Stocks hit more record highs Monday on the second anniversary of President Trump signing historic tax cuts into law, as the White House and its allies said the strong economy is proof that the tax cuts have worked.
The Nasdaq climbed 0.23% to its latest record high of 8,945 points to start the holiday week, putting the tech-heavy market on a pace to rise 30% for the year. The Dow Jones Industrial Average rose 96 points, or 0.34 %, to close at 28,551 points.
The S&P 500 index is up about 29% this year.
On top of rising middle-class wages, the administration and its supporters said the consistently good economic news has resulted in large part from the tax cuts that Mr. Trump signed on Dec. 22, 2017, at the end of his first year in office.
“More than anything else, the tax cuts of 2017 are responsible for our current economic boom,” said Alfredo Ortiz, president of the nonpartisan Job Creators Network. “Today, we are experiencing the best economy in a half-a-century, with unemployment at its lowest level in 50 years, wages growing 3% annually, and the Dow Jones hitting all-time records.”
The economy has grown at an average of 2.4% in the first three quarters of this year, with unemployment at a historic low of 3.5%. In the latest Quinnipiac University poll, 79% of respondents said they are optimistic about their financial future. Even among Democrats, 71% said they’re optimistic.
Opponents of the tax cuts for corporations and most individuals said two years ago it would be little more than a giveaway for the wealthy and wouldn’t benefit the average worker.
“It won’t create jobs, increase middle-class incomes or grow our economy,” Sen. Bob Casey, Pennsylvania Democrat, said at the time.
Even in the face of the strong numbers, some Democrats refuse to acknowledge the tax cuts have helped to spur the economy.
“Trickle-down economics has always been a fraud,” tweeted Sen. Bernard Sanders of Vermont, one of the leading candidates for the Democratic presidential nomination. “It is an idea propagated by big-money interests to give an intellectual veneer for more tax breaks for billionaires. Instead of listening to Sheldon Adelson and other multibillionaire campaign contributors, it is time to start listening to the overwhelming majority of Americans who want a government and an economy that works for the many — not just the few.”
But two former White House economic advisers, Gary Cohn and Kevin Hassett, said capital spending was 4.5% higher than projected in 2018 and the trend has continued this year.
“This extra capital improved productivity and wages and, as expected, did so especially for those in lower-paying jobs. The numbers are striking,” they wrote in The Wall Street Journal on Monday. “Over the past year, nominal wages for the lowest 10% of American workers jumped 7%. The growth rate for those without a high-school diploma was 9%.”
They also noted that employers have created 7 million new jobs in three years, while the Congressional Budget Office forecasted before Mr. Trump took office that employers would create 2 million jobs by this point.
“Those who say that the strong economy under President Trump is merely a continuation of past trends are in full-scale denial,” they said.
At a conference of young conservatives in Florida last weekend, the president referred to the legislation he signed two years ago as “the greatest tax cut in the history of our country.”
“We passed massive tax cuts to bring back jobs and factories home from other countries,” Mr. Trump said. “We’ve cut a record number of job-killing regulation.”
Critics of the tax cuts point out that the economy grew 2.9% in 2018, the same rate it did in 2015, before the tax relief was enacted. And the nonpartisan Tax Policy Center said in a recent study that more than 60% of the tax savings went to people in the top 20% of income brackets.
Opponents of the tax cuts also cite a rise in budget deficits under Mr. Trump, after deficits had been declining in the second term of President Obama. In fiscal year 2019, which ended on Sept. 30, the federal budget deficit was $984 billion, or $205 billion more than the shortfall recorded in 2018.
The CBO said the deficit in fiscal 2019 increased to 4.6% of the nation’s gross domestic product, up from 3.8% in 2018 and 3.5% in 2017.
Federal tax revenue rose slightly in 2019, but deficits grew because spending increased greater than tax receipts, CBO said.
In fiscal 2019, the government’s revenues amounted to $3.5 trillion — $133 billion (or 4%) more than in 2018. But net spending by the government was $4.4 trillion in 2019 — $339 billion (or 8%) more than the previous year.
Receipts from individual income taxes, the largest source of revenue, rose 2% in 2019. Revenue from payroll taxes, the second-largest source, increased 6% partly due to higher wages and salaries. And receipts from corporate income taxes, the third-largest source of revenue, increased by 12%, CBO said.
• Dave Boyer can be reached at dboyer@washingtontimes.com.
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