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Trump: “We were in such bad shape when I took over, eggs had tripled in price more than that, everything was up, and prices are down and it bugs me. I looked at CNN the other night which is a failing uh deal it’s got no ratings and I’m probably the only guy watching and I watch these guys talking about ‘well with Trump prices are up’ no no prices are down since I came in. Down. Allll prices just about except for the price of stock. The price of stock is way up, OK? Prices are down. And if you look [host crosstalk- inflation is (inaudible)] and I’ll give you an example, Joe [host crosstalk some of ‘em, some of ‘em are down] Joe look at energy. Energy is WAY down. Energy is down to two dollars and twenty cents a barrel a uh a uh gallon now for a car it’s down to uh [host crosstalk- I’ve seen $2.80] your down to a level I guess around $65 a barrel but it’s going down.

There’s tremendous energy and if you notice, OPEC and OPEC plus uh they’re drilling more, they wanna drill more cause I think they want me happy cause if energy goes down low enough Putin’s gonna stop killing people. That’ll be nice and if you know they’re his own people that are dying him and uh Ukraine. But Putin will stop killing peiple if you get energy down another $10 a barrel, he’s gonna have no choice cause his economy stinks.”
 
nycfan said:
The cash savings won’t affect reported earnings, which are calculated using different accounting rules than taxes. It won’t all ultimately end up in free cash flow either, because AT&T plans to reinvest much of the savings in new capital projects. But the change is still a positive for the company’s shareholders and valuation, all other things being equal….”
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And is a negative for the US Treasury, all other things being equal.
 
Purple Nurple said:
This is why I noted this is a stimulus bill and the economy will not be tanking in the near future. Just like the first time around.
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You should check your economics. There are two problems with this theory.

1. Companies holding cash is bad for the economy. Recessions occur when savings exceed investment. Essentially, cash sitting around represents potential but not actual production. More cash = less production = worse economy. That's why monetary policy works the way it does: you cut rates when the economy is doing poorly, in order to make cash less desirable and to get the cash off the sidelines. When the economy is overheating because people are borrowing too much, rates get increased.

2. Tax cuts don't really work as stimulus. That's because any money flowing out of the Treasury as tax cuts has to flow back in as debt. If the problem is that businesses aren't investing (and that's clearly a big problem right now, if the economic numbers are remotely correct), giving them cash isn't going to make them invest more. The problem isn't and hasn't been that they are liquidity constrained; it's that there's not enough demand. So Treasury gives out tax cuts, and the businesses just buy bonds.

All those tax cuts do is replace assets of the United States with debt owed by the United States, to the recipients of the tax cuts. It's a giveaway. When the government spends money in a recession, it is guaranteeing a boost to aggregate demand. Tax cuts don't do that. They add to supply and then hope the supply induces demand. That has never worked out, to my knowledge, in any way that could be considered successful stimulus.

3. You're probably confusing the welfare of stockholders with the welfare of the country. It's true that investors like cash. But why? What's so great about cash? If GM suddenly sells a ton more cars, and it sells most of them on financing, then isn't it making more money even if it's not making as much cash?

The answer is that cash isn't corporate bullshit. Investors are often concerned about excessively non-cash earnings, because there is a fear that a) the earnings are the results of cooking the books or some sort of accounting maneuver that boosts the bottom line without improving the business and/or b) the non-cash earnings will turn out to be illusory, or will be squandered. For instance, in the example of GM there, if it sells a million financed cars, it will report a huge earnings spike. Will they actually collect the money they are owed, or are they soon going to have half a million repo-ed vehicles on a lot somewhere?

But none of those considerations has any relevance to the economy as a whole.

4. The first time around, the big tax cuts didn't stimulate the economy hardly at all, while ballooning the deficit. There was no crash because there was nothing to cause a crash -- the economy was strong in 2016 and the Fed was running extremely accommodative monetary policy. Nobody predicted that Trump was going to cause a recession. People predicted that the 2017 tax cuts would hollow out the treasury with no gain, which happened, and also had many perverse incentives, such as rewarding offshoring of labor (in a provision supposedly about repatriation, lol) which also happened.
 
