Once again the usual suspects have hoisted the supply side economics flag. The theory massive tax cuts will pay for themselves will go down in flames a third time. Fool me once, shame on you, fool me twice shame on me, fool me three times, then you fill in the blanks. Like Paul on the way to Damascus, David Stockman, President Reagan’s budget director, has seen the light and admits the supply-side theory was a hoax. Reagan and George W. Bush followed the supply-side Pied Piper, but ballooning deficits forced tax increases; the alleged growth never appeared.
High-earners close to retirement who live frugally relative to their income stand to benefit the most. They can take advantage of lower rates and then when rates have to go up they will be in retirement living off their investments and likely at a much lower rate. Of course, living responsibly often works well, regardless of tax policy.
With any tax change, we should know how the modifications affect the people whose idea it was. Since Trump refuses to release his tax returns, supporting his tax plan requires a leap of faith or, better said, foolishness. Speaking of folly, Trump’s predecessor, Mr. Obama, has a $400,000 speaking engagement lined up from bond trading firm Cantor Fitzgerald. While 44 is an eloquent speaker, four hundred grand from any financial firm is utterly distasteful. Maybe each will change their mind.
Liberals are upset retired Gen. Michael Flynn accepted money for speeches from foreign governments due to conflict of interest regulations. Obama taking money from Cantor Fitzgerald also smells like influence peddling; the same guidelines should apply to former elected officials and their coterie. Currently, there is a bill working through Congress giving firms like Cantor Fitzgerald a pass if complex derivatives blow up like they did barely 10 years. Influence buying comes in multiple forms.
Penguin Books fronted Michelle and Barack Obama a reported $65 million for their memoirs; they do not need the money. Plus he gets a $200,000 pension, adjusted for inflation, for the rest of his life. His family will not suffer. We should not be surprised though. Obama’s Justice Department reached multi-billion dollar settlements repeatedly with financial firms and refused to prosecute blatant criminal conduct. Initially, Obama proposed mortgage relief, but it soon morphed into bailing out banks with top management collecting $100,000 plus bonuses on the taxpayer dime.
The near-collapse of our economy a scant decade ago still lingers. Obama’s foreclosure relief ignored lots of American families, and many still suffer. According to the New York Times, some 25 percent of working class Obama supporters who voted for him twice flipped to Trump. People vote their pocketbooks. If Obama’s finance-friendly policies stifled the recovery then maybe his strategies led to the current occupant.
You can’t always get what you want, but Buz Livingston, CFP can help figure out what you need. For specific recommendations, visit livingstonfinancial.net or come by the office in Redfish Village, 2050 Scenic 30A, M-1 Suite 230.