Tag: U.S. economy

Treasury’s Second Set of Guidelines for Opportunity Zones Still Leaves Struggling Communities Behind

The Opportunity Zone program, part of the 2017 Tax Cuts and Jobs Act, has been touted as a key tool in revitalizing distressed communities. The Trump administration argues that giving tax breaks to investors to incentivize investments in certain struggling geographical areas will in turn benefit these communities and their residents.

Critics of the Opportunity Zone program, however, argue that such trickle-down approaches do not work, and that this latest tax break only adds to the tax giveaways for the rich. Moreover, they point to evidence that the program is geared exclusively toward the wealthy and could even harm the residents and communities it is meant to serve. Proponents, on the other hand, have touted new projects—the result of incentivized investment—that could benefit distressed communities. Which side is ultimately correct depends on the U.S. Department of the Treasury’s guidance on how to implement the program. Its most recent set of rules, however, make clear that the Opportunity Zone program will not be a tool for economic development. If it was, Treasury would have imposed strict guidelines that ensured the projects funded through the program are those needed and vetted by targeted communities. However, the loose rules and favorable eligibility requirements in Treasury’s new guidelines will ensure that the Opportunity Zone program is just a tax shelter for the wealthy to park their capital gains. Continue reading “Treasury’s Second Set of Guidelines for Opportunity Zones Still Leaves Struggling Communities Behind”

Larry Kudlow’s claim that ‘we have virtually paid for’ Trump’s tax cut

Judy Woodruff, PBS: “You are hanging a lot of this on these tax cuts, but we now have a number of experts who are watching those tax receipt numbers that come in regularly, and they are saying that they do not add up to what is anything like the kind of growth that the administration had projected off these tax cuts.”

National Economic Council Director Larry Kudlow: “Well, actually, overall revenues are up about 10 percent. So that’s a pretty good number. And let me say, one of the people that are skeptical of us, the Congressional Budget Office, nonetheless, their estimates before taxes and most recently after the taxes, they have argued, they have said, there’s roughly $7 trillion of higher nominal GDP, and from that comes about 1.2 trillion in extra revenues, so that the tax cuts are about 80 percent paid for overall.”

— Exchange on PBS’s “NewsHour,” March 11, 2019

“Even the CBO, with which we generally disagree — I’m not breaking news here on my part — but they just published their new numbers. You know, from the point of pre-tax-cut to now, we have had about $7 trillion unexpected increase, $7 trillion over 10 years in terms of GDP. And that kind of calculates to roughly 1.2, 1.3 trillion in additional revenue. That’s the CBO numbers. These are all 10-year estimates. I apologize for that, but that’s the convention. So, what am I saying here? The tax cut was about 1.5 trillion scored. We have virtually paid for it — I guess 80 percent paid for it — and that’s by the CBO’s own numbers.”

— Kudlow, in an interview on CNBC’s “Squawk on the Street,” March 8, 2019

President Trump’s chief economic adviser says new numbers from the Congressional Budget Office show that 80 percent of the administration’s tax cuts will be paid for in a decade. Even when accounting for lost revenue, the tax cuts will “virtually” pay for themselves because of increased economic activity, Kudlow suggests.

He’s not the first Republican to claim tax cuts pay for themselves. But he is the first to twist what the CBO’s nonpartisan number-crunchers said in a Feb. 28 analysis.

CBO Director Keith Hall factored in several big developments in this analysis. One was the estimated effect of the tax cuts Trump signed in December 2017. Another was “changes to federal spending resulting from legislation enacted early in 2018.” The biggest change came from “revised historical data and changes in the economic outlook … before accounting for the effects of the tax act.”

The Pinocchio Test

View the complete March 14 article by Salvador Rizzo on The Washington Post website here.

Gary Cohn says Trump is ‘desperate’ for trade deal with China

Gary Cohn, President Trump’s former top economic adviser, says the president is “desperate” to reach a trade deal with China and is being ill-served by protectionist advisers who have left the White House “living in chaos” on major decisions.

“The president needs a win,” Cohn said in an interview with Freakonomics, a public radio show and podcast.

Trump expects a China deal to boost the stock market, which has treaded water for the past year, the former aide said. Cohn cast doubt on the president’s ability to obtain fundamental changes in China’s state-led economic system, one of his core negotiating objectives.

View the complete March 13 article by David J. Lynch on The Washington Post website here.

Economy adds just 20K jobs in February, far below expectations

The U.S. economy added 20,000 jobs in February, the Labor Department reported Friday, far below analysts’ expectations that the country would gain 180,000 jobs.

The unemployment rate dropped 0.2 percentage points to 3.8 percent as the labor force participation rate held steady at 63.2 percent. Hourly earnings also increased 3.4 percent in the past 12 months, beating expectations.

The underwhelming February numbers follow a stellar January jobs report, which was revised upward Thursday from 304,000 to 311,000 jobs.

View the complete March 8 article by Sylvan Lane on the Hill website here.

