Barring some black swan event, the US economy will continue to grow at around 2% for the foreseeable future. Unlike Mish, I'm not calling for a recession; just steady/slow growth. The next 3 years can be easily be the same as the last 9 years, with steady economic and employment growth.

The tax holiday was just that -- a big party. Lowering the corporate rate into future will help to prevent inversions and the flight of corporate headquarters to other countries. It will make the US a bit more favorable for business. If it is good for Ireland and the UK it will be good for us. Having said that, the pending bill mostly is a steaming POS.

Hi Realist, Everybody complains about the boom - bust cycle. Apparently steady slow growth isn't good either.

Hi WildBull. I prefer slow growth to boom/bust. Even if the US lowers its tax rates to try to get an advantage over other countries, there is nothing to prevent other countries from further lowering their rates. Tax reform, even if done well (which it isn't), is not a game changer; especially since it does almost nothing to stimulate an economy near capacity already.

Cutting business taxes (all of which are ultimately paid by consumers) will expand investment in business entities. Even if stock buybacks are the application for the greater retained earnings of current entities, those buyback payments will find their way into capital investment in other entities, driven primarily by expected rates of return. This reallocation of capital is part of the magic of free markets, which tend to be efficient directors of capital resources. The new capital investment should result in additional employment and production.

As for the logic of cutting taxes and not cutting spending; legislators cannot get re elected without buying votes. You cannot buy votes if you don't have money available to distribute. The end of this cycle will occur when we have maxed out our credit card....a day difficult to predict. In the meantime, debt service will continue to force the Fed to artificially reduce interest rates to far below the rate of inflation, which will gut returns to capital for the middle class. It will, at the same time, fatten the pockets of investment banks which can play the carry trade game (raising prices in an inflationary environment, on assets purchased with very cheap credit).

Fewer regulations and welfare reform will unquestionably spur higher GDP growth. How can anybody on this site debate this? Regulations are falling already and welfare reform is next up on the docket. Now, a debate can be had about whether or not tax cuts spur long-term growth when spending doesn't decline. But to just blow off deregulation and welfare reform is poor analysis. Mish so badly wants to be right about the economy tanking soon, but instead why not admit you were wrong and be happy that we have the best president since Reagan? When tax reform is passed just watch GDP growth go up to 3.5% in 2018. Then what will you predict? Mish, when will you admit that you have just been flat out wrong with your growth predictions?

Just as Mish is too pessimistic, clovis and douglas are too optimistic. More stimulus will not increase economic growth by much because it won't reach the vast majority of the population in any significant way. Most of the limited benefits will go to those at the top and won't affect capital investment to any great degree. However, it certainly will result in higher fiscal and trade deficits. To counteract this, Trump will want to cut spending on the needy, and impose tariffs on imports, resulting in higher prices for consumers. A lose-lose scenario.

Mish may still b right tho I hope he’s wrong and 4% growth is on its way .Years ago when the Fed monitized all this debt shoving over 4 trillion of liquidity into the credit markets out of thin air and reducing interest rates, Bernanke’s model didn’t work with QE~1 so he added QE~2and 3. So here we are and the Fed has raised short rates and is finally letting some of this debt mature at an increasing rate. So I wonder what is going to happen as we start to drain this liquidity of treasuries and mortgage backed securities? Since it was a rather large gift to the credit markets that ended up mostly in the equity markets, as it matures, since it was created out of thin air, does it just go back into thin air from which it came, or does someone have to buy it? And if they have to buy it, what will the interest rate be? I honestly don’t know the answer to this question, so I hope someone will help me here. As a result of all this what is going to happen to the long term bond market is something else I can’t figure out.

Zimbabwe and Venezuela can grow at X per year too, if “growth” get to mean whatever those proclaiming it wishes.

If you look at harder to fudge measures, like per capita energy consumption, there hasn’t been growth for decades. And while I’m not sure anyone is tracking median consumption, considering the growth in Government use, particularly military; as well as the at least seeming increase amongst those on the, relative, beneficiary side of the past few decades of ever more rapacious Fed looting, I wouldn’t hold my breath for much other than a pretty darned steep decline.

Of course, it’s much easier and more fun to play useful for something, when you get to define your own measure for usefulness.

When everything is fake why not this? After all, when lies are repeated often it is construed to be the truth. Everyone seems to be so adept at this that truth appears laughable (ask Hussman). The music still seems to be playing so everyone is dancing.

Mish has been calling for a recession for years. A broken clock is right twice a day.

Although I agree with the conclusion that we will not see long-term economic growth from these tax cuts, I disagree strongly with your use of the term "Fake Math". Economics should not be represented as "Math". The two are distinctly different.

"OTP has modeled the revenue impact of higher growth effects, using the Administration projections of approximately a 2.9% real GDP growth rate over 10 years contained in the Administration’s Fiscal Year 2018 budget." Projections are just that, someone's imaginings. The modeling is based on someone's imaginings.

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