One of President Trump’s major campaign promises, both in his original presidential campaign and during his midterm stump speeches, was the idea that he was going to “bring back jobs” to Americans who have been pushed out of work by globalization and automation. Republicans pitched their tax cuts as another way to do that, by giving corporations more money to indirectly fund their hiring. According to a new examination of the policy’s effects by the New York Times, that strategy didn’t work. In fact, companies actually cut more jobs more enthusiastically after the tax cuts.
Much of the “growth” promised by the tax cuts has taken the form of companies like Google, Facebook, and Goldman Sachs investing their money in technology. As a way to boost hiring, the tax cuts have unequivocally been a bust.
“The results of a survey published in late October by the National Association for Business Economics showed that 81 percent of the 116 companies surveyed said they had not changed plans for investment or hiring because of the tax bill,” the Times writes.
But don’t worry—shareholders are doing great!
From the Times:
JPMorgan Chase analysts estimate that in the first half of 2018, about $270 billion in corporate profits previously held overseas were repatriated to the United States and spent as a result of changes to the tax code. Some 46 percent of that, JPMorgan Chase analysts said, was spent on $124 billion in stock buybacks.
The flow of repatriated corporate cash is just one tributary in what has become a flood of payouts to shareholders, both as buybacks and dividends. Such payouts are expected to hit almost $1.3 trillion this year, up 28 percent from 2017, according to estimates from Goldman Sachs analysts.
Despite frequent claims from the administration that the tax cuts would “pay for themselves,” tax revenue from companies has decreased by 3.6 percent since the cuts took effect, even as corporate profit grew, according to the nonpartisan Committee for a Responsible Federal Budget. The deficit, once a favorite Republican talking point, has exploded as a result.
The Times writes:
The growing budget gap means the Treasury must borrow more to keep the government running. The Treasury expects to borrow a total of $1.338 trillion from global investors this calendar year. That would be 145 percent higher than the $546 billion the federal government borrowed last year. That would be the highest level of borrowing since 2010, when the American economy was struggling to recover from the great recession.
Most disappointing, and least surprising, is the effect that the tax cuts have had on actual workers. Even at the companies who promised to give some of their new wealth to their employees, the actual benefits workers saw were minor. Nonprofit researchers Just Capital estimate that a typical worker saw a salary increase or bonus totaling just $225 for the year.
But what about the jobs?!? Just Capital reports that since the tax cuts, the 1,000 biggest public companies have cut 140,000 jobs, which is double the 73,000 they say they created. The analysis found that most of those cuts came from the service industry. Wages, meanwhile, grew by only .5 percent, one point slower than the .6 percent growth of the economy as a whole.