Democrats unveil Green New Deal that would push government to make radical changes

The resolution would force lawmakers to take a position on the deal, and its goals of remaking the U.S. economy within a decade

Rep. Alexandria Ocasio-Cortez listens as Sen. Ed Markey speaks as Democrats announce their Green New Deal resolution outside of the Capitol on Thursday. Credit: Bill Clark, CQ Roll Call

A resolution outlining the goals of an ambitious progressive plan to overhaul the U.S. economy across all sectors, from finance to energy to social services, was rolled out Thursday with the aim of driving future legislation.

The Green New Deal resolution sponsored in the House by Alexandria Ocasio-Cortez and in the Senate by Massachusetts Democrat Edward J. Markey cites urgent warnings in two recent major climate reports to compel the federal government to act urgently on the radical changes they say would make the U.S. resilient and sustainable across all sectors.

In an October report, the United Nations Intergovernmental Panel on Climate Change warned that unless urgent and drastic action is taken, global temperatures could rise by 1.5 degrees Celsius (2.7 degrees Fahrenheit) between 2030 and 2052, which could have catastrophic repercussions for the economy, the environment, humans and wildlife.

View the complete February 7 article by Elvina Nawaguna on The Roll Call website here.

U.S. Economy Lost An Estimated $6 Billion To Shutdown, S&P Says

The president had demanded $5.7 billion to fulfill his long-promised project to build a wall on the southern border.

A global ratings agency has estimated that the recent partial government shutdown cost the U.S. economy at least $6 billion, according to a Reuters report.

Standard & Poor’s Global Ratings announced on Friday that its estimation is based on productivity loss from furloughed workers and economic activity loss to outside business, according to the news agency.

“Although this shutdown has ended, little agreement on Capitol Hill will likely weigh on business confidence and financial market sentiments,” the company said in a statement.

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I wish people would read or listen to my words on the Border Wall. This was in no way a concession. It was taking care of millions of people who were getting badly hurt by the Shutdown with the understanding that in 21 days, if no deal is done, it’s off to the races!

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View the complete January 26 article by Kimberley Richards on the Huffington Post website here.

Shutdown ends but its damage will last

Speaker Nancy Pelosi, D-CA, and Senate Minority Leader Charles Schumer, D-NY Credit: Tom Williams/CQ Roll Call

CQ Homeland Security Editor Patrick B. Pexton discusses the details of the deal between President Donald Trump and lawmakers to end the shutdown. Max Stier, president of the nonprofit Partnership for Public Service, says it has done lasting damage to the civil service and that Congress must never allow it to happen again.

Davos Attendees Wonder, ‘What on Earth Is Donald Trump Up To?’

In 2018, Davos was basking in a robust global economy as Donald Trump pledged that “America is open for business.”

One year on, the U.S. government is partially shut and the market ebullience that greeted the president’s corporate tax overhaul is a distant memory.

In the 12 months since he visited the World Economic Forum in the Swiss Alps, Trump has launched a trade war with China, slapped tariffs on Europe, weighed in on Prime Minister Theresa May’s Brexit deal, expressed understanding for France’s “Yellow Vest” protests against President Emmanuel Macron and threatened to “devastate” Turkey’s economy.

View the complete January 21 article by David Wainer on the Bloomberg website here.

Climate Change’s Giant Impact on the Economy: 4 Key Issues

Wading through flood waters from Tropical Storm Harvey in Houston in August 2017. “We know we can adapt to slow changes,” a Yale economist said. “Rapid changes are the ones that would be most damaging and painful.” Credit: Jonathan Bachman, Reuters

Many of the big economic questions in coming decades will come down to just how extreme the weather will be, and how to value the future versus the present.

By now, it’s clear that climate change poses environmental risks beyond anything seen in the modern age. But we’re only starting to come to grips with the potential economic effects.

Using increasingly sophisticated modeling, researchers are calculating how each tenth of a degree of global warming is likely to play out in economic terms. Their projections carry large bands of uncertainty, because of the vagaries of human behavior and the remaining questions about how quickly the planet will respond to the buildup of greenhouse gases.

A government report in November raised the prospect that a warmer planet could mean a big hit to G.D.P. in the coming decades.

View the complete January 17 article by Neil Irwin on The New York Times website here.

Recession warnings pile up as shutdown wraps up fourth week

Maryland resident Rosa Marquez displays her bills while standing near other furloughed security officers and custodians outside Senate Majority Leader Mitch McConnell’s office. An extended shutdown could push first-quarter growth close to or even below zero. Credit: M. Scott Mahaskey, Politico

The impasse is triggering alarms about an already fragile economic environment.

The partial government shutdown was supposed to be a brief non-event for the economy. Now it’s starting to look like a serious crisis that could nudge the U.S. toward recession and threaten President Donald Trump’s economic message during his reelection campaign.

Across Wall Street, analysts are rushing out warnings that missed federal paychecks, dormant government contractors and shelved corporate stock offerings could push first-quarter growth close to or even below zero if the shutdown, which is wrapping up its fourth week, drags on much longer.

Their broader fear: The protracted impasse could convince consumers and businesses that the federal government will spend all of 2019 on the brink of crisis — whether on the border wall, trade with China or the debt limit. That could choke business investment and consumer spending, bringing an end to one of the longest economic expansions on record.

View the complete January 17 article by Ben White on the Politico website here.