh its problems.
Sanders also fears that congressional Republicans will cite the $1.4 trillion the law is expected to add to the national debt as an excuse to pursue cuts to Social Security, Medicare, Medicaid and other social programs.
Rather than do away with the tax law entirely, Sanders supports repealing the tax breaks for the wealthy and corporations to make the bill’s middle-class tax breaks permanent and expand upon them.
“Let’s pass tax reform that permanently benefits all middle-income and working-class families without giving tax breaks to the top 1 percent,” he said.
“Instead of providing huge tax breaks to the rich and large corporations that explode the deficit, which this bill does, millionaires, billionaires and large, profitable corporations must begin paying their fair share of taxes.” Sanders has ambitious domestic spending priorities, including a national, single-payer health care system that he and other boosters have dubbed “Medicare for all.” Sanders declared flatly at a Democratic presidential candidate forum in January 2016 that to fund these priorities, “We will raise taxes, yes we will.” He introduced new legislation in September laying out his vision for a universal public insurance plan that goes beyond even the benefits Medicare currently provides to seniors and people with disabilities.
One of the ideas is a 4 percent income-based premium on all households ― in other words, a middle-class tax increase.