By Josh DuBose
January 9, 2018
WASHINGTON – Positioning the United States as the center for global investment is where Bloomberg contributor Tyler Cowen believes establishment Republicans and “Trumpian nationalists” move past their first few awkward dates and climb into bed together. In Trump’s Economic Revolution Is All About Investment, Cowen parses out why the Republican held government is so insistent on lowering the corporate tax rate to around 20 percent.
“The underlying belief is that more [foreign] investment will do so much economic good that it will offset the direct tax increase for many Americans,” he writes.
This is Reagan-era supply-side economics with an upped ante. Here, corporations rather than individuals receive the largest tax cuts with Republicans believing the proceeds will “trickle down” the nation’s economic leg and water the middle and lower classes with new jobs, better benefits packages and maybe even higher wages.
The founder and president of Americans for Tax Reform, Grover Norquist, is giddy with lectern-pounding enthusiasm for the new tax bill. Somewhere around $3 trillion in corporate profits will return to the U.S. because of the legislation, according to Norquist’s statements to college students at The Washington Center today. The outcome presumably being these companies intend to “make it rain” domestically. One hitch in this philosophy, however, is the fact that corporations are already nesting atop record profits they’re not distributing to workers, making workers wish they were shareholders and shareholders offering to buy Norquist a cocktail, so they can hear him rant more about all the money they’re going to make under the new GOP tax reform bill.
A significant issue Cowen identifies in the new tax bill is how greater foreign investment in the U.S. “also must be associated with higher trade deficits.” The Republican tax bill adds nearly $1.5 trillion to the deficit and might lead to fewer new jobs and less economic growth than Trump promised and legislators need for the maneuver to work.
“U.S. debt is on an unsustainable path,” Robert Bixby, an economist and president of the Concord Coalition, who spoke before Norquist, said. Bixby provided CBO projections on how government outlays are outpacing revenues because of the aging baby-boomer population, which is shrinking tax revenues that could help mitigate the national debt.
“There is a fix,” Bixby said, adding that entitlement reform can be structured so that top earners, when they retire, aren’t as much of a drain on Social Security and Medicaid as other, less wealthy populations of Americans.
With her time at the center, Neera Tanden, president of the Center for American Progress, said, “The tax reform act is the most regressive in history.” Otherwise, Tanden, offered reasons for continued “resistance,” but an equal amount of solution-less partisanship as Norquist, though without all the yelling.
In the next episode of Trump’s “reality presidency,” Republicans hope to cut entitlements as a patch to the nasty hole they just poked in the nation’s debt. Even with a sweep in the 2018 midterms, Democrats will need to work fast to build a new dam against incoming flood of debt.