Biden's Commerce chief claims Trump tax cuts didn't boost economy

Biden's Commerce chief claims Trump tax cuts didn't boost economy

Biden's Commerce chief claims Trump tax cuts didn't boost economy

President Donald J. Trump speaks with military service personnel Thursday, Nov. 26, 2020, during a Thanksgiving video teleconference call from the Diplomatic Reception Room of the White House. (Official White House photo by Shealah Craighead)

Making a case for tax hikes at the White House on Wednesday, U.S. Commerce Secretary Gina Raimondo insisted to a reporter that the booming economy under President Trump before the COVID-19 lockdowns had nothing to do with his tax cuts.

“There is not a shred of evidence to show that the cuts in 2017 increased growth or productivity,” she said.

However, as the Wall Street Journal summarized the economy during Trump’s first three years in office, “median household incomes grew, inequality diminished, and the poverty rate among Black people fell below 20% for the first time in post-World War II records.”

In fact the unemployment rate among blacks dipped under 6%.

Median family income, which had been flat from 1999 to 2017, increased by more than $6,000 from 2017 to 2019.

The Wall Street Journal noted the unemployment rate fell from 4.7% shortly after Trump’s election to 3.5% by the end of 2019, which was below Federal Reserve expectations of about 4.5%.

“That was partly driven by Trump’s corporate and individual income-tax cuts and a February 2018 bill that reset spending caps Republicans had demanded in the Obama era,” the paper said.

Tax Cuts and Jobs Act was signed in into law on Dec. 22, 2017.

See Raimondo’s remarks:

In September 2018, Kevin Hassett, the chairman of the Council of Economic Advisers in the Trump administration, presented data to reporters at the White House showing recent economic trends and the impact of the tax cuts.

Hassett sought to counter the idea that “the strong economy that we’re seeing” is merely “a continuation of recent trends.”

He and his White House colleagues decided to test the “hypothesis.”

Hassett showed the sharp rise in the previous year in indexes such as small-business optimism, business investment, capital goods orders and shipments, business conditions, new business applications, prime-age workers reentering the labor force and blue-collar jobs.

He also compared projections by the Congressional Budget Office to actual data to demonstrate the impact of the tax cuts.

Historians, Hassett said, will look back on the period and “accept the fact that there was an inflection at the election of Donald Trump and that a whole bunch of data items started heading north.”

Hassett noted that he predicted, prior to the legislation, that the tax cuts would increase capital spending by about 11%. At that point, he said, capital spending was up 10%.

“And so you don’t have to reach far for a theory of what happened,” he said.

Trump, he said, deregulated the economy and, along with the tax cuts, that has brought businesses back to the U.S. and created jobs “for ordinary Americans.”

“It’s clear in the data there’s been a trend break,” he said.

See Hassett’s presentation:

On Wednesday, Raimondo did give a tip of the hat to Trump’s tariffs, including on Chinese steel and aluminum, which she said, have “saved American jobs.”

Willing to negotiate on corporate rate

Raimondo said at the news conference that the “corporate structure today is broken,” arguing that many large corporations pay no taxes.

“So I’d like to think we all can agree that it needs to be improved — level the playing field, close the loopholes, and have a discussion around how we do this together to improve competitiveness.”

She said that there is room for compromise on the White House’s proposal to raise corporate tax rates to 28% to help pay for its $2.3 trillion infrastructure proposal.

After remarks at the White House Wednesday on the spending plan, President Biden confirmed to reporters he is “willing to negotiate” with Congress on the corporate tax hikes.

With even Democratic Sen. Joe Manchin in opposition to his plan, he said he’s open to a slightly reduced rate.

“I’m willing to listen to that,” Biden said. “I’m wide open, but we’ve got to pay for this. There’s many other ways we can do it, but I’m willing to negotiate that. I’ve come forward with the best most rational way, in my view, the fairest way to pay for it. But there are many other ways as well, and I’m open.”

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Biden's Commerce chief claims Trump tax cuts didn't boost economy