Killing A Growing Economy One Law At A Time

On January 4th, Investor’s Business Daily reported:

Since President Donald Trump took office nearly two years ago, some 4.8 million new payroll jobs have been created. That’s more than four times as many as created during President Obama’s first four years.

Hold on, you say, didn’t the unemployment rate jump from 3.7% to 3.9%? It did. Yes, but not because more people were unemployed, but because more people entered the labor force, seeking opportunities that didn’t exist before.

It’s actually a bullish sign. Some 419,000 people entered the workforce during the month, driving the labor force participation rate to 63.1%, up from 62.7% a year ago. That bellwether employment figure declined pretty consistently during the job-poor Obama years, from 65.7% when Obama entered office to 62.9% when he left. It stabilized under Trump. Last month’s 63.1% tied for the highest point since September 2013.

This rapidly improving economy is the result of President Trump’s deregulation and tax cuts. Cutting the corporate taxes and regulations resulted in manufacturing jobs returning to America (after President Obama told us they were never coming back). So why is the Democrat House of Representatives trying to undo this progress?

The Hill reported yesterday:

Rep. John Yarmuth, the new House Budget chairman, said his chamber’s budget blueprint will aim to claw back lost revenue by boosting the corporate tax rate from its current 21 percent to as high as 28 percent, with rate increases also possible for high-earning individuals.

The Kentucky Democrat said Friday he wants to mark up a fiscal 2020 budget resolution, which will outline his party’s vision for taxes and spending over the next decade, in time to reach the House floor in early April. Yarmuth said Democratic leaders have told him they want to be ready so they can set the procedural stage for passage of all 12 appropriations bills before the August recess.

Are they simply economically badly informed or is there another motive? Well first I would like to mention my favorite Milton Friedman quote, “If you put the federal government in charge of the Sahara Desert, in five years there’d be a shortage of sand.” I think there are two forces at work here–first of all the Democrats love taxes. They believe that the more of everyone else’s money they have to spend, the more powerful they are. Second of all, Democrats with brains realize that increasing taxes will slow economic growth. Slowing the Trump economy is the only chance the Democrats have of taking the presidency in 2020. That is the plan. Hopefully the Senate will not pass the House of Representative’s budget plans. They will be harmful to average Americans. President Trump has helped average Americans economically. President Obama helped Wall Street but ignored Main Street. The House Democrats seem determined to go back to that model which ignored average Americans.

The Real Numbers

Yesterday Investor’s Business Daily posted an editorial about the federal deficit and federal revenues. The numbers tell a very different story than the one the media would have you believe.

The editorial reports:

The latest monthly budget report from the Congressional Budget Office shows the deficit jumping $102 billion in just the first two months of the new fiscal year.

…A true apples-to-apples comparison, the CBO says, shows that the deficit climbed by just $13 billion.

So, no, the deficit is not soaring.

The editorial explains:

In fact, the CBO report shows that overall tax revenues climbed by $14 billion in the first two months of the year, compared with the same months last year. Which means they continue to hit new highs.

The CBO report shows that combined income and payroll taxes were the same in the first two months of the new fiscal year as they were last year. That’s even though far less money was withheld from paychecks thanks to the Trump tax cuts.

It also found that corporate income taxes went up by $5 billion. That’s despite the “massive corporate tax giveaway” that Democrats want to repeal.

Why are these revenues flat or up? Simple: The tax cuts help spur accelerated economic growth, which create jobs and spark income gains. More workers and higher wages mean more tax revenues. On the corporate side, a bigger economy means more profits, which even when taxed at lower rates can produce more revenue. This is exactly what advocates of Trump’s pro-growth tax cuts said would happen.

Meanwhile, revenue from “other sources” climbed by $8 billion. (To be clear, at least some of that $8 billion came from the re-imposition of ObamaCare’s nefarious tax on insurance premiums, which Congress had suspended the year before.)

But while revenues climbed by $14 billion, spending in the first two months of the new fiscal year climbed by $27 billion.

The obvious solution to the deficit problem is to limit spending. If we can’t agree on that, we could lower taxes again to increase revenue further, but I suspect that would really cause some Congressional heads to explode.

Unexpected Benefits Coming From The Trump Tax Cuts

The Washington Examiner posted an article today about a recent policy change from the Federal Energy Regulatory Commission.

The article reports:

The Federal Energy Regulatory Commission (FERC) issued a proposed rulemaking that would require all publicly-owned utility companies that own transmission lines “to revise” their rates to account for the benefits they received under the tax reform package.

The tax reform bill passed last December cut the corporate tax rate from 35 percent to 21 percent beginning in 2018. A number of states’ energy commissions have already directed the utilities they regulate at the retail level to account for the changes and grant credits to ratepayers.

…FERC also issued a policy statement on Thursday that provided ratemaking guidance for all companies under FERC’s jurisdiction to account for the tax benefits they received. Those companies include public utilities, owners and operators of natural gas and oil pipelines.

FERC also acted on 46 show-cause investigations, directing certain public utilities whose transmission tariffs used a tax rate of 35 percent to reduce their tax rates to 21 percent, or show why they did not need to do so.

