Sunday Talks: Ways and Means Committee Chairman Kevin Brady Discusses Economy and Tax Proposals…

House Ways and Means Committee Chairman Kevin Brady discusses the current economic growth and the GOP policy initiatives behind tax proposals.

Chairman Brady emphasizes an intent to make the current middle-class tax cuts permanent in the next legislative session if Republicans can do well in the midterm election.  One of the benefits from previously ‘unexpected’ (by CBO) MAGAnomic growth is the baseline calculations for ‘revenue neutral’ did not factor in the current GDP growth rate.  [All previous Congressional Budget Office forecasts were underestimated.]

As Rep Brady outlines President Trump is committed to empowering Main Street, not Wall Street, as the driving force behind U.S. economic growth. [The essence of MAGAnomics.]  Every.Single.Trump.Policy targets support to Main Street. Period.

The Commerce Department, Bureau of Economic Analysis (BEA), has released the first estimate of the third quarter GDP growth for June, July and August 2018 (full pdf below).  The rate of economic growth in Q3 is estimated at 3.5%, exceeding most forecasts of slightly more than three percent.  The second quarter growth was 4.2%.

“Defying ‘conventional wisdom’ once again, 3.5 percent growth is the latest sign that the Trump economy continues to surge,” said Secretary of Commerce Wilbur Ross. “The President’s actions from deregulation to tax reform have supercharged the American economy, driving it to new heights.”

Overall the 3.5% growth is exceptionally strong. To see the data bolstering a positive future forecast I would draw attention to Table 2 (lines 43 through 49) and the analysis for net impact over Exports/Imports. The heavy import number delivered a net subtraction of 1.78% from GDP growth; that’s a result of a large increase in imported durable goods [likely anticipatory holiday inventory buildup].

As you can imagine from your own shopping experiences, durable goods inventories generally climb in the third quarter as companies increase inventory in preparation for holiday sales in quarter four. The growth in the buildup of this inventory is significantly higher than historic trend; this means companies are forecasting strong consumer demand for goods in Q4, the holiday season.

The value of imported goods are deducted from GDP at the time they are acquired.  The Commerce Department (BEA) does not track purchase ‘orders’, they track purchase ‘payments’. The majority of contracted terms for goods, depending on company and industry, are “net 30 days”; meaning the full purchase cost for the product is due to the manufacturer or wholesaler 30 days from delivery.  However, when the deducted inventory cost turns into sales, consumer spending then drives domestic economic activity (GDP growth) at the time the product is sold.

Further support for a booming Q4 purchase prediction can be found in the current 4% growth of consumer spending. With wages growing (3.8% avg), and with an incredibly strong jobs market, people are making large purchases with confidence. Additionally, price data in the current GDP report shows inflation at a 1.6 percent annualized pace.

Add it all up and you can see the reason for companies to boost inventory ahead of a very strong holiday season. The middle class drives the MAGAnomic economy. Workers are getting paid more and being taxed less; our paychecks are bigger.

Simultaneously inflation is low (prices not increasing), so the net is more disposable income to make purchases, combined with confidence in wages/jobs allowing people to spend more.

Bloomberg – The U.S. economy expanded at a 3.5 percent pace in the third quarter as consumers opened their wallets, businesses restocked inventories and governments boosted spending, marking the strongest back-to-back quarters of growth since 2014.

The annualized rate of gains in gross domestic product compared with the 3.3 percent median estimate in a Bloomberg survey and followed a 4.2 percent advance in the prior three months, according to Friday’s report from the Commerce Department.

Consumer spending, which accounts for about 70 percent of the economy, unexpectedly accelerated to a 4 percent increase — the best since 2014 — while the 0.8 percent gain in nonresidential business investment was the weakest in almost two years. In two volatile categories, inventories provided the biggest contribution since early 2015, while the drag from trade was the largest in 33 years. Government spending rose by the most since 2016. (read more)

Here’s the full BEA report. [Table 2 is on page 8]

.

Keep in mind, none of the revamped trade deals have come into play yet….

