I read yesterday that the 2017 American Jobs and Tax Cur Act of 2017 would cost $1.8 billion, but (over time) the true cost could be as high as $5.5 trillion.
Did the tax cut bill really help the economy?
The answer if "yes and no".
During the second quarter of 2018, companies used $437 billon of their tax cut money t o buy back their own stock. In the first quarter of 2018, they spent $241.1 billion for stock purchases.
Overall, companies used 57% of their tax savings on stock purchases. 7% on workers, 8% on customers, 6% on products, 3% on communities, and 19% on jobs.
In 2019, the oil and gas industry had revenue of $181 billion, and profits of $28 billion. The airline industry had revenues of $240 billion, and profits of $28 billion. The largest cruise line, Carnival, has a net profit of $3 billion.
In addition, the oil and gas industry received government subsidies of $20 billion. 80% went to the oil and gas industry, and 20% to the coal industry. The airline industry received subsidies of $279 million, most of which went to subsidize airports in smaller cities.
Due to lost revenue caused by the COVID-19 crisis, the airline industry just asked the government to give them $50 billion to tide them over.
The tax cut bill, naturally, triggered some huge deficits in the budget.
- Cumulative FY20 Deficit through February 2020: $625 billion
- Cumulative Budget Deficit over same period in FY19: $544 billion
The largest expense item in the budget is Social Security, at roughly $450 billion. The second largest item is Medicare, at roughly $280 billion.
On February 10, 2020, Trump vowed not to cut Social Security and Medicate.
On March 9, 2020, Trump said that he will cut Social Security, Medicare, and Medicaid.
"The White House proposes to cut spending by $4.4 trillion over a decade. Of that, it targets $2 trillion in savings from mandatory spending programs, including $130 billion from changes to Medicare prescription-drug pricing, $292 billion from safety-net cuts – such as work requirements for Medicaid and food stamps – and $70 billion from tightening eligibility access to federal disability benefits."
Who pays for all these programs that Trump wants to cut"
For FY 2020, Federal Revenues from individual tax returns is $671 billion, a 7% increase from the year before.
Payroll taxes are the next largest source of revenue, at $511 billion, an increase of 5% from the year before.
Corporate taxes are the third largest source of income, at $74 billion, which is actually a 25% increase from the year before.
The CBO projects that debt held by the public could rise to 180 percent of gross domestic product (GDP) by 2050 if no changes are made to current laws. That level of debt would far exceed the 50-year historical average of approximately 40 percent of GDP.
None of the dollar amounts shown above, of course, show the amount that will be spent for the coronavirus relief bill that Trump signed this week.
The Treasury Department outlined the administration's proposal for the third phase of the response. In a memo, the administration asks for two rounds of direct cash payments to taxpayers, worth $250 billion each. The first payment would be made April 6, and the second would come on May 18.
The administration's request also includes $300 billion in small business loans, $50 billion for the airline industry and $150 billion for other "severely distressed" industries. The document outlining the request was first reported by The Washington Post, and a senior administration official confirmed its authenticity to CBS News.
If you're good at math, that adds up to $1 trillion.