Lew Says Tax Cuts Will Leave the U.S. Broke

Former Treasury Secretary Jacob Lew told Bloomberg the Trump administration’s decision to add a significant amount of debt through last year’s tax legislation is leaving the country broke.

Said Lew: “It’s a ticking time bomb in terms of the debt. You cannot run a fiscal policy by spending trillions of dollars you don’t have at a time that the economy is doing well.”

World’s Wealthiest Became $1 Trillion Richer in 2017

Bloomberg: “The richest people on earth became $1 trillion richer in 2017, more than four times last year’s gain, as stock markets shrugged off economic, social and political divisions to reach record highs.”

“The 23 percent increase on the Bloomberg Billionaires Index, a daily ranking of the world’s 500 richest people, compares with an almost 20 percent increase for both the MSCI World Index and Standard & Poor’s 500 Index.”

Trump Rebrands Obama’s Economic Legacy

“The White House hopes to boost President Trump’s low approval ratings by using the economy as a centerpiece of its political message in 2018, according to three White House officials, even if many of the president’s successes so far are squarely built on the legacy of former President Barack Obama,” Politico reports.

“The trends of declining unemployment, coupled with healthy gains in the stock market, began during Obama’s first term, a welcome uptick following the global economic downturn Obama inherited in 2009.”

Economic Outlook Hits New High

A new Quinnipiac poll finds that 63% of American voters say the nation’s economy is “excellent” or “good,” while 34% say it is “not so good” or “poor.”

More think President Obama is mostly responsible for the state of the economy, 45% of voters, than President Trump, 43% of voters. In fact, voters disapprove 51% to 44% of the way Trump is handling the economy.

Redistributing Income from the Poor to the Rich

Washington Post: “Back in 1980, the bottom 50% of wage-earners in the United States earned about 21% of all income in the country — nearly twice as much as the share of income (11%) earned by the top 1 percent of Americans.”

“But today, according to a massive new study on global inequality, those numbers have nearly reversed: The bottom 50% take in only 13% of the income pie, while the top 1% grab over 20% of the country’s income.”

“Since 1980, in other words, the U.S. economy has transferred eight points of national income from the bottom 50% to the top 1%.”

One-Third of Puerto Rico Still Has No Power

Bloomberg: “Today, nearly three months after the storm, more than one-third of the island is still without power, and in the areas where it has been restored the service is often unstable, with occasional outages. Thousands of businesses remain closed. Normality sporadically peeks out from it all—on a street with a string of working stoplights, in an air-conditioned hotel lobby—then quickly retreats, as if ungraspable.”

The GOP Tax Bill Is an Economic Policy Disaster

Stan Collender: “If it’s enacted, the GOP tax cut now working its way through Congress will be the start of a decades-long economic policy disaster unlike any other that has occurred in American history.”

“There’s no economic justification whatsoever for a tax cut at this time. U.S. GDP is growing, unemployment is close to 4 percent (below what is commonly considered ‘full employment’), corporate profits are at record levels and stock markets are soaring. It makes no sense to add any federal government-induced stimulus to all this private sector-caused economic activity, let alone a tax cut as big as this one.”

“This is actually the ideal time for Washington to be doing the opposite.”

How Trump Is Poisoning World Trade

Edward Luce: “How many poison pills does it take to kill a trade deal? Three, according to Donald Trump. Mexico and Canada are bending over backwards to preserve the North American Free Trade Agreement. But their tolerance for Mr Trump’s demands is wearing thin. It seems a matter of time before he declares America’s exit from ‘the worst trade deal ever.’ The temptation to withdraw from the World Trade Organization will grow as Mr Trump’s term wears on. Anyone who thinks he has dropped his vow to rip up the global trading system has not been paying attention.”

“Such tactics are the opposite of the art-of-the-deal image Mr Trump has spun. According to that playbook, Mr Trump opens with extravagant demands that force his counterparties to improve their offers. The final deal is far better than had he begun with a realistic gambit. Yet when Mr Trump refuses to dilute his outrageous opening offer, the suspicion arises that he never wanted a deal. That, indeed, has been his approach to almost every negotiation.”

Axios: The industries at risk if Trump quits NAFTA

Trump’s Tough Talk Suggests NAFTA’s Demise Is Imminent

“The North American Free Trade Agreement, long disparaged by President Trump as bad for the United States, was edging closer toward collapse as negotiators gathered for a fourth round of contentious talks here this week,” the New York Times reports.

“In recent weeks, the Trump administration has sparred with American businesses that support Nafta and has pushed for significant changes that negotiators from Mexico and Canada say are nonstarters. All the while, the president has continued threatening to withdraw the United States from the trade agreement, which he has maligned as the worst in history.”

Dispelling the GOP Tax Myth

Bruce Bartlett: “Four decades ago, while working for Rep. Jack Kemp (R-NY), I had a hand in creating the Republican tax myth. Of course, it didn’t seem like a myth at that time — taxes were rising rapidly because of inflation and bracket creep, the top tax rate was 70 percent and the economy seemed trapped in stagflation with no way out. Tax cuts, at that time, were an appropriate remedy for the economy’s ills.”

“Tax cuts became the GOP’s go-to solution for nearly every economic problem. Extravagant claims are made for any proposed tax cut…”

“That’s wishful thinking. So is most Republican rhetoric around tax cutting. In reality, there’s no evidence that a tax cut now would spur growth.