Actually, the Tax Cuts ARE Working
Despite the GM debacle, overall business investment is significantly up this year.
When GM announced major layoffs and plant closures earlier this week, Democrats immediately blamed GOP corporate tax cuts. We argued GM’s problem is far more complicated than that; other factors include its bailout 10 years ago, Big Labor, and a poor and unpopular product lineup. Not only that, but Democrats were missing the forest for one tree.
The Wall Street Journal’s James Freeman agrees. Noting yesterday’s updated but largely unrevised report of third-quarter GDP growth of 3.5%, Freeman wrote, “Despite concerns over trade disputes and a slowing global economy, the corporate tax rate cut enacted in December of 2017 continues to encourage the business investment that leads to higher productivity and higher wages for American workers. Today the government reported that such investment was higher than it initially reported for the third quarter of the year.”
In other words, the significant revision to the GDP report was that American companies invested substantially more than initially reported. Freeman explains, “The Commerce Department has reported that non-residential fixed investment rose 2.5% at an annual rate in the three months ending in September, up from 0.8% in the earlier estimate. Within this overall category of business investment, spending on equipment was revised to estimated growth of 3.5%, up sharply from an earlier 0.4% estimate.”
How did companies have that money to invest in growth? Their taxes were substantially lower. If Democrats blaming Republicans for GM had their way, the U.S. would still have the highest corporate tax rate in the world. Lower tax rates obviously don’t fix every ill in the economy, but leaving businesses — and by extension consumers — with more of their own money means there will be more jobs, higher wages, and overall economic growth that would be hampered by Democrat policies.
That’s why it’s so laughably absurd for Barack Obama to keep taking credit for Donald Trump’s economy. Let’s hope House Democrats don’t, as they like to say, turn back the clock.