Trumps "tax reform"

Principles for tax reform are black and white, congress should improve efficiency by levying lower rates on a broader base of income: minimum wage incentives, distort loopholes and deductions. A tax reform should legitimately be a reform that changes for the better economically. Trump has something that looks on paper as if a proposal that the rich pays much less, and the poor pays a lot more. During the campaign Trump's team put forward a plan to slash revenue at a estimated 620$ million every year. That is roughly 19% of fiscal 2015 receipts, over 10 years with no credit offset in form of spending cuts. The top 0.1% tax payers would experience an average tax cut of nearly 1.1 million. Sending out mixed signals I believe Trumps team needs to put out a more plausible plan on paper. A plan that reduces revenue by about 3.1 trillion$ over 10 years is more plausible fiscally responsible absent by spending cuts to federal programs, which the GOP also proposes, but harder to pass than tax cuts. Trumps team doesn't seem right now to have any specific idea for taxes, but when asked it seems that they either really don't know, or that isn't what is most important in what Trump plans to do in office. http://www.businessinsider.com/trump-tax-plan-mortgage-charity-deduction-changes-2016-12
-Travon

What Economists Expect from a Donald Trump Economy

With Trump set to be president, Economists are continuing to weigh in on what they believe the outlook for economies will be over the next four years. They are currently anticipating higher GDP, higher inflation, and higher interest rates.

Unemployment has been forecasted to remain within a few percentage points of full unemployment. The average amount of job growth has been slowing over the past few years and is expected to continue along that trend. If unemployment were to fall any further, we could see some heightened inflation.

Real GDP is anticipated to grow by 2.2% in 2017 and 2.3% in 2018. Growth has been stifled in recent years due to an aging workforce, slow population growth, and slow productivity. This is however still higher than the current growth rate (about 1.5%).

The inflation rate is expected to be higher than last month's rate, as fiscal stimulus under Trump is expected. Forecasted at 2.2% in 2017 and 2.4% in 2018, this could be the highest rate of sustained inflation above 2% since '07-'09. The possibility of a trade war, trade treaty expiration, and increased tariffs will also increase the price of goods driving inflation upward.

The interest rate on 10-Year Treasury Bonds is expected to rise to 3% in 2018. Borrowing will become more expensive for both consumers and the U.S. Government. Mortgages, for example, would become more expensive while payouts to investors seeking higher yields would become more favorable.

Having made an astounding comeback since the recession, The housing market has seen prices settle at a steady 5.5% increase in price. That is forecasted to hit 4.3% in 2017. Higher mortgage rates discussed above could slow that growth, as builders are anticipated to build about 1.3 million houses in 2017.

The big question... What are the odds of a recession under Trump? In the next 12 months, "forecasters believe the odds of a recession are somewhat lower" than this past summer. The odds are predicted to be 19%. The past 7 years of growth is a long time for the U.S. to not face a recession, and should there be no recession in the next 4 years, "it would be the longest stretch in U.S. history without recession". This is considered to be unlikely by most economists as the economy regularly faces cycles, as it is the nature of the beast. It will be interesting to see whether or not Trump's legacy is tainted but an inevitable crash, or if he can deliver on the grandiose promises he made during his campaign.

http://blogs.wsj.com/economics/2016/11/14/what-economists-expect-from-a-donald-trump-economy/

Uneven Tax Distribution Under Trump

Despite reports by Steven Mnuchin that rich U.S. taxpayers won’t be beneficiaries of “an absolute tax cut” under Trump's new plan, Eugene Steurle says, "Trump’s current plan doesn’t identify sufficient offsets for high earners to pay for their rate reductions.”  In Trump’s new taxation plan for 2017, a division of several hundred billion dollars of revenue cuts will be spread across different income ranges. As a result, the required tax pay of U.S citizens will decrease, but the expected contributions of the different income ranges is expected to shift in a way that the wealthy, top 1% will benefit. Their average tax cut will be around $215,000 per household under Trump's new plan which is a drop to 25% owed in federal taxes from the 28.7% currently being paid and the Tax Policy Center expects nearly half of the benefits under Trump’s plan to go to the top 1%, households which would result in them earning north of $700,000 each year.  This uneven split of the benefits of Trump's new plan contradicts both his and his projected Treasury secretary's statements on his new plan.

