The Republican Redemption: Tax Cuts Pass
It feels like the climax of a sports drama - the underdog team has been facing loss after loss, mostly due to dysfunction and a lack of leadership from the head coach. Some players have put their own egos ahead of the greater good for the team. But as the final game approaches, they realize how much is on the line and they must unite to prove that they have it in them.
And then they win.
Despite prior attempts at obstruction by individuals like Susan Collins, Lisa Murkowski, John McCain, and Bob Corker (to name the most egregious offenders), McConnell finally found his inner coach and made magic happen. There is no way we can forget his failures over the past year - but this bill is undoubtedly the closest he can come to making up for it.
The Republicans in Congress finally have a victory that they can call their own. Perhaps the only problem with the Tax Cuts and Jobs Act of 2017 is its name - because this bill is so much more than a mere tax cut. It also includes provisions to open up drilling in the oil-rich Arctic National Wildlife Refuge, as well as eliminating the tyrannical individual mandate of Obamacare, among other things. In that sense, this single bill can be seen as the Republicans’ best effort at essentially making up for their shortcomings over the course of the entire year, encompassing numerous other issues that they had not addressed adequately earlier in the year.
But this is still, at the end of the day, a tax cut. Its most important accomplishment by far is the slashing of the corporate tax rate. Prior to this bill’s passage, the corporate rate was 35% - the highest in the developed world; the Tax Cuts and Jobs Act reduced that rate by 14 points to 21%. Easing other restrictions, the bill also eliminates taxation on corporations’ earnings outside the U.S., and allows businesses to write off expenses immediately.
The bill has already taken swift effect for some corporations, with AT&T heralding the coming tax cuts by investing $1 billion in the U.S., and paying over 200,000 employees a bonus of $1,000. Boeing made a similar announcement, declaring that they would invest $300 million in “employee-related and charitable investments.” Fifth Third Bancorp and Wells Fargo have both announced that they will raise their minimum wages to $15 an hour; in addition, the former plans to award $1,000 bonuses to 13,500 employees, while the latter has pledged $400 million to philanthropic causes next year. Comcast has announced that it will also award 100,000 employees with a $1,000 bonus, as well as invest $50 billion in infrastructure over the next five years.
Most importantly, this bill capitalizes on a full year of economic optimism based almost entirely on President Trump’s rhetoric. The mere promise of tax cuts has had profound effects on the American economy, with the main points highlighted as follows by Breitbart’s John Nolte.
The stock market has shot even past the stars, gaining over 5,000 points in one year for the first time ever, and seeing 70 record closes over the course of 2017 - with its latest record being 24,000. GDP growth has been phenomenal, with the last two quarters seeing growth of well over 3%. The fourth quarter is now projected to reach 4%, which would mark the first time in over a decade that the U.S. GDP has grown by over 3% for three consecutive quarters.
Unemployment has hit a 17-year low, both overall (4.1%) and for African-Americans (7.3%), and an all-time low for Hispanic Americans (4.7%). Trump has even brought prosperity to a very particular swath of the American economy that he vowed to protect in the election: Manufacturing jobs, with 171,000 created in 2017 alone, resulting in a manufacturing unemployment rate of just 2.6% - the lowest it’s ever been.
Aside from Trump’s rhetoric, one other key policy initiative by the Trump Administration has played a role in this economic optimism: His massive deregulation spree. As The Weekly Standard noted, the rate of new regulations introduced in the Trump era has held constant at or near zero percent, with the average rate being 22 regulations cut for every one new regulation. This eased many burdens on the American economy, from businesses and entire industries to average individuals, so the introduction of these sweeping tax cuts completes an effective 1-2 combination of policies that are guaranteed to boost the American economy even further.
The President is set to sign this bill into law very soon. It will be the most comprehensive rewrite of the American tax code since Ronald Reagan’s Economic Recovery Tax Act of 1981, and may perhaps be even more significant than the Gipper’s bill.
Now, it is a waiting game. Only time will tell how much more the American economy will thrive as a result of this bill becoming law. April of 2018 will be the final time Americans file their taxes under the previous system, but the expectations for this bill will most likely spur further growth even before it is officially implemented. If the results are more or less along the lines of what President Trump has predicted, then the strong economy of 2018 could play a crucial role in the midterms that same year.