It can’t be any of the things they promised, because none of those have happened. At least not yet. Indeed, the $5 trillion that President Trump said his tax cuts would bring back into the country has, according to the Wall Street Journal, been more like $143 billion so far — or 97 percent short of his stated goal. Which is why it should be no surprise that the investment boom all this money was supposed to set off hasn’t materialized either. Not unless you think the rather anemic 0.8 percent increase in nonresidential fixed investment last quarter constituted some sort of economic miracle. No, the reality is that business investment is still going up and down more with the price of oil — spending on things such as rigs is a big part of the overall picture — than it is with the tax rate on corporate income.
It’s almost as if giving businesses more incentive to invest doesn’t matter if they don’t have a reason to invest in the first place. They’ll just buy back more of their stock instead, which, of course, they’ve been doing at a record pace the past year.
And it pretty much goes without saying that, contrary to Treasury Secretary Steven Mnuchin’s empirically indefensible claims, the Trump tax cuts will not pay for themselves. They won’t even come remotely close to doing so. What’s happened instead has been so predictable that everyone else predicted it: cutting tax rates has made us collect so much less tax revenue that the budget deficit has increased substantially. It’s the first time it has ever gone up this much in the absence of a war or a recession.
To sum it up, then, the Trump tax cuts have both cost more and done less than Republicans said they would. But no matter! While a less ideologically devoted party might let that get in the way of their planned festivities, Republicans still apparently think that the Trump tax cuts are worthy of a six-part video tribute. How have they managed to convince themselves of this? Well, there are three big parts to it. The first is that the unemployment rate was so low when they passed the tax cuts — just 4.1 percent — that it’s been easy for them to mistake correlation for causation if they’re so inclined. That is, they can tell themselves that things are good because of the tax cuts instead of the truth that they were already good even before the tax cuts, and haven’t improved in the ways that the tax cuts' biggest proponents said they would.
The second is that there really were a rash of stories last year about how all the bonuses that were being handed out back then were supposedly the result of the recently-passed tax cuts. It’s something that, as you can imagine, Republicans still like to talk about to this day. The only problem, though, is that it wasn’t really true. The fact of the matter is that even if the Trump tax cuts do end up increasing wages, this isn’t the way they’d do it. That’s because they didn’t give companies an incentive to directly pay their employees more, but rather to invest more in their businesses, which, by making their workers more productive, was supposed to indirectly lead to higher pay in the long run. What happened last year, though, is that CEOs were touting bonuses they were probably going to give anyway as evidence that the tax cuts were already working — Wells Fargo, for one, originally said its raises didn’t have anything to do with the tax bill, before quickly changing its tune — to try to curry favor with the administration. But, as the left-leaning Economic Policy Institute’s Lawrence Mishel points out, you can tell that this wasn’t actually what was going on from the fact that neither salaries nor bonuses have started growing any faster since then.
Which brings us to the real reason that Republicans are so happy that they cut corporate taxes. It’s that they ... cut corporate taxes. For some of them, you see, letting the rich keep more of their money is an absolute moral good. Heck, it might be the absolute moral good. That’s because they’re worried, as House Speaker Paul D. Ryan (R-Wis.) used to put it before he realized that this type of Ayn Rand-inspired rhetoric is politically toxic, that the “takers” will soon outnumber the “makers” and simply vote to give themselves other people’s money. That’s why, independent of any economic benefits, which we’re finding out may very well be ephemeral, they think that cutting taxes for top earners is good policy. For the less philosophically-inclined among them, though, letting the rich keep more of their money is still an absolute political good. It’s what their donors gave them money to do. And that’s not just a cynical interpretation of events. It’s their own interpretation of them. Republicans were quite open about the fact that they had to cut corporate taxes or their moneymen would cut them off. “The financial contributions will stop,” Sen. Lindsey O. Graham (R-S.C.) bluntly put it, if they let their tax bill get derailed like their health-care plan had.
The Trump tax cuts, then, weren’t so much about the economy as the political economy — and it shows. There’s been very little bang for even 1.5 trillion bucks.