President Trump and the Republicans that control Congress promised the giant, budget-busting tax bill passed last year would have a trickle-down effect as big corporate employers passed tax breaks down to their employees in the form of bonuses and raises. House Speaker Paul Ryan (R, Quitting) back in January in response to Apple’s decision to reward a bonus of $2,500 in stock grants to some Apple employees. “Workers are coming home and telling their families they got a bonus, or they got a raise or they got better benefits.”
Not very many workers. Not very big bonuses and pay raises.
In fact, among Fortune 500 companies, just 4.3% or workers are getting one-time bonuses or wage increases from their employers. That’s 6.7 million people among a work force of 155 million. Measured another way, corporations are getting $11.00 for each $1.00 they are passing along to employees. And that includes bonuses to executives.
By contrast, among those Fortune 500 companies, they are spending 78 times as much on stock buy-backs and dividends to shareholders as wages and bonuses to employees. 433 or 87% of Fortune 500 companies have not given any bonuses or raises.
Okay, what about all those promises new investments as a consequence of the tax cuts? A grand total of 29 of the Fortune 500 companies have announced they plan new capital investments, and even that meager number is suspect. It appears a lot of those companies have long had the investments planned.
What America’s employers did with their giant tax break was put the money in their pockets. They kept it. There was no trickle down.
Inevitably, the inflationary pressures of all that deficit spending at a time of low unemployment is going to force the Federal Reserve to raise interest rates. That increases the cost of credit, including the rates under floating rate mortgages. That’s hard on the middle class. And higher rates mean it will cost the United States more to borrow money to finance that deficit. That will increase pressure on Congress to reduce discretionary spending, including safety net programs.
As WC’s grandmother would say, “It’s all sting and no honey.”
But, hey, we made a bunch of Trump’s rich buddies even richer, so that’s something. Right?