As much as I generally don’t like federal regulations, if that is what it takes to pass the tax savings of publicly-owned utility companies on to their customers, then I support the regulations.

 

The Impact Of The Trump Tax Cuts

The Gateway Pundit is reporting today that corporate first quarter earnings are the best in twenty-five years.

The article reports:

We predicted that this would be one of the greatest quarters ever in the history of corporate earnings and we were right. 

We reported on April 12th that “because of President Trump’s economic measures, the ‘bottom line’ or net profits for these companies will be the best 1st Quarter results ever!”  We also said –

As a result of these tax cuts, most US Corporation will deliver a net income in their financial results that is 14% greater than prior year. This starts in the 1st Quarter of 2018 and the results for many major companies will begin being reported in the next few weeks.  This means that for every large corporation reporting financial results in the US, the net income after taxes will be increased by 14% – an unheard of increase!

With many companies reporting their best year’s results ever in 2017, and the economy on fire, and taxes being cut by 14% – expectations are that the net income for these companies in the 1st Quarter of 2018 will be the best ever and this will continue from this point forward!

The article quotes a Marketwatch report:

According to Thomson Reuters I/B/E/S, of the 343 companies, or about 70%, of S&P 500 members that have reported earnings to date, 79.9% have reported earnings per share that were above analysts’ expectations, putting the season on track for the highest earnings beat rate on record, going back to 1994.

So far, the first-quarter growth rate for EPS is 22%, compared with consensus earnings growth of 16.3% as of April 12, according to Lindsey Bell, investment strategist at CFRA. That outperformance is underpinned by some of the most highly valued companies, including JPMorgan Chase & Co. JPM, -0.50% Apple Inc. AAPL, -0.44% Facebook Inc. FB, -0.32% and Amazon.com Inc. AMZN, -0.36%

Bell said recent quarterly results have seen outperformance of about 3 to 4 percentage points better than analysts’ consensus estimates on average, compared with the 5.7 percentage points earnings are currently running ahead.

Bell said what’s really impressive is that expectations were already lofty and this quarter represented the first in which the bar was raised to factor in fiscal stimulus measures such as corporate tax cuts, which took effect in late 2017.

“It’s significant because we haven’t seen a change like this from the very beginning to (the) start of reporting season,” Bell said.

The Marketwatch article is focused on why the stock market has not yet responded positively to good news in corporate earnings, but it includes a lot of interesting information about the current state of the economy. The biggest financial challenge we face as a nation is our continued overspending. Until that is brought under control, we will not have a truly healthy economy. Tax revenues are up since the tax cuts (that always happens–see the Laffer Curve for further information), but spending has also increased. We are a nation that based on our income should be driving a Ford but has gone out and purchased a Rolls Royce. At some point there will be a reckoning, and it will not be fun. We need to elect people who will shrink government and cut spending. Raising our taxes will not help because it will slow economic growth and decrease revenue. Please consider this when you vote in current primary elections and when you vote in November.

The Problem Is Not The Revenue–It’s The Spending

CNS News posted a story today stating that the federal government raked in a record of approximately $2,883,250,000,000 in tax revenues through the first eleven months of fiscal 2015 (Oct. 1, 2014 through the end of August), according to the Monthly Treasury Statement released Friday. This equals approximately $19,346 for every person who was working either full or part-time in August.

The article further reports:

Despite the record tax revenues of $2,883,250,000,000 in the first eleven months of this fiscal year, the government spent $3,413,210,000,000 in those eleven months, and, thus, ran up a deficit of $529,960,000,000 during the period.

…The largest share of this year’s record-setting October-through-August tax haul came from the individual income tax. That yielded the Treasury $1,379,255,000,000. Payroll taxes for “social insurance and retirement receipts” took in another $977,501,000,000. The corporate income tax brought in $268,387,000,000.

The chart below is an illustration of America‘s spending problem.

The article also noted that under ObamaCare new taxes took effect in 2013.

Excessive spending is a problem that Washington has no incentive to fix. It is up to the voters to give them an incentive–fix this or we vote you out of office!

 

The Truth In A Chart

Received in my email from a friend:

Below is a brief summary chart of what the Obama regime has really done to our great nation.

1.    Our national debt rose 80% to over $18 trillion.

2.    Our population rose 17 million, but the number of taxpayers only went up 9 million, the workforce rose only 4 million,  13 million desperate people stopped looking for work and dropped OUT of the workforce because jobs don’t exist (millions applying for and getting designated as ”disabled” so they don’t starve) and actual unemployment rose 4 million.

3.    The “food stamp” president, Obama,  has seen recipients rise 16 million (almost as much as the 17 million population increase!) to 46 million. Those living in poverty rose 16% to 44 million and US manufacturing jobs dropped from 19 to 12 million since 2000.  Why?  Because our highest-in-the-developed-world corporate tax rate of 35% is driving jobs out of our country as fast as corporations can legally incorporate off shore to maximize profits and survive.

graphofWorkforceThis, my friends, is where we are.

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