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Steve Forbes:  Trump Tax Cuts Will Stoke 3.5 Percent Economic Growth

Steve Forbes speaks about the flat tax during a discussion at the Heritage Foundation in Washington, DC, March 16, 2015. (Jim Watson/AFP/Getty Images)

By    |   Sunday, 24 December 2017 10:26 AM

Investment guru Steve Forbes tells Newsmax TV that President Donald Trump’s tax cuts will trigger economic growth of at least 3 percent to 3.5 percent.

For a decade, economic growth has usually been below 2 percent, Forbes said. “We've had a few quarters that would go above it or it'd gone 25 miles an hour in a 70 mile hour zone speed zone. Now we're going to get it up to 40, 45. Good start. And if the administration continues, Trump continues on deregulation and alike, good,” the chairman and editor-in-chief of Forbes Media told Sunday’s “The Income Generation Show.”

Forbes told host David Scranton he thinks the Trump tax cuts will solidify “a 3, 3 and a half percent growth economy.”

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To be sure, gross domestic product expanded at a 3.2 percent annual rate last quarter, the Commerce Department said in its third GDP estimate on Thursday. While that was slightly down from the 3.3 percent rate reported last month, it was the quickest pace since the first quarter of 2015 and was a pickup from the second quarter’s 3.1 percent rate.

It also marked the first time since 2014 that the economy experienced growth of 3 percent or more for two straight quarters. But the growth pace for the July-September period likely overstates the health of the economy, Reuters explained.

Republicans in the U.S. Congress this week approved a broad package of tax cuts in what was the largest overhaul of the tax code in 30 years, handing Trump a major legislative victory. Trump is expected to soon sign the legislation, which has $1.5 trillion in tax cuts, Reuters explained.

Economists are forecasting a modest economic boost from the tax cuts, which includes slashing the corporate income tax rate to 21 percent from 35 percent. The fiscal stimulus will come while the economy is at full employment, which raises the risk of it overheating.

For his part, Forbes admitted that a flourishing economy isn’t without its risks and dangers. “The things what could go wrong? A foreign crisis. A trade war would be devastating,” said Forbes, author of "Reviving America: How Repealing Obamacare, Replacing the Tax Code and Reforming The Fed will Restore Hope and Prosperity."

“There's always things lurking out there, but they at least got the tax thing on the business side right," said Forbes, a Republican candidate in the 1996 and 2000 presidential primaries.

"And if they make it clear there's more to come, I think we'll have the best years since really the middle part of the last decade and that'll start to change people's attitudes,” he said.

While Forbes realized results from investment will take time, “the key thing is if people sense that plans are being made, that cutbacks are going to go up on a sustained basis, that starts to change attitude,” he said.

“And you're also going to see something that's going to be tough on CEOs – labor shortages. They're going to have to train workers more and that means higher wages,” he said.

He warned that the Federal Reserve could sound alarms bells of an overheating economy.

“No such thing. Let it play out and people have a feeling we haven't had since the late 1990s.”

However, the U.S. tax overhaul will give the economy a bit of a lift next year, but will have little lasting impact, according to a brief analysis from the Federal Reserve Bank of San Francisco, Reuters explained.

“If Congress passes the tax reform legislation by the end of this year or early next year, we expect a modest boost to GDP growth in 2018 and 2019,” senior research advisor Zheng Liu wrote in the regional Fed bank’s latest edition of FedViews, prepared ahead of the Fed’s policy-setting meeting last week but not made public until this week.

“We expect real GDP to grow at an average annual rate of about 2.25 percent through 2018, before slowing to 1.75 percent in 2019.”

Forecasts for both years are lower than that of most Fed policymakers, according to projections published by the central bank last week that show a median expectation of 2.5 percent growth for next year and 2.1 percent in 2019.

But they are higher than the regional Fed bank’s own forecast just three months ago, although it is not clear how much of the increase comes from the tax plan and how much reflects stronger economic data in recent months. The bank’s September FedViews pointed to economic growth of between 1.5 percent and 1.75 percent for both 2018 and 2019.

The San Francisco FedViews updated forecast reflects expected rate hikes to come over the next couple of years, “as well as the longer term effects of population aging and slower productivity growth,” Zheng wrote.

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Investment guru Steve Forbes tells Newsmax TV that President Donald Trump’s tax cuts will trigger economic growth of at least 3 percent to 3.5 percent.
steve forbes, trump, tax, cuts, economic, growth
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2017-26-24
Sunday, 24 December 2017 10:26 AM
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