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First quarter GDP, following the massive tax cut that was supposed to serve as a stimulus, clocked in at a meager 1.7% after peaking at 2.9% in the fourth quarter of 2017, before the tax “stimulus” took effect.

Unless GDP grows in excess of 3-4% annually, the deficits resulting from tax cuts will not be met with adequate tax revenue from increased profitability to cover the costs of their implementation. Not by a long shot.

If the cuts do not have the desired effect on the economy, which seems likely considering the extended economic recovery we’ve been in, then the deficit will grow at rates never before seen by this nation. And that will trigger a rapid increase in interest rates, which themselves will choke off economic expansion.

The economy will be in real trouble if we’ve wasted a tax cut, because tax cuts can be a decent approach to a depressed economy when proposed at the proper time. Implementing one during a period of slowing economic expansion makes no sense…but then not much this administration does makes sense.

 

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