Trump’s tax deform and the coming economic disaster
The rich own about 98% of all the outstanding stock. The market has been soaring as they look forward to increasing their wealth by paying less taxes. The Republican tax “reform” is more of a “deform” for the rich. We will pay for this because the Republicans cannot evade the economic facts of life. They cut taxes drastically in Kansas and are still repairing the damage. The tax cut ideologues ignored this and spread extreme tax cutting to an already deficit ridden federal budget.
The tax cuts will be taking effect with unemployment about 4%, which is in reality “full employment”. You can’t get zero unemployment unless you factor out those changing jobs and impaired applicants who have limited capacities.
At full employment, there is no unemployed pool to draw from for growth. The Republican voodoo economics that growth will cancel out the increased deficit is dead on arrival.
There have been many false claims that the big corporations like Walmart are sharing a tiny fraction of the tax windfall with their employees. This is a pathetically small sharing and basically not true. They are raising some wages to compete for the limited supply of workers.
Economists call this “Wage inflation”. It’s great for the work force except that it carries the seeds of its own destruction. Inflation feeds on itself and can cancel out the wage gains.
Inflation raises interest rates in the bond markets. The Federal Reserve also fights it by tightening the money supply and raising interest rates.
Higher interest rates weaken consumer spending and investment. That’s when the upward economic cycle ends with recession. The Republicans have paved the way for a deep deficit/inflation driven recession. The Bond and Stock Markets are waking up to this with higher interest rates and lower stock prices. The tax deform isn’t even in effect yet. The worst is yet to come.