Yves here. The thrust of Trump’s stimulus ideas make clear that his priority is to goose the stock market, not to do much for the broader economy. And that should come as no surprise. As we’ve pointed out a few times, small focus groups with Trump and Hillary voters found that the enthusiasm of Trump voters post election was due almost entirely to the gains in their portfolios. Of course, this is doesn’t do much for the lower-income voters who also backed him.
It is also worth noting that Trump’s tariff gaslighting, his attacks on international institutions, and his general erraticness (his hissy fit over Denmark not being willing to sell Greenland is a classic) is creating uncertainty. How much economic damage that has done is unclear. But a President who is regularly and forcefully flailing has more potential to spook businessmen when conditions are already starting to decay than if fundamentals were stronger.
By Jake Johnson, staff writer at CommonDreams. Originally published at CommonDreams
While continuing to publicly downplay warning signsthat the U.S. economy is barreling toward a recession, the Trump White House is reportedly weighing a number of supposed stimulus measures, including more tax cuts for the rich and large corporations.
Politicoreportedlate Tuesday that Trump officials are considering “a cut of an additional percentage point or two to the corporate tax rate,” which the GOP tax law slashed from 35 percent to 21 percent in 2018.
“The American people are waking up to the damage he has done to our economy by waging senseless trade wars and handing out trillions in tax cuts to the wealthy and corporations.”
—Robert Reich, former Labor Secretary
“That’s on top of a potential payroll tax cut,” the news outlet noted, “which the Obama administration had used to shore up the economy, and a move to index the capital gains rate to inflation, which potentially could be done through an executive order.”
A payroll tax cut, which Trump on Tuesday confirmed he is considering, would temporarily boost workers’ paychecks.
But, as the Washington PostreportedMonday, depending on how it is designed, a payroll tax cut could “pull billions of dollars away from Social Security.”
The other option Trump is considering, indexing capital gains to inflation via executive order, would primarily benefit wealthy investors. According toChye-Ching Huang of the Center on Budget and Policy Priorities, 86 percent of the benefits would go to the top one percent.
The Trump administration has been mulling indexing capital gains to inflation through executive action since last year, despite warnings the move may be illegal. As Common Dreamsreportedlast month, a group of more than 20 Republican senators, led by Sen. Ted Cruz (R-Texas), is urging the president to push ahead with the executive order.
“We have been talking about indexing for a long time,” Trump told reporters Tuesday. “I can do it directly.”
Trump tells WH pool he could index capital gains to inflation — effectively a huge tax cut, primarily befalling the wealthy — through executive action, without going through Congress. Here's what Trump's own AG Bill Barr said about that in 1992, the last time he was AG pic.twitter.com/MdFGrzmqCo
— Catherine Rampell (@crampell) August 20, 2019
Journalist Matt O’Brien derided the White House’s reported ideas to ward off a recession as handouts to the rich that would do little to stimulate the economy.
“Hilariously, two of Trump’s ideas for stimulating the economy are 1) cutting the corporate tax rate a little more (after cutting it a lot didn’t do much), and 2) indexing capital gains to inflation,” O’Brien tweetedon Tuesday. “It’s tax cuts for the rich all the way down.”
Trump’s reported plans to put more money in the pockets of the wealthiest Americans and large corporations come just a week after the Treasury bond yield curve invertedfor the first time since the Wall Street crash of 2008. The inverted yield curve has preceeded every major economic downturn over the past 50 years.
Economists and other observers were quick to point to Trump’s reckless trade war with China, the world’s second-largest economy behind the U.S., as a key reason for recession fears. As Common Dreamsreportedlast week, the Twitter hashtag #TrumpRecessionwent viral shortly following the inverted yield curve.
Former Labor Secretary Robert Reich tweetedTuesday that “we already know about Trump’s racism, xenophobia, and fear-mongering.”
“Now,” said Reich, “the American people are waking up to the damage he has done to our economy by waging senseless trade wars and handing out trillions in tax cuts to the wealthy and corporations.”
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Maybe he should just do a reverse-AOC and have anyone with an income over $10M pay a marginal tax rate of zero? That should make the deified rich finally bless us peons with some trickling down, right?
Seriously, they’ve been trying this same playbook for decades and all it’s done is inflate the wealth of the rich and stifle any growth for the rest of us. It’s almost like that’s the feature and not a bug. :)
“It’s almost like that’s the feature and not a bug” – why the ‘almost‘? Unless you believe our elites really are less intelligent than a dog turd, it must be the feature. Only complete idiots continue with the same behaviour when it achieves opposite outcomes to those desired.
They’re getting rich and that’s all that matters to them. Whether it all blows up in their faces is another matter …
If he indexed capital gains to inflation I could imagine a huge drop in stock prices as those sitting on gains would be forced to cash out before the rule gets changed. Real estate as well would be subject to huge selling pressure. The well heeled sit on gains until they can realize a tax loss somewhere else. We desperately need a well funded IRS and a robust tax policy.
Trump is proposing (another) tax cut for… Trump. That it would benefit anyone other than The Donald & his family is purely coincidental.
How about cut income taxes to zero, tax pollution, automation, monopoly/extreme wealth, all things war/security/intelligence production and rentier wealth – if you really care about working people….
As my dad used to say, helping those who need it the least…
From a article in the 8/22 links.
Be sure to get out of the way, before “the resistence” stampedes in support. They votes for Trump’s tax cuts before, hard to think they will suddenly grow a spine now.
Remember Tim Kaine’s words, after the duopoly’s last tax cut as passed:
“We’ll just have to learn to live with it.” Poor dears!
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