Congressional Budget Office Projects That 80 Percent Of Trump’s Tax Cut Gains Will Go To Foreigners
Voters who flocked to the polls a year and a half ago to support then-candidate Donald Trump’s America First policy promises may be distressed to learn that most economic gains generated by the GOP tax plan are going abroad to foreign investors, according to a report from the nonpartisan Congressional Budget Office (CBO).
While the projected growth of gross domestic product (GDP) is expected to increase over the next decade, 80 percent of those gains will go to foreign investors.
Foreign investors account for nearly one in three owners of the American stock market, while the U.S. government continues to balance its budget with borrowed cash from countries like China as the deficit balloons.
The Republican tax bill cut taxes while failing to compensate with complementary decreases in government spending. Put simply, the government is spending more than they are earning. To meet the demand of costly government programs like social security, Medicaid, and Medicare, the government borrows money from other countries or sells treasury bonds to its own public.
Just as a loan from a bank to an individual grows from interests rates, so does the national debt. Interest payments on the U.S. debt, along with projected gains from foreign stock market investors, means that most national productivity gains will leave the American economy because almost half of our debt is held by foreign investors. The main holders are China with 1.2 trillion and Japan with 1 trillion.
By 2028, the federal debt will match the GDP. The official report from the CBO explicitly outlines the negative consequences for the national economy:
“The likelihood of a fiscal crisis in the United States would increase. There would be a greater risk that investors would become unwilling to finance the government’s borrowing unless they were compensated with very high-interest rates; if that happened, interest rates on federal debt would rise suddenly and sharply.”
The report also notes rising interest rates, lower wages, and productivity declines. Congressional Republicans are making a bet with the national economy according to the trickle-down economic theory. If the theory holds, the short-term decrease in tax revenue will be offset by an increase in economic productivity which would increase the country’s wealth over the next few decades. However, if the math plays out differently, the most vulnerable American class will be left holding the proverbial bag.