Thanksgiving Economics Briefing 2017
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The 2017 Thanksgiving Economics Briefing discusses the effects of the Trump tax plan, highlighting that it primarily benefits top earners while increasing tax burdens for those earning $75k or less, and is unlikely to pay for itself, contributing to national debt. It also notes positive economic indicators such as record median household income, job growth, and low unemployment rates, but points to severe wealth inequality, where the top 1% control 42% of wealth. The briefing further argues that historically, economic growth and job creation have been higher under Democratic presidents compared to their Republican counterparts.
Thanksgiving Economics Briefing 2017
- 1. Thanksgiving Economics Briefing 2017: Getting Ready for the Relatives (and the Economic Nonsense They Bring) David Doney CPA July 2017 1 Do tax cuts pay for themselves?
- 2. 2 Ripped from the Headlines: Who Benefits from the Trump Tax Cut Plan? The largest benefits go to the top earners. Those earning $75k or less will end up paying more in taxes, after an initial cut.
- 3. 3 Ripped from the Headlines: Who Benefits from the Trump Tax Cut Plan? Note: These are aggregate amounts for the income group, not individual impacts
- 4. 4 How Much Will the Trump Tax Plan (TCJA) Add to the Deficit and Debt? By the way, this means the tax cuts won’t pay for themselves, to answer our Turkey’s Question from the Cover Page
- 5. 5 What do top economists think of the Trump Tax Plan? The University of Chicago IGM panel is a “Who’s Who” of about 40 top U.S. economists. They aren’t fans of the tax plan. Another way of saying the tax cuts won’t pay for themselves
- 6. 6 Now for Good News…Middle Class Incomes Hit Record Level in 2016 $59,039 Median household income (real means adjusted for inflation) hit an all-time record in 2016. Median means half the households are above this level and half below; it is a better measure than the average. $58,665 FRED is “Federal Reserve Economic Data” a definitive source of information maintained by the Federal Reserve Bank of St. Louis.
- 7. 7 And More Good News…The Economy Has Added Jobs Consistently Since 2011 147 million 130 million 138 million For the Trump Fans: Sorry, job creation in 2016 was slightly faster than 2017 We’re 9 million ahead of the bubble-juiced pre-crisis peak, and 17 million ahead of the 2010 crisis trough.
- 8. 8 But Wait…There’s More…Very Low Unemployment We’re so close to full employment that the Fed began raising interest rates gradually in late 2015, a big sign of confidence. And those U-6 mis-quoters, that wider rate of unemployment is also back to pre-crisis levels.
- 9. 9 And…The economy has grown for 14 quarters Obama Trump
- 10. 10 Look at that stock market…
- 11. 11 We’ve Never Been This Rich, But We Have a Distribution Problem Household net worth continues to surpass records, reaching $94.8 trillion in Q1 2017 (about $730,000 / household on average) due to both financial and real- estate asset price increases… …However, the average is misleading due to highly skewed wealth distribution. The top 1% have approximately 42% of the wealth. The bottom 50% of families average about $11,000 net worth. 42% How do we fix this? Tax hikes on the rich (rate increases and loophole elimination) used to fund universal healthcare, tuition through college, and life-long education or vocational training. Alas, Trump has proposed none of these, while HRC did. But that is a tale for another day…
- 12. 12 Dealing with the Income Inequality Status Quo Arguments Ben Stein “In Class Warfare, Guess which class is winning?” NYT, Nov 2006. http://www.nytimes.com/2006/11/26/business/yourmoney/26every.html “There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.” -- Warren Buffett (2006)
- 13. 13 Dealing with the Income Inequality Status Quo Arguments
- 14. 14 P.S. / The economy grows faster under Democratic Presidents Sources: The Economist “Timing is Everything: Why the economy has grown faster under Democratic presidents” (August 2014) https://www.economist.com/news/united-states/21611143-why-economy-has-grown-faster-under-democratic-presidents-timing-everything The Economist: “Since the second world war the economy has done better under Democratic presidents, who have overseen more job creation and higher stock market returns than Republican leaders. During this time the economy has grown about 1.8 percentage points faster when a Democrat occupies the White House…” Yes, the economy grew faster under Clinton than it did under Reagan. Heck, even Jimmy Carter had faster growth than Reagan’s first term. And yes, including his second term (not shown here) the economy grew faster under Obama than Bush
- 15. 15 P.S. 2 / Job Creation is Higher Under Democratic Presidents “Since 1961…the Republicans have held the White House 28 years, the Democrats 24,” said Bill Clinton in 2012. “In those 52 years, our private economy has produced 66m private-sector jobs. So what’s the jobs score? Republicans 24m, Democrats 42m.” Obama added +8m to this lead 2013-2016, so the score now is 50m to 24m, with equal numbers of years in control of the Presidency. Sources: The Economist “Timing is Everything: Why the economy has grown faster under Democratic presidents” (August 2014) New York Times: “How Obama’s Job Record Stacks Up” (January 6, 2017) 50 24 Job Creation Total (Millions) Democrats Republicans
- 16. 16 P.S. 3 / Stock Market Does Better Under Democratic Presidents Sources: CNN Money “Democrats vs. Republicans: Who’s better for stocks?” (October 28, 2015) S&P 500 Annual Returns Since 1945, the average annual stock market gain under a Democratic president is 9.7%. Under a Republican president, it's only been 6.7%.