Purple Nurple said:
She leaving like $18k on the table by not working full time. Perhaps she should work more instead of less. WTF?
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Maybe it costs her more to pay for child care than what she can bring in. WTF can't you understand that? Why is that you right-wingers are constantly judging people without having any fucking idea what their lives are like?
 
superrific said:
You should check your economics. There are two problems with this theory.

1. Companies holding cash is bad for the economy. Recessions occur when savings exceed investment. Essentially, cash sitting around represents potential but not actual production. More cash = less production = worse economy. That's why monetary policy works the way it does: you cut rates when the economy is doing poorly, in order to make cash less desirable and to get the cash off the sidelines. When the economy is overheating because people are borrowing too much, rates get increased.

2. Tax cuts don't really work as stimulus. That's because any money flowing out of the Treasury as tax cuts has to flow back in as debt. If the problem is that businesses aren't investing (and that's clearly a big problem right now, if the economic numbers are remotely correct), giving them cash isn't going to make them invest more. The problem isn't and hasn't been that they are liquidity constrained; it's that there's not enough demand. So Treasury gives out tax cuts, and the businesses just buy bonds.

All those tax cuts do is replace assets of the United States with debt owed by the United States, to the recipients of the tax cuts. It's a giveaway. When the government spends money in a recession, it is guaranteeing a boost to aggregate demand. Tax cuts don't do that. They add to supply and then hope the supply induces demand. That has never worked out, to my knowledge, in any way that could be considered successful stimulus.

3. You're probably confusing the welfare of stockholders with the welfare of the country. It's true that investors like cash. But why? What's so great about cash? If GM suddenly sells a ton more cars, and it sells most of them on financing, then isn't it making more money even if it's not making as much cash?

The answer is that cash isn't corporate bullshit. Investors are often concerned about excessively non-cash earnings, because there is a fear that a) the earnings are the results of cooking the books or some sort of accounting maneuver that boosts the bottom line without improving the business and/or b) the non-cash earnings will turn out to be illusory, or will be squandered. For instance, in the example of GM there, if it sells a million financed cars, it will report a huge earnings spike. Will they actually collect the money they are owed, or are they soon going to have half a million repo-ed vehicles on a lot somewhere?

But none of those considerations has any relevance to the economy as a whole.

4. The first time around, the big tax cuts didn't stimulate the economy hardly at all, while ballooning the deficit. There was no crash because there was nothing to cause a crash -- the economy was strong in 2016 and the Fed was running extremely accommodative monetary policy. Nobody predicted that Trump was going to cause a recession. People predicted that the 2017 tax cuts would hollow out the treasury with no gain, which happened, and also had many perverse incentives, such as rewarding offshoring of labor (in a provision supposedly about repatriation, lol) which also happened.
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It almost like the bill should do something to encourage investment of those new dollars from tax relief.

In short, changes like allowing upfront depreciation of assets and immediate expensing of research-and-development expenses will bring swift windfalls to American corporations but also lasting tailwinds.
fred.stlouisfed.org

Gross private domestic investment: Domestic business

Graph and download economic data for Gross private domestic investment: Domestic business (W987RC1Q027SBEA) from Q1 1960 to Q2 2025 about investment, gross, domestic, business, private, GDP, and USA.
fred.stlouisfed.org
 
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Purple Nurple said:
It almost like the bill should do something to encourage investment of those new dollars from tax relief.

In short, changes like allowing upfront depreciation of assets and immediate expensing of research-and-development expenses will bring swift windfalls to American corporations but also lasting tailwinds.
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I think you missed point #2. My company is sitting on millions in cash because demand is soft due to the uncertainty in the economy. My clients are being hugely cautious and so there are few obvious/large investments we could make right now that would generate a clear ROI. We're doing fine, but our cash is in CDs waiting to either (a) be used when/if the president gets his head out of his ass and quits fucking around with every aspect of the economy, or (b) be used to weather an economic meltdown. Love to see (a), feel like (b) is more likely.
 
