Sep 13 2018
What’s helping America’s booming economy? The Joint Economic Committee Republicans have compiled the most egregious misstatements of economic facts made during our last hearing on the positive impact of the Tax Cuts and Jobs Act. Real reforms get real results.
CLAIM: “The White House and my Republican colleagues promised families a $4,000 a year increase in income. But that hasn’t happened.”
FACT: The $4,000 increase was estimated to happen over 3 to 5 years, not 8 months.
CLAIM: "While discussing this year's job growth, Republicans fail to acknowledge that 2018 and 2017 look basically the same as 2016 and 2015."
FACT: Economic growth and job creation had been slowing in 2015 and 2016 to the point that CBO had projected only 106,000 jobs per month would be created in 2018. Following Republicans’ pro-growth policies, monthly job creation has averaged 206,000 thus far in 2018.
CLAIM: “In fact, wages adjusted for inflation are actually going down, not up.”
CLAIM: “After decades of wage stagnation – where the median worker’s wages have grown by 6.1 percent over the last 38 years.”
FACT: Workers’ real purchasing power has increased significantly in four decades. For example, of the model trucks below, it’s easy to guess which one is from 1980. From improved suspension, better quality audio systems, and more reliable safety features, Americans’ hard-earned dollars go much further today than 38 years ago.
CLAIM: “While buybacks benefit company executives and other wealthy shareholders and investors, they do nothing for half of all Americans who own no stock… Each dollar spent on buybacks is a dollar not spent on investing in factories or plants, training, or boosting workers’ wages.”
FACT: All Americans benefit from buybacks, beyond the substantial number of everyday Americans who rely on the pensions and retirement accounts. Those who are receiving dividends have already demonstrated their desire to invest—and are likely to re-invest that money where it is needed elsewhere. Such investment leads to business expansion and job creation, which helps a larger share of people. We should be encouraging greater investment like this.
CLAIM: “By adding $1.9 trillion to the national debt, the tax law gives Republicans their latest justification to target Social Security, Medicare, and Medicaid.”
FACT: The tax law addresses income taxes and does not cut benefits. In fact, tax relief allows seniors to keep more of their Social Security income and economic growth from TCJA is fueling more payroll tax revenues to finance Social Security and Medicare.
FACT: From 2008 to 2016, Democrats added $9.3 billion to the national debt and never attempted to save Social Security, which is heading toward insolvency.
FACT: Democrats plan to increase the deficit by 42.5 trillion over the next 10 years.
CLAIM: “Any growth bump from the Republican tax cut will be short lived.”
FACT: In fact, CBO says the law has positive long-term growth effects on investment, employment, and GDP. Federal Reserve Chairman Powell has said, “The economy is doing very well.”
CLAIM: “Long-term projections are unchanged.”
FACT: CBO projects that an average of almost a million more Americans will have jobs over the decade due solely to TJCA. And again, CBO is projecting lasting positive effects on GDP, investment, and employment from TCJA. GDP growth is strengthening despite top Obama Administration officials claiming as recently as 2017 that 2% growth is about all the economy can muster anymore and would inevitably continue.
CLAIM: “The San Francisco Fed recently projected that the tax cuts could have zero impact to growth, due to poor timing of the law.”
FACT: The San Francisco Fed actually said that “Many analysts have forecast large increases in GDP growth over the next two or three years as a result [of the 2017 Tax Cuts and Jobs Act].”
FACT: According to James Bullard, President of the St. Louis Fed: “The slow pace of growth suggests the expansion could have much further to go,” and “the strong performance of current labor markets could entice marginally attached workers back to work, increasing skills and enhancing resiliency before the next downturn."
 To make such a misleading claim as the above, one would have to ignore employee benefits, which have grown to about 30% of worker compensation; ignore changes in workforce composition, such as a rising proportion of lower-skilled workers who could not find jobs in the Obama era, and; over adjust for inflation. (The Federal Reserve relies on a different inflation indicator.)