US consumer demand will dictate how corporations will respond to the
windfall of cash it will experience with the 2018 corporate tax reductions.
US corporate debt is $1 trillion. US household debt is $13 trillion.
Mortgage interest rates are 3.04% for 15 year and 3.74% for 30 year mortgages.
US federal debt is $20.3 trillion. US federal liabilities are $124 trillion.
State and local government debt is $1.88 trillion. US federal spending has
risen from $2.2 trillion in 2000 to $4.1 trillion in 2017. The US trade deficit
in goods was $750 billion in 2016.
Corporate cash repatriation could cause $4 trillion in cash to return
to the US. Corporations will have the option to invest in US operations, pay
down corporate debt or hold on to cash to reinvest in acquisitions and US
expansion. The reduction of the US corporate tax rate from 35% to 21% will
allow companies to relocate operations back to the US.
There is pressure on corporations who manufacture goods for the US
market to move more of their manufacturing operations to the US and hire US
citizens. We should see more Japanese automobile manufacturers opening new
plants in the US. We should also see US electronics companies expanding in the
US to protect their intellectual property. We could see new manufacturing
plants making a variety of products return to rural counties in the US.
Individual income tax reductions could free up cash for taxpayers to
keep the cash to pay their bills on time, pay down debt or use it for necessary
purchases like repairs and maintenance.
The Federal Reserve interest rate has moved from 1.25% to 1.5%. The 10
year Treasury Bill yield is down from 2.39% to 2.33%.
The Dow is up from 18,000 to 24,800. US GDP grew from $18.6 trillion to
$19.3 trillion. The big winners are those who own stocks and includes 401K
holders and pension plans.
The target for the US National Debt should be 30% of GDP and that would
bring the debt down to $6 trillion. The federal budget needs to be balanced and
that would require spending cuts of $700 billion.
Norb
Leahy, Dunwoody GA Tea Party Leader
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