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This entry was posted in Big Government, Big Stupid Government, Donald Trump, Economy, Election 2018, Legislation, media bias, President Trump, Taxes, Trade Deal, Uncategorized, US dept of agriculture, US Treasury, USA. Bookmark the permalink.

30 Responses to Sunday Talks: Ways and Means Committee Chairman Kevin Brady Discusses Economy and Tax Proposals…

  1. Everything looks good to me!

    Liked by 1 person

    • Newton Love says:

      There is “another shoe to drop.” Heck, a whole day’s production at a shoe factory is qued to fall from the skies.

      When the USMCA Trade Treaty is ratified, and the farmers and manufacturers start selling into those markets, suddenly there will be a lot of new revenue pouring in, generating more tax revenues.

      The same for the renegotiated treaties with the EU, India, Japan, South Korea, et cetera.

      There are lots of economic shoes waiting to drop!

      Liked by 4 people

  2. Sentient says:

    As Larry Schweikarr tweeted, I think most people would prefer a middle class Wall on the border.

    Liked by 3 people

  3. thedoc00 says:

    The following can be done without legislation and via tax rules and regulations. The following would also have nice impact on voters in terms of reducing taxes as well as fixing taxes on the “rich” hedge fund owners.
    Move some level of SALT to be an income adjustment from being a deduction.
    Move some level of medical expenses (not insurance premiums) to be an income adjustment and not a deduction.
    Increase income level before kicking in tax on 85% of Social Security.
    Restore some level of exemptions for dependents but not for the tax payer(s) as those exemptions are built into the standard deduction.
    Tax hedge fund profits as income.

    Liked by 2 people

    • thedoc00 says:

      Tax money moving off shore by immigrants by 35% as well as wire services moving the money.

      Liked by 9 people

    • Paqul Killinger says:

      W-2 ALL wage earners… Magically, tax collections will increase by 25% along with the SOLVENCY of Social Sec and Medicare.

      And don’t forget to tax all those foreign remittances with a 6% tax (less than their services charge them!). Call it a “Convenience Fee.”

      Like

      • Paqul Killinger says:

        …Or they can trust the Drug Lords to carry it back for them. They won’t charge them more than a 50% “Handling fee.”

        Liked by 1 person

      • thedoc00 says:

        As long as Social Security and Medicare are tied to the general fund and congress is allowed to expand eligibility to but votes, there is no way to realistically fix either fund short of increase in tax rates no matter how many payers are involved. Congress has a very bad habit of continually increasing eligibility (costs) for all US Tax Payer funded benefits to buy votes beyond any improvements (increases) in tax collections year over year. There is NOT a single member of congress from either party who ever advocates for at least reducing costs (even if benefits are not impacted) in government spending.

        Liked by 1 person

  4. czarowniczy says:

    I think the Trump 2.0 tax break would look a lot like hundreds of Democratic top-tier pols crying, screaming and beating their little child hands on the lecterns around the country.
    The Rats have based an entire base on the premise that bleeding the working class to feed the consuming class, tax cuts mean their charges have to starve or head into the working class…shudder…and realize where all that manna the fed them actually came from. Viola, that would create a large cadre of Republicans.

    Liked by 2 people

  5. permiejack says:

    I’m curious and hope someone can clarify for me. Does wage growth take into consideration the tax breaks? If wage growth is at 3.8% and you get to keep an additional let’s say 2% from lower taxes, it seems that take home pay should be around 5.8% more. Yes?

    Liked by 1 person

  6. CorwinAmber says:

    I think POTUS should propose a cut in payroll taxes…which everyone pays (unlike income taxes), as follows:

    Drop the overall rate from 7.65% to 7.5% (which is a cut anyway you slice it)

    Take Social Security down to a flat 5% and raise the taxable minimum to whatever level is necessary to make up for the loss in revenue from the lower rate

    Raise the Medicare tax to 1.5% to help defray rising medical costs for the older folks

    Take the remaining 1% and return it to the States to spend on Medicaid, long term care, opioid abuse…whatever they desire, as long as it is related to medical care

    Give everyone fair warning that this the amount of money you are going to have to live with in order to fulfill their “responsibilities” and let the States be creative in their execution thereof. The whole Federal tax system is way too complicated, whether it is income taxes or payroll taxes, and I think it is high time we try to simplify it, but hey, what do I know?

