Posted on 09/16/2017 10:45:00 AM PDT by Kaslin
Financial markets and most media pundits are missing the new writing on the wall. For a variety of reasons surrounding shrewd moves by President Trump, the chances for significant tax cuts in the next ten weeks have risen sharply.
Since the Charlottesville blow-up in mid August, when the presidents fortunes were at low ebb -- and Ill repeat my view that theres not a white-supremacist, racist, hateful bone in Trumps body -- weve witnessed a dramatic executive turnaround. Trump beautifully handled the hurricane emergencies. His bipartisan political pivot to Charlie and Nancy to keep the government open and raise the debt ceiling was clever indeed. As economist Steve Moore puts it, POTUS publicly spanked GOP leaders Paul Ryan and Mitch McConnell. And though theres plenty of confusion about immigration reform, its clear now that 800,000 dreamers wont be deported for at least two years if ever.
Some polls show POTUSs approval nearing 50 percent. The public likes what it sees.
And most important, Trump has cleared the decks for tax cuts and reform.
Make no mistake: Trump is absolutely committed to tax cuts. This is completely unlike the health-care muddle. And critical here is the argument Trump is making: A big drop in large- and small-business tax rates will mostly benefit middle-class wage earners.
Research from Kevin Hassett, formerly of AEI and now chairman of the CEA, shows about 70 percent of the benefits of business tax cuts going to wage earners. This is not a tax cut for the rich, as Johnny-one-note Democrats insist.
There are two big numbers standing atop Trumps tax plan: 3 percent and 15 percent. Three percent is the new growth path that will normalize Americas economy and generate at least $3 trillion of additional revenues over ten years (or sooner). This is the mother of all pay-fors. Fifteen percent is the corporate rate that will spur capital-formation, business-investment, productivity, and real-wage increases.
The Republican establishment says it cant be done. Theyll only risk dropping the business rate from 35 to 25 percent. But Trump wants the full 15. So does his Treasury secretary, Steven Mnuchin. Other than the president, Mnuchin, whom I call the apostle of growth, is the only administration official to keep up the drum beat for 3 and 15 percent.
Aparna Mathur of AEI notes that at 39.1 percent, including state taxes, the U.S. has the highest statutory rate among G20 nations. (China is 15 percent.) And our average corporate rate, which is total taxes paid as a share of income, is 29 percent, third highest in the G20.
So echoing the president, if we want to build out investment, jobs, and wages, bring back overseas profits, stop American companies from going overseas, and make the investment climate in America tops in the world, we need a big-bang slash of our business tax rate.
Its not a matter of bean counting. Its a matter of growth-oriented economic policy.
Trump is ending Obamas wars on business and success. Hes halting the war on fossil fuels. And hes virtually rolling back the regulatory state. OMB reports that roughly 800 pending business regulations have either been frozen, rolled back, or reclassified in the administrations first seven months.
Slashing the business tax rate is the necessary complement to this regulatory relief.
And GOP lawmakers have ten weeks to do it.
Can they? Will they?
Heres some progress: It looks like Paul Ryan is taking off his CBO green eyeshades. Rather than insist on revenue neutral tax policy, he seems to be returning to his Jack Kemp, supply-side roots, arguing that growth is the most important issue.
The CBO is a big part of the swamp that President Trump would drain. With its pathetically small growth estimates, it blocks pro-growth tax-cut policies. Neither CBO nor the Joint Tax Committee has any serious models showing how lower tax rates reduce tax-avoidance and tax-sheltering -- a point made emphatically by supply-side mentor Arthur Laffer.
But Mnuchins Treasury will come up with more realistic models for the Trump tax cut. And theres no reason why these estimates cant be used.
Whats more, theres no reason why the ten-year scorecard window cant be extended to 20 years. The green-eyeshade process must not be permitted to block an American prosperity renaissance.
The GOP needs a budget resolution, which will contain crucial, 51-vote reconciliation instructions on spending and taxes. But where theres strong political will, legislative ways and means will be found. Ten weeks is plenty of time.
So I agree with my friends at Bretton Woods Research: Budget and tax-cut draft legislation is coming sooner than folks think. My financial take? Buy stocks, go long the dollar, and short gold.
In other words, optimism.
There are a lot of worry-warts around here lately, but I think President Trump is doing great. Things take time, and the hill is steep, but he’ll do it.
Everything is proceeding nicely.
I also agree we have seen a fair amount concern trolls recently. Mostly newer accounts or older neocons. They refuse to accept the paradigm shift. They still don’t realize the press, with very few exceptions, is the enemy.
Nice article and nothing about the ‘Dreamers’ who’ll flip Texas and Florida socialist if they’re allowed naturalization and subsequent chain immigration.
There are a lot of worry-warts around here lately, but I think President Trump is doing great. Things take time, and the hill is steep, but hell do it.
My thoughts exactly........well said.........;)
Love it!
We will immediately terminate President Obamas two illegal executive amnesties, in which he defied federal law and the constitution to give amnesty to approximately 5 million illegal immigrants.” DJT -August 31, 2016
All of the trolls concerns are based on conjecture and fear. It ain’t over til it’s over and we are in the early part of the game.
Larry Kudlow is a fav. Occasionally he strays, but this time he’s right on target.
Excellent article.
Mnuchin and Trump are holding firm on corporate tax cuts to 15% vs. the current 40% tax rate on business (including confiscatory State taxes).
The kerfuffle re: DACA may have helped take focus off progress Trump is making toward getting a signed tax cut bill by year’s end. This writer says “10 weeks”. If true, I will bet Trump wins on this one which means all these loser Republican incumbents will win reelection next year; but first they have to gird their loins to withstand the namecalling and attempts to blackmail by the Dem stasi. Reelection for sure if they stand pat. Or resign when their little secrets are revealed. Hmmm.
The article wasn’t about DACA. Why would it be mentioned?
The article was about taxes. What is your point for being off topic?
The Garrison political cartoons are amazing.
This one makes it clear he’s got his head in the game, all the topics he covers. As busy as it is, it’s hard to believe, but there is even more that could have gone on it, a lot more.
Kudos to him for this effort.
Thanks for posting it here. I saved a copy. Really nice...
His work reminds me a lot of Thomas Nast. It’s just that thickly textured.
This seemed to reflect your point pretty well.
Thank you. I agree.
“Trump Turnaround Puts New Tax-Cut Writing on the Wall”
what “turnaround”? how can there be a “turnaround” when there was never a REAL issue to begin with?
this “low ebb”/”turnaround” BS is total nonsense because all of these putative Trump tidal levels are simply fabrications by the enemedia, which no one but die-hard leftist pay the slightest bit of attention to the enemedia anymore as evidenced by the recent poll showing 98% of Pubs who voted for Trump in both a primary and the general election still support him.
Financial markets ...are missing the new writing on the wall
No.
https://grrrgraphics.com/
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