http://www.wsj.com/articles/taxes-under-trump-almost-everyone-pays-less-and-the-richest-pay-a-lot-less-1480700891

Fed May Face Unnerving Shake-Up Under Trump Administration

The article mostly talks about the ideas that the chairwoman of the Fed Janet Yellen has, and what are her ideas of what the Fed should do. Her idea is to increase the interest rates at a slow pace so there is no extreme inflation. Then they start talking about the Trump administration, and how this people might change the plans for the Fed. For the economic ideas and plans that Trump has they need the interest rates to increase faster than the Fed would like to increase them, that is why they talk about the pressure that Trump and his administration might put on the officials of the Fed so they do what Trump wants. Also the talk about how Trump could get this to be true by getting people into the Fed, since there are many important officials that are going to finish their role in the Fed soon, Trump has the opportunity to name people for those positions which might give him control over the Fed and he would have more control to change things like the interest rates. They said that this could also lead to new laws about all these issues, but the most important one that the Fed might start being related to politics and government issues, which could end up in a big problem and politicians crashing the economy because of lack of knowledge and using this as a tool for things like elections. Only over time we would see how much Trump is going to influence the Fed and how much is this going to affect the economy.

http://www.nytimes.com/reuters/2016/12/01/business/01reuters-usa-trump-fed-analysis.html?_r=0

The opinion of the Greek prime minister on the American election

http://www.greekcrisis.net/2016/11/tsipras-expects-trump-to-govern.html

Alexis Tsipras, is the prime minister of Greece representing SIRIZA, a political party considered to be placed on the left side. When asked for his opinion, Alexis Tsipras said that he believes that Donald Trump will follow a different tactic during his presidency than that shown and promised. His aggressiveness will fade out through time.

With the Republicans being extremely conservative for the standards of SIRIZA, I did not expect Tsipras to say a good word about the new president. It is interesting thought to see that politicians tend to scold exactly what they do. The Greek prime minister totally followed a different tactic after being elected as well.

http://paidpost.nytimes.com/chevron/how-the-us-has-cut-pollution-while-growing-the-economy.html?tbs_nyt=2016-oct-nytnative_hpstory-chevron?module=PaidPostDriver&region=PaidPostMOTH&pgType=Homepage&action=click

In this article of the New York Times discusses the effects that new ways of consuming energy have had on the world. As worded by the writer of the article, not only the environment has been helped but also the economy has been boosted.

Since the seventees, the national GDP has risen by near two hundred fifty percent, while the pollution has fell by fifty percent. It seems that the use of  natural gas, re usable energy and other cleaner burning fuels, have managed to hit two birds with the same stone. It is refreshing to see ways in which science helps out the world.

How Puerto Rico's sinking economy is crushing the American dream

David Bogaty owner of WorldNet explains that Puerto Rico's government does not support entrepreneurship which is a main cause for their sinking economy. David explains that if Puerto Rico's government would have more structured government support for entrepreneurship, this has the potential to boost 14 billion dollars into the economy. David also explains that in the 2017 Global Entrepreneurship Index, Puerto Rico ranked 41 out of 137 countries and has dropped six positions since last year.

David has proposed 3 key fixes

1. Refocus government on economic growth,  "What we need to move our economy forward is more and more structured government support for entrepreneurship. Our government should be funding more incubators and accelerators. University of Puerto Rico, which is publicly funded, should be investing heavily in entrepreneurship education".

2. Reduce Taxes that are hostile to start-ups, businesses in Puerto Rico must pay a tax on gross revenue of up to 2% that goes to municipalities. "Talking about repealing this tax is taboo, because the municipalities are always hurting for money." "We need to change that mind-set. The tax is crushing for start-up businesses, especially those that bring in revenue but aren't profitable yet."

