Democrats have long championed running budget deficits and ramping government spending to kickstart the economy. Now that Republicans are doing just that, Democrats aren’t so sure.
For years, the prevailing Democratic talking point was that expansionary fiscal policy — the idea that cutting taxes, increasing government expenditures, or both — is the best way to stimulate economic growth and put downward pressure on inflation. Now Republicans, during a period of near full employment and economic expansion, are hopping on board, cutting taxes and revving up government spending.
President Donald Trump signed a $1.5 trillion tax bill into law in December that slashed corporate, business and income tax rates. Congressional Republicans last week rolled back the 2011 budget austerity measures the party fought aggressively with former President Barack Obama’s administration to enact with a two-year budget deal that increases federal spending some $300 billion. Trump signed the bill into law Friday.
Despite enacting what Democrats have asked for and tried to push under Obama, Democrats aren’t thrilled with the Republican rollout, arguing that the policies either miss the targets or the timing is completely off. – READ MORE
[divider][/divider]If first quarter tax revenues are any indication, Trumponomics is operating much like Reaganomics and producing the same kind of results: lower taxes and deregulation resulting in more economic growth and, thus, more tax revenues.
In the first quarter after the Republican-passed, Donald Trump-signed reform bill — which will save taxpayers and corporations $1.5 trillion in taxes over ten years — tax revenues actually increased by $18 billion (5.2%) over the previous year, resulting in the government running a $51-billion surplus.
The CBO notes that not all employee tax withholdings have been updated under the new policies; companies have until mid-February to do so. However, as Investors Bureau Daily underscores, the CBO’s numbers suggest that gains in wages and salaries are likely to continue and even “accelerate” due to the tax cuts.
The increase in tax revenues corresponds with the positive economic news of the last few months. Trump’s aggressive approach to slashing regulations — more aggressive, in fact, in than Reagan so far — appears to be paying dividends. The Atlanta Fed’s recent forecast for the first quarter of 2018 indicates a dramatic increase in GDP of an estimated 5.4%. – READ MORE
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