We now have data for the first quarter of 2018, and guess what? There is no sign of the corporate investment boom that was promised as a result of the Trump tax cut. The money is being used predominantly for share buybacks.
Who could have predicted it? Well, everyone except Kevin Hassett.
The rationale for the tax cut is now mutating into an argument that, even if corporations don’t invest, their wealthy owners will. Sure–they will drive up the cost of assets and buy government bonds.
And so, the final outcome of the tax cut is. . . the government gives money to rich people, who then invest in the securities the government sells to finance the deficit created by the tax cut.
Who says Republicans hate recycling?