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GOP Tax Bill Is the Wrong Use for $1.5 Trillion New Debt

Dec. 20, 2017 (EIRNS)—President Trump today signed the "Tax Cut and Job Creation Act" which cuts household taxes for the next five years, and corporate taxes permanently from 35% to 21%. There remains little public interest in the Act; the United States is already a relatively low-tax industrialized country for households and individuals.

The acute need is not for lower taxes but for real wages to increase from a secular decline which has now reached 40 years, the deindustrialization period. For this, more productive and skilled employment must increase relative to the workforce; and the path to that end is wide-ranging national investment in new high-technology infrastructure.

The tax bill has the effect of authorizing $1.5 trillion more in Federal debt over a decade. Instead of using this to cut (primarily corporate) taxes, that new debt authorization could be used in Treasury borrowing for a new Reconstruction Financial Corporation, a national credit institution for infrastructure and more productive manufacturing and agriculture.

By contrast, the corporate tax cut which is the centerpiece here will result in much more money invested in stock market speculation, stock buybacks, bigger dividends, mergers and acquisitions—it will be, as Jamie Dimon called it, "QE4," i.e., version 4 of the "quantitative easing" bank bail-out policy.