On Ozarks Tonight, we’re talking business investment and job growth after the Trump tax cuts.
Welcome to this edition of Ozarks Tonight. I’m pleased to be joined by Dr. Rachel Gillum. She’s senior director at consulting firm Rice, Hadley, Gates, and she’s also a visiting scholar at Stanford University.
Now, if the name Rice, Hadley, Gates sounds familiar to you, it’s because they refer to three former high level officials who worked for president George W. Bush: Dr. Condoleezza Rice, Stephen Hadley, and Dr. Robert Gates.
Of course we could do an entire segment on the credentials of those three folks, Rachel, but we are looking for your expertise in this interview. So good evening to you thanks for being with us.
Good evening, thanks Brian.
Now, folks in the Ozarks are generally supportive of lower taxes and lower regulation and that includes lower corporate tax rates. So of course President Trump and Congress with their plan to lower tax rates for companies is pretty popular here, and, of course, that went into effect late last year.
What I’m wondering about tonight, though, is the expectation that corporate tax cuts and the rates that we’ve seen drop from thirty five to twenty one percent will spur enough investment to move the needle in terms of say a permanent wage increase for workers abd an expansion of the manufacturing sector. These are both important issues for viewers here in the Ozarks. What can you tell us about this?
That’s a really great question, and it’s one that a lot of Americans are of course asking but, of course, asking. But it’s a bit too early to tell if the overhaul will have any meaningful long term effects on growth, but based on what we’ve seen so far of course the scene a mixed bag. On a positive side, you know, we see several companies that have been announced one time bonuses to employees such as AT&T and Comcast. They’re providing one time $1,000 bonuses. Others are announcing that they’re raising salaries for some employees, such Walmart, and others have announced plans, indeed, to build new factories or make more infrastructural investments, as well, so that’s great. And, indeed, we have seen a recent 6.8 percent bump in investment in things like factories and businesses, and that’s all good news for the economy.
But I will say that, you know, this news, as good as it is, is somewhat modest based on the high expectations that this tax overhaul was going to lead to a surge of spending and investment to help the overall economy. And so, that brings me to the other hand. You know, several have argued that these corporate tax cuts are actually going to disproportionately help the wealthiest of Americans.
The most recent example since the overhaul has been that many of these companies are buying back their own shares at record rates, and, of course, buying back shares is a known method to boost the company’s stock price and benefit shareholders. And, of course, the company shareholders tend to be company executives and some of the wealthiest americans. So skeptics would say that buying back stock comes at the expense of hiring new workers and building new manufacturing plants.
The stock buybacks that a lot of companies are able to take part in, does that help across the board from an economic standpoint? You have pension plans that have investments in the stock market. Is that the sort of thing this buyback that can help, overall, with the health of the stock portfolios?
Yes. Absolutely, when the stock market goes well, many would argue that there are several positive externalities for the overall economy that can trickle down and help average americans. So absolutely, that is a positive outcome, a potential positive outcomes for the tax overhaul
Rachel gillum thanks so much we will be waiting and seeing and hopefully we can call you again for your expertise and perspective we appreciate your time tonight. Rachel thanks so much.
Absolutely. Thanks, Brian.