I ain’t the sharpest economic tool in the box, but even I am pretty reasonably confident that any policy that causes a significantly increased import tax that then causes significantly increased consumption tax, significantly decreased wage growth, significantly increased layoffs, significantly decreased hiring, isn’t great for economic growth.
 
superrific said:
Maybe it costs her more to pay for child care than what she can bring in. WTF can't you understand that? Why is that you right-wingers are constantly judging people without having any fucking idea what their lives are like?
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I understand that. I know people who have done that. It doesn’t look like this. She was working 32 hours. She had a 12. 14, 17, and 22 year old at the house.

She also then made the decision to cut her hours to 26 hours to receive less in assistance than she could have made.

I feel bad for anyone struggling, but it appears that she could do more to help herself. I could be entirely wrong.
 
CFordUNC said:
I ain’t the sharpest economic tool in the box, but even I am pretty reasonably confident that any policy that causes a significantly increased import tax that then causes significantly increased consumption tax, significantly decreased wage growth, significantly increased layoffs, significantly decreased hiring, isn’t great for economic growth.
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most people don’t have a clue about how the economy works.
So, a wise person would listen to what the experts are saying.
Others consult Facebook memes.
 
Purple Nurple said:
It almost like the bill should do something to encourage investment of those new dollars from tax relief.

In short, changes like allowing upfront depreciation of assets and immediate expensing of research-and-development expenses will bring swift windfalls to American corporations but also lasting tailwinds.
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Eh. Here's the thing: the R&D expense was changed in 2022 (it was actually a change mandated by the 2017 Act) going back to amortization of research expenses. Overall R&D spending didn't change much, if at all. It grew 5% in real terms in 2023, pretty much in line with the historical trend. So maybe there's a slight increase in R&D spending. Let's say the effect is 5% (implying that R&D would have grown by 10% after 2022). That's about $70B, which is a rounding error in the economy. It will definitely not keep the economy humming.

And about 50-75% of business investment is done in-house, with the remainder at contract firms or universities. Guess what? That university R&D number is coming down. A business can't just move a laboratory from a university in-house. So whatever benefits might come from the tax expensing are probably going to be neutered (or more) by the cuts to research funding and the exodus of scientists. Note that the expensing only applies to domestic R&D.

Thing is, most businesses don't R&D because they want to. They do it because they need to, to retain market positioning. While there can be some play in the joints at the margins, it's not going to make a huge difference on the totals. There's some elasticity at the margins but that elasticity decreases pretty quickly, based on what I have read. I'm by no means an expert in this area.

I think it's pretty fair to conclude that, best case, R&D expensing will lead to increases in R&D spending that are very small compared to the economy. And meanwhile, we get accounting distortion, and possible increase in cyclicality.
 
Purple Nurple said:
I understand that. I know people who have done that. It doesn’t look like this. She was working 32 hours. She had a 12. 14, 17, and 22 year old at the house.

She also then made the decision to cut her hours to 26 hours to receive less in assistance than she could have made.

I feel bad for anyone struggling, but it appears that she could do more to help herself. I could be entirely wrong.
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You missed the 3 year old. The 22 year old moved out, meaning less child care provided by older siblings. But more to the point: you have no idea of her actual circumstances. Maybe the 3 year old was diagnosed as autistic. Maybe her kids are having some disciplinary issues. It just seems like POS thing to do to say, "she should work more" without understanding her constraints.

And sure, the $220 in food benefits probably helped. I very much doubt it was why she reduced her hours, but it made quitting more palatable and affordable. That's the whole point of food aid. To provide food for people who otherwise have trouble affording it. Does that mean that food assistance phase-outs have an unintended side effect of discouraging work? Yes. That's true for every phase-out program. But the effect has been measured many, many times and it's small. The vast majority of people do not cut hours to get benefits -- and as you can see, even here the cut was not that big. Usually these decisions are taken out of necessity, not choice.
 
YAY !

The very horrible trade deficit is narrowing !

I'm no economist, but don't trade deficits end up destroying our economy and provide no benefits for consumers or lead to economic and job growth ?
I think I read somewhere that the downside to a trade surplus could lead to higher prices and interest rates and stagnate economic growth. The example I read is Japan that has been running a trade surplus for years.

It's so confusing. I'm at the point where I'm thinking trade balances don't really matter, but I don't understand economics all that much.

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finance.yahoo.com
 
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