    Liked by 4 people

    • Deplorable_Infidel says:

      “I think it is high time we try to simplify it”

      The tax code alone is what, 78,000+ pages?

      “hey, what do I know?”

      IMO, it is not necessarily how much you know, but rather, how you apply it (common sense). Back when NAFTA was first proposed, us “common folk” could hear the “giant sucking sound” described by Ross Perot of jobs leaving the country. It took 25 years before some of the so-called experts admitted the problems NAFTA caused.

      Liked by 1 person

    • Wai cheah says:

      Great ideas

      Like

  7. Steve in Greensboro says:

    Hey, Kev. Drop the tax stuff and let’s build the wall, huh?

    Liked by 1 person

    • mashall says:

      He’s another Cornyn RINO “go along with Paul Ryan to get along.”
      I’ts all in the way you point the Finger of Blame that matters, not results for US Citizens.
      The Real Estate and Banking Industry loves cheap homebuilding illegal alien labor.

      Liked by 1 person

  8. budklatsch says:

    I’m trying to figure why I did not get ANY reduction in my taxes. This middle income retiree will now pay more in taxes than before the tax reduction act.. I can’t believe we alone slipped between Trump’s plan. A little aggravated right now. Maybe no decrease, but an increase sucks!

    Like

    • Normally Quiet Observer says:

      budklatsch … I think you should get yourself a NEW taxman!

      Hopefully, you are NOT using one of the ‘chain store’ preparers for your returns, as they NEVER advise you of ALL of the tax exemptions you are entitled to, mainly because they are not aware of them! The local preparers in the mall kiosks, and small ‘storefront’ operations, have minimal training, and very little knowledge of the actual tax laws.

      Most of them are only interested in getting you a “fast” refund, and then getting you to accept an “instant refund loan”. THAT is where they make their money, not from their ‘flat fee’ services they provide you!

      You might think about getting an Income Tax Certified CPA, that is in business ALL YEAR LONG to do your returns for you. A bit more expensive than the ‘chain store’ types, but in the overall picture a much better deal for you.

      Liked by 3 people

    • mimbler says:

      Just curious as to how you know that? Taxes can’t be filed till 2019 to see what your taxes will be, unless you are filing quarterlies.
      And that would be unusual for a middle income retiree.

      Like

    • PATMAC says:

      i think the new tax rates are incredible for this middle income taxpayer. I can make up to $102K IN PENSION and taxable sociaL SECURITY AND PAY ONLY 12% TAX. perfect timing for this year’s planned retirement. Thank you President Trump!

      Liked by 3 people

  9. Paqul Killinger says:

    Not to mention importers are shipping us everything they’ve got that’s not nailed down, while “the sending’s still good!”

    Liked by 1 person

  10. gingergal says:

    How about getting rid of property taxes? I don’t like renting my land from the government and I’m sure Trump feels the same way owning lots of real estate himself. Yes, do away with property tax, lets all write letters!

    Like

  11. Newton Love says:

    There is “another shoe to drop.” Heck, a whole day’s production at a shoe factory is qued to fall from the skies.

    When the USMCA Trade Treaty is ratified, and the farmers and manufacturers start selling into those markets, suddenly there will be a lot of new revenue pouring in, generating more tax revenues.

    The same for the renegotiated treaties with the EU, India, Japan, South Korea, et cetera.

    There are lots of economic shoes waiting to drop!

    Liked by 2 people

  12. E.jay Miller says:

    I hear Kevin Brady speak and my skin crawls. I hear Kevin Brady say (in response to DJT’s calls for a 10% middle-class tax cut) that the GOPe ‘may pass a non-binding resolution’. I hear Kevin Brady speak/talk/say lots of things–meanwhile he and the other ‘leaders’ in the House have raised spending with each and every continuing resolution and spending appropriation bill time after time. Why did we not hear Kevin Brady saying, “we are committed to Trump’s ‘nickle plan’ to reduce Federal Spending for 5 cents on every dollar with our next Budget and through our next appropriations bill?
    crickets. . . . . . . .

    Like

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