3.Reform the government bidding process, "our government agencies require entrepreneurs to use a competitive bidding process that discourages innovation. Officials come up with the solutions they want and to win the work; companies have to submit the lowest price bid. We would do better with a system that tells us what problems government needs to solve and asks us to submit innovative solutions in the areas where we have expertise. Government should choose solutions based on which ones will truly advance our economy, or at least drive government efficiency."

"The changes I suggest require political will — a true desire to build a stronger Puerto Rico for our children. They require sacrifice and political risk by our politicians, but they would transform a seemingly hopeless situation into one in which Puerto Rico controls its own destiny."

http://www.cnbc.com/2016/11/20/how-puerto-ricos-sinking-economy-is-crushing-startups.html

US home prices hit new peak

The prices of homes are 5.5 percent higher than September 2015. This index has now surpassed its peak in July of 2006. The nations 20 largest cities reported a 5.1 percent annual gain. "This gain will mark a shift from the housing recovery to the hoped for start to a new advance"-David M.Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices.

Still another new read on home prices, looking at October values, also shows a hefty jump from a year ago. Zillow's Home Value Index shows home values nationally up over six percent compared to a year ago. Competition for homes is so fierce that less than half of buyers get the first home they make an offer on, according to the report. So the housing market has been favoring sellers and we see this trend continue over the last couple of months. 

http://www.cnbc.com/2016/11/29/us-home-prices-hit-new-peak-in-september-sp-corelogic-case-shiller.html

Trump's Carrier Victory Is the Economy's Loss

Donald Trump persuaded Carrier Corp, a maker of air-conditioning and heating equipment, to keep about 1,000 jobs in the U.S. The free market works in part because it relies on millions of individual enterprises to decide how best to employ their resources. The government's role is to protect their right to do so, and to intervene only in those cases where the market fails, when misaligned incentives lead to environmental damage, for example, or financial instability. In Carrier's case, the market was working. The company wanted to move production to Mexico to lower labor costs and remain competitive. American workers would lose jobs, but U.S. consumers and investors would get cheaper furnaces and/or better corporate earnings -- and, potentially, more spending on U.S. imports by the Mexican workers who got the jobs. This constant shifting of resources tends to boost living standards both in the U.S. and abroad, by allowing everyone to focus on what they do best. Now the company might be in worse shape than it would have wanted to prevent.

Another example is Ford Motor Co.'s decision to keep production of its Lincoln MKC sport utility vehicle in Kentucky, a move for which Trump has taken credit. The automaker had been considering moving the MKC to Mexico to make more room for the more popular Ford Escape, which is produced in the same factory. So to the extent that Trump influenced Ford, he may have done damage by preventing the company from efficiently responding to demand.

Bullying companies into making bad decisions is no way to make America great again.

Link: https://www.bloomberg.com/view/articles/2016-12-01/trump-s-carrier-victory-is-the-u-s-economy-s-loss

Jobless Rate Hits Nine-Year Low; 178,000 Jobs Added

The unemployment rate dropped to 4.6 percent from 4.9, the lowest it has been since August of 2007. In addition, 178,000 jobs were added in November. Many economists believe this is a sign that the economy is picking up and will hopefully continue to gain steam. The drop in the unemployment rate is partially due to a decline in the labor force participation rate, since many Baby Boomers are now retiring. These numbers come from the first report since the result of the election. Many are hopeful for the future of the economy under the new President-elect Donald Trump while others are uncertain. 

While the unemployment rate dropped and jobs were added, several other measures dropped. The average hourly earnings dropped by 3 cents, and the U-6 rate, the number of people who have given up looking for work and part-time workers who would like full-time work, also fell to 9.3 percent. Economists are not worried about either of these numbers since throughout the year earnings have actually increased 2.5 percent and the U-6 rate is at its lowest since April of 2008. It will be interesting to see how these rates, if any, will be affected throughout Donald Trump's time in office and what the differences will be at the end of his term.

http://www.nbcnews.com/business/economy/jobless-rate-hits-nine-year-low-n691111

https://www.washingtonpost.com/news/wonk/wp/2016/12/02/u-s-economy-added-178000-jobs-in-november-unemployment-rate-drops-to-4-6-percent/?utm_term=.f2185b7b1510