Republicans promised that Mr. Trump’s $1.5 trillion tax cut, which featured large reductions for corporations and other business owners, would supercharge business investment in America. And it did — but only briefly.
Nonresidential fixed investment grew at an annual rate of nearly 9 percent in the first quarter after the tax cuts were enacted, its highest rate since 2012. That growth trailed off in the second half of 2018 and slid further at the start of 2019. This spring, it turned negative — in part because investment in America is increasingly linked with the price of oil, and oil prices have fallen sharply from a peak last fall.
The tax cuts, which lowered individual income tax rates, delivered benefits to most Americans. Democratic candidates aren’t acknowledging those gains in the debates. Instead, they’re focusing on high earners, companies and shareholders, who enjoyed the largest benefits from the cuts.
“Since 2001, we have cut $5 trillion worth of taxes,” Senator Michael Bennet of Colorado said on Wednesday. “Almost all of that has gone to the wealthiest people in America. We have made the income inequality worse, not better, through the policies of the federal government.”
Senator Amy Klobuchar of Minnesota promised on Tuesday to pay for an infrastructure bill by raising capital gains rates and “doing something when it comes to that regressive tax bill that left everyone behind, but really made his Mar-a-Lago friends richer, as he promised.”
Trade wars are disrupting some industries.
The Fed chair handed Democrats a talking point at a news conference following the Fed’s rate cut on Wednesday, saying the move was “intended to ensure against downside risks from weak global growth and trade tensions” and noting that Mr. Trump’s trade fights “do seem to be having a significant effect on financial market conditions and the economy.”
Mr. Trump’s imposition of tariffs on imported steel, aluminum, washing machines, solar panels and products from China, along with threats to impose others on automobiles and even French wine, has fueled a spike in business uncertainty both domestically and abroad. The tariffs have also slightly raised prices: A recent study from economists at the Federal Reserve Bank of New York found that the tariffs on Chinese goods cost the average household $419 last year. Higher duties that took effect earlier this year could add hundreds more to that total.