Trumpanomics Part II: Tax Reform, The First Act
In this piece, I look at the Trump tax reform proposal (at least last one on his web site) from the prospective of if it will create the promised 25 million new jobs and a sustainable growth rate about 4%. The answer is unlikely. It would seem that the current reform plan could create a few million over the next 10 years, and 1/2% bump in GDP growth at best. However it will also create trillions of addition debt. But that is not the point, it is unlikely any reform of the US tax code even with substantial cuts can generate those kinds of numbers from the US economy as it current stands. Though the tax reform plan alone cannot create the jobs or the growth, in conjunction with the other two acts of Trump's plan for the first 100 days it could.
So, through the likely debate in getting the tax reform act passed focus on corporate tax reform and if the act continues to reduce the marginal cost of investable capital ( changing capital investment to an expense for example) . This feature along with Act II and III could create the the tail winds for both US growth and jobs by producing a renaissance of US manufacturing build on cheap energy and infrastructure investment.
So, then what are the trades?
I will talk about that in Part III.