So many people I run into lately seem to be in a complete state of confusion regarding our current economy and the overall stock market. They can’t understand why the markets “feel okay” about such a politically incorrect, volatile and sometimes downright vile person in the Oval Office. My response to this sentiment lies in something that I’ve never done before; I’m going to quote myself from my November 2017 My City article: “The possibility of pro-economic growth policies could inspire animal spirits in the markets for hope of a brighter economic future.”
Americans have forgotten what strong economic expansion feels like. Although many disagree with the President’s antics, capitalists couldn’t care less what he says – they care about what he is doing. Since taking office, President Trump has broadcasted his entire agenda: Business! Business! Business! He believes that the best path to economic freedom for the marginalized in America is to have extreme economic growth, through which those who want to be employed, can start down the path to financial freedom through the means of a good job.
Congress recently passed what I would consider to be the largest piece of Pro-Economic Growth legislature in our history – the tax reform act to cut the corporate tax rate from 35% to 21%. The entire theory behind this tax bill is that companies will be enticed to use the excess profits to invest in new property, plant, equipment and labor. A labor shortage will then attract more people back into the workforce as inflation sets in and wages start to increase. These economic forces will, hopefully, then create a self-fulfilling prophesy of more workers, more earnings and more demand for products. Will this work? I sure as heck hope so; because if it doesn’t, we’ll be paying off one huge tax bill for decades to come.
I’m going out on a limb here and predicting the President’s next steps. I believe that he will very aggressively target an infrastructure-spending bill. This is the same spending bill that President Obama wanted, but was unable to get into place due to Republicans blocking his efforts. One might ask, “Infrastructure spending? That’s not a Republican thing to do,” and one would be right to ask. The key here is that President Trump isn’t a real Republican … he’s a businessman who saw a road to the White House through an angry Middle America. So, my prediction is that Donald Trump will use Universal Health Care and DACA as bargaining chips to get a $1 trillion infrastructure bill and build his “wall.” Three out four of these initiatives are democratic in nature, with of course the “wall” being for his ego.
He would do this because he doesn’t care about debt like your average Republican claims to, and he knows that the spending bill would give the economy a huge shot in the arm. Heck, he may even throw in that he won’t run as a Republican in the 2020 Presidential election to get the entire Congress to vote for the measure. If he was able to cut corporate taxes, get a spending bill, universalize healthcare AND build his wall, all in four years – he may just drop the mic, walk offstage, go back to his old life and be a one-term president. Of course, not before saying, “You’re welcome, America.” Or, who knows … maybe he would keep his word and not run as a Republican, but square off against Oprah as an Independent. Well, now I’m just being crazy!
Hope your year’s off to a great start and I hope you enjoyed the fairytale ending of this crazy story.
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