Photo: Spencer Platt/Getty
On November 13, 2018, Sophie Weiner writes on Splinter News:
One of President Trump’s major campaign promises, both in his original presidential campaign and during his midterm stump speeches, was the idea that he was going to “bring back jobs” to Americans who have been pushed out of work by globalization and automation. Republicans pitched their tax cuts as another way to do that, by giving corporations more money to indirectly fund their hiring. According to a new examination of the policy’s effects by the New York Times, that strategy didn’t work. In fact, companies actually cut more jobs more enthusiastically after the tax cuts.
Much of the “growth” promised by the tax cuts has taken the form of companies like Google, Facebook, and Goldman Sachs investing their money in technology. As a way to boost hiring, the tax cuts have unequivocally been a bust.
“The results of a survey published in late October by the National Association for Business Economics showed that 81 percent of the 116 companies surveyed said they had not changed plans for investment or hiring because of the tax bill,” the Times writes.
But don’t worry—shareholders are doing great!
From the Times:
“JPMorgan Chase analysts estimate that in the first half of 2018, about $270 billion in corporate profits previously held overseas were repatriated to the United States and spent as a result of changes to the tax code. Some 46 percent of that, JPMorgan Chase analysts said, was spent on $124 billion in stock buybacks.
“The flow of repatriated corporate cash is just one tributary in what has become a flood of payouts to shareholders, both as buybacks and dividends. Such payouts are expected to hit almost $1.3 trillion this year, up 28 percent from 2017, according to estimates from Goldman Sachs analysts.”
Despite frequent claims from the administration that the tax cuts would “pay for themselves,” tax revenue from companies has decreased by 3.6 percent since the cuts took effect, even as corporate profit grew, according to the nonpartisan Committee for a Responsible Federal Budget. The deficit, once a favorite Republican talking point, has exploded as a result.
The Times writes:
“The growing budget gap means the Treasury must borrow more to keep the government running. The Treasury expects to borrow a total of $1.338 trillion from global investors this calendar year. That would be 145 percent higher than the $546 billion the federal government borrowed last year. That would be the highest level of borrowing since 2010, when the American economy was struggling to recover from the great recession.”
Most disappointing, and least surprising, is the effect that the tax cuts have had on actual workers. Even at the companies who promised to give some of their new wealth to their employees, the actual benefits workers saw were minor. Nonprofit researchers Just Capital estimate that a typical worker saw a salary increase or bonus totaling just $225 for the year.
But what about the jobs?!? Just Capital reports that since the tax cuts, the 1,000 biggest public companies have cut 140,000 jobs, which is double the 73,000 they say they created. The analysis found that most of those cuts came from the service industry. Wages, meanwhile, grew by only .5 percent, one point slower than the .6 percent growth of the economy as a whole.
Senator Bernie Sanders Comments: Trickle-down economics is, quite simply, a fraud. Creating massive tax cuts for the wealthy and corporations doesn’t create jobs. It puts more money into the pockets of wealthy executives. The Republican tax plan was a scam from the very beginning.
Gary Reber Comments:
What Senator Sanders does not address is the necessity to create universal productive capital asset ownership, to empower EVERY child, woman, and man, as individuals, to acquire ownership in the formation of future productive capital assets simultaneously with the growth of the economy, without the requirement of past savings, a job, or any other requirement, except for being a United States citizen.
Stock buybacks only further concentrates the ownership of productive capital assets among the already wealthy capital assets ownership class who own the corporations growing the economy within our homeland and globally as they continue to outsource production.
Creating jobs or full employment is not an objective of businesses nor is conducting business stationary in terms of geographical location. Companies strive to achieve cost efficiencies to maximize sales and profits for the owners, thus keeping labor input and other operating and production costs at a minimum. They strive to minimize marginal costs, the cost of producing an additional unit of a good, product or service once a business has its fixed costs in place, in order to stay competitive with other companies racing to stay competitive through technological invention and innovation. Reducing marginal costs enables businesses to increase profits, offer goods, products and services at a lower price (which people as consumers seek), or both. Increasingly, new technologies are enabling companies to achieve near-zero cost growth without having to hire people. Thus, private sector job creation in numbers that match the pool of people willing and able to work is constantly being eroded by physical productive capital’s ever increasing role.
The result is that the price of products and services are extremely competitive as consumers will always seek the lowest cost/quality/performance alternative, no matter where the country of origin, and thus for-profit companies are constantly competing with each other (on a local, national and global scale) for attracting “customers with money” to purchase their goods, products or services in order to generate increased sales and profits, and thus return on investment (ROI).
To fix the problem, a major component of the solution is to support the agenda of the JUST Third WAY to achieve a free market system that economically empowers all individuals and families through the democratization of money and credit for new production, with universal access to direct ownership of income-producing capital, AND to enact the proposed Capital Homestead Act (aka Economic Democracy Act and Economic Empowerment Act) at http://www.cesj.org/learn/capital-homesteading/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/ and http://www.cesj.org/learn/capital-homesteading/ch-vehicles/. And The Capital Homestead Act brochure, pdf print version at http://www.cesj.org/wp-content/uploads/2014/11/C-CHAflyer_1018101.pdf and Capital Homestead Accounts (CHAs) at http://www.cesj.org/learn/capital-homesteading/ch-vehicles/capital-homestead-accounts-chas/
