A budget that all of DC can get behind. (That’s not a good thing.)

I’ve got 2 stories this episode about the economy; one good and one bad. Both are directly related to what Trump and the Republicans are doing.

The stories are one about the tax cut and one about the budget. Listen in to find out which is good and which isn’t.

Mentioned links:

Granite Grok (Conservative politics in New Hampshire in 10 minutes or less)

Here’s what America’s biggest companies plan to do with all that cash coming back to the US

Over 100 companies giving ‘Trump Bonuses’ after tax victory, ‘tsunami building’

Apple, Capitalizing on New Tax Law, Plans to Bring Billions in Cash Back to U.S.

The Trump Spending Binge

Trump’s budget balloons deficits, cuts social safety net

Planned Parenthood’s Taxpayer Funding Safe Under Spending Deal

Conservatives lash out at GOP spending binge

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Show transcript

For good news on the economic front, listener John sent me a message recently with a topic suggestion.

Good morning!  I don’t know if you’re a regular NY Times “The Daily” podcast listener but if not I’d highly recommend today’s episode. It’s all about companies giving back to their workers from the tax cuts. Of course, the Times discredits Trump’s success in it…. It’s very good and I thought could be a piece in your Consider This podcast. I know a company locally that is adding 700 new workers and pulling them from their Mexico plant just because of the cuts.

Thanks, John! It is indeed completely contrary to the media narrative that cuts to corporate tax rates would help out anyone other than the 1%, so they have to minimize the conservative principle involved. Maybe, just maybe, “trickle down” economics isn’t such a discredited theory after all. This, at least, is a rather stark example of it. It can and does still happen to a slower extent over time, but an overall windfall at the top can indeed come splashing down on many lower down.

When asked about these benefits of the tax cuts, President Trump was quoted as saying, [Maui from “Moana”: “What can I say except, ‘You’re welcome.’”]

I have some links in the show notes that gets that list of companies going with 100, and I’m sure that there are many others, just like John noticed locally. In many cases, these are coming as 1 or 2 thousand dollar bonuses. I’ve heard others criticize those bonuses for the inflation they will cause, and that wage increases would be better. Well, we’re getting those, too, and some of them to the magic $15 an hour you hear the Left protest about. I guess a government-mandated minimum is somehow better than a company doing it themselves, once they believe they have the capital to do it. Of course, we’ve already seen examples of businesses, especially small businesses, closing because the government priced labor out of their ability to pay. And yet, give businesses their own money back, and the change begins, without government force. (How is that even possible? The world may never know.)

And some, as John observed, will begin expanded hiring as a result of these tax cuts. Even better than a wage increase is getting a wage when you weren’t getting one before.

Now, one of the other things this tax bill did was lower the tax rate on companies to bring back profit they’ve left overseas in order to avoid the high corporate tax rate. They get a one-time “repatriation sale” rate, so to speak, in order to get that money back home to spend in our economy. One of the biggest announcements on this front came from Apple, who was keeping 94% of its cash offshore. With this deal, they’d bring back the vast majority of that cash and pay $38 billion in taxes.

In the meantime, Democrats spent most of their own political capital passing this off as “tax cuts for the rich!” Yeah, well, as has been noted so often before, it’s these rich folks who create the jobs. You’re welcome.

And now we go from good news on the economic front to bad news. On February 9th, we had a “blink and you missed it” government shutdown. Again. This time, however, to get things moving again, here’s what the Wall Street Journal says got passed.

The two-year budget deal will boost federal spending for both the military and domestic programs by almost $300 billion over two years, in addition to nearly $90 billion in disaster aid for areas recovering from last year’s destructive storms. It will also suspend the government’s borrowing limit through March 1, 2019.

What? Where did the allegedly “fiscally responsible” Republicans go hiding out for this? They were voted in, at least by conservatives, to reign in the spending; you know, just like they said they wanted to do under Obama.

And the idea of suspending the borrowing limit is absolutely insane! It sets an awful precedent. Instead of at least having a pause every so often to raise our credit limit, and keep that issue in front of both politician and voter, now the question is, “Limit? What limit?” My prediction now is that, instead of credit limit increases, we’ll just extend the holiday in 2019, and there will be no check at all on the debt.

Yeah, I know that a limit that is always increased is no limit at all, really. But now we’ve done away with the barest of fig leaves and now proudly prance around with nothing more than a credit card.

On top of that, Trump released his proposed budget plan, which requires borrowing around $1 trillion each of the next 2 years. And speaking of broken promises, Planned Parenthood spending is not touched. Sure, it’s just half a billion dollars – a drop in the bucket – but if Republicans can’t even do that, their claims of being fiscally responsible are as truthful as…well, as a promise from Democrats to be fiscally responsible. Never mind the morality issues of abortion. And you should never “never mind” those issues, anyway.

I will note that there are actual conservatives really getting out there and railing against this. Lots of good links in the show notes. And basically, budget proposals from the White House are dead on arrival anyway. But still, if you’re going to claim the mantle of the responsible party, you should be negotiating from a position of more responsibility, not less.

Filed under: DebtEconomics & Taxes