BALTIMORE – After a year of defeat and disorder, it finally looks like Republicans have managed a legislative victory.
The stock market celebrated Monday with the Dow hitting a new record high.
“Buy the rumor; sell the news.” That’s what the old timers say.
The rumor was that this tax bill would light a fire under U.S. companies… and soon, the entire economy would be ablaze.
The news is just coming in; more than likely, it will be soggy.
Throwing Bombs
Among those who had kind things to say about themselves was Tennessee Governor Bill Haslam, who congratulated his own party with this apologia: “It is easy to stand on the outside and throw bombs. It is a lot harder to accomplish things in government in a very divided country.”
Today, we stand with the bomb throwers, as usual. Not because we don’t like the tax bill; it will save us millions.
As one dear reader put it in today’s mailbag below: “Your organization is a bunch of blundering idiots. If you don’t like the tax bill, then send the 14% percent tax savings you’re receiving as a business back to the government.”
But along with our gratitude comes curiosity. If we pay 14% less, who will pay 14% more?
So let us begin our bomb throwing by chucking one at Governor Haslam, in the form of a nuance wrapped in an extenuated circumstance: It is especially hard to achieve any substantial change when you are trying desperately to avoid it.
“Greatest President Ever”
Another of our dear readers shocked us.
He wrote that he thought Mr. Trump was the “greatest president ever.”
Maybe he was joking. Or maybe he was comparing him only to Lincoln, Teddy Roosevelt, and Wilson.
Still, we stopped in our tracks… our breath taken away… Mr. Trump is easily one of the most colorful and controversial presidents ever.
And he is right about a number of things: The media is largely in the fake-news business. Most members of Congress are jackasses. Most regulations should be abolished forthright. Most of our wars are losing propositions.
Most important, he’s right about this, too: The system is rigged against the “little guy.”
The French Supreme Court recently ruled that dwarf-tossing threatens public order by undermining the dignity of man for the amusement of ticket-buying yahoos.
But no court has ever ruled that a politician cannot exploit little-guy voters to benefit his own career… and enrich his cronies.
We don’t blame Mr. Trump.
The government is controlled by insiders. Mr. Trump could play ball… or get whacked with the bat.
The insiders benefit from the fake-money system… fake wars… and the tax system. Real reform is off limits. The last thing they want is significant change.
First-Hand Knowledge
The tax bill is no exception.
With no cuts to spending, somebody will still have to pay the costs of running the government. And it won’t be the insiders.
Those costs are rising fast. From $4 trillion this year, the feds will spend about $4.5 trillion in 2018, the biggest pop in government spending in U.S. history.
Earlier this week, The Wall Street Journal revealed that the plan will allow U.S. corporations to bring back money earned overseas.
About $250 billion of this loot is expected to show up next year. This money will go into the pockets of stockholders, of course, with which we have no quarrel.
But it is alleged that it will stimulate the economy, too, and aid the common man as well as the rich one.
As it happens, we have some first-hand knowledge.
Our company does business all over the globe and earns money outside of the U.S. as well as inside.
Will it bring the money back home now that the tax rates are lower? If so, what will it do with it?
As to the first question, “I don’t know,” is the right answer. It really depends on where we need the money and where we think we can put it to its best use.
Generally, we judge the ground more fertile outside the U.S. Our guess is that other U.S. corporations do, too.
But as for the second question, there is little doubt. With rates so low, it is not for lack of capital that U.S. businesses do not invest more in the homeland.
Access to more money is not going to make them suddenly want to build new facilities and hire more workers.
On the contrary, the ability to bring back earnings at a lower tax rate could encourage us to invest more overseas.
The likely beneficiaries will fall into one of the familiar categories: rich U.S. shareholders who will pay less tax on corporate earnings at home and abroad… and middle-class foreign workers who are put to work by U.S. companies doing business overseas.
As for America’s middle- and lower-middle-class taxpayers… it’s the dwarf-toss for them.
They’ll get the old heave-ho… to the glee of the swamp-based fauna.
Regards,
Bill
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Category: Economics