Democrats panic over avalanche of good economic news
Democrats sound plain silly as they continue to attack the GOP tax cuts.
Former Democratic National Committee Chairwoman Debbie Wasserman Schultz (D-Fla.) said at a recent town hall that $1,000 bonuses “wouldn’t go very far,” and they were taxable, so it wouldn’t really be $1,000 after all. Amazingly, she also said she hadn’t heard of any bonuses bigger than $1,000.
Wasserman Schultz also neglected to mention the pay hikes announced by many companies, including AT&T, Wells Fargo, Fifth Third Bancorp, Boeing, Walmart and Comcast, that will make a permanent difference to workers going forward.
Is Debbie not keeping up? Or is she so panicked over the avalanche of good economic news triggered by the Trump agenda that she can no longer bear to read the headlines?
She made the disparaging comments while appearing with House Minority Leader Nancy Pelosi (D-Calif.), who has been leading the charge against Trump’s tax cuts.
The wealthy Pelosi has famously likened $1,000 bonuses to “crumbs”; this, from a woman who in 2011 called a $40 payroll tax savings passed by President Obama a “victory for America.” At the time, Pelosi tweeted that the $40 weekly benefit would “make a difference” to the American people.
Here’s the bad news for Democrats: The good news from the tax bill is going to be bigger and more powerful in the months ahead, leading right up to the fall elections. The most important number contained in the fourth-quarter GDP report was a 6.8-percent rise in business nonresidential investment.
That is a notable acceleration from the 6.2-percent gain of the first three quarters and is a remarkable turnaround from Obama’s eight years in office when, as The Wall Street Journal noted, such spending “underperformed.”
Why does it matter? Because, as The New York Times noted in a rare piece crediting President Trump’s tax breaks and deregulatory policies with the upturn in business optimism: “Investment in new plants, equipment and factory upgrades … bolsters economic growth, spurs job creation — and may finally raise wages significantly.”
Rising capital spending means increased productivity; with new machines and more efficient plants, workers are able to make more goods. Economists have long cited the lackluster productivity growth of recent years for sluggish wage gains.
The increase in investment spending will accelerate not only because of increased business confidence but also because the GOP tax bill allows immediate expensing of capital goods purchases. Businesses of all kinds report they are stepping up modernization projects to take advantage of the generous new tax treatment.
Apple announced capital spending of $30 billion in the U.S. over the next five years, while Comcast has committed to spending $50 billion. Orders for capital goods are through the roof, up 11.4 percent in the fourth quarter; higher output will follow.
In contrast to this more favorable treatment of capital-good spending, under Obama, taxes were raised on investment income, including on dividends, capital gains and profits, reducing after-tax returns. As an editorial in Investor’s Business Daily noted in 2016, “Investment taxes are up by as much as 60% since the end of the George W. Bush years (from 15% to 23.8%).”
Wasserman Schultz and Pelosi haven’t addressed the positive effect of a spending boom, because they continue to portray the GOP tax bill as only benefiting billionaires and big business. Workers, they suggest, are hung out to dry.
The New York Times echoed those sentiments in a recent editorial, arguing that it’s the “corporate elite” like Lloyd Blankfein who will benefit from the tax plan. The editorial board points out that the head of Goldman Sachs supported Hillary Clinton in 2016; they are apparently miffed that he is not a stalwart member of the resistance. His crime? Saying he “really liked” what President Trump is doing for the economy.
The Times piece is the essence of silly, reminding readers, for instance, that Walmart, which is spending $700 million of its tax windfall on wage hikes and bonuses, “also raised wages when tax rates were higher under President Barack Obama.”
They fail to note Obama’s dismal record on investment and wage growth. The editorial board also targets Apple’s ability to repatriate overseas-held cash at a lower tax rate, doubting that tax planners “made the right call” by giving out such a “huge tax break.”
They neglect to mention that the U.S. was uniquely penalizing income earned overseas by multinational corporations, and that Obama suggested a policy change similar to that included in the GOP tax bill. His proposal, like so many of his initiatives, went nowhere.
The incessant criticism of the tax bill initially made it “widely unpopular” according to polling, but a more in-depth survey conducted by IBD/TIPP last month showed the public approves of many if not most of the legislation’s features.
Some 57 percent agreed that corporate tax rates should be lower, 83 percent supported dropping the pass-through rate for small businesses and two-thirds likes doubling the standard deduction. As Americans open their pay envelopes next month, approval of the tax cuts will likely rise.
Democrats and The New York Times simply cannot tolerate the notion that the Trump agenda has boosted optimism and confidence and that the entire country stands to benefit. Their stalwart negativity is understandable.
Americans vote with their pocketbooks, which day by day are getting fatter. Nothing is more dangerous to Democrats’ ambitions in the upcoming elections than today’s booming stock prices and economy — except maybe lower taxes.
Published in The Hill
