The first six months of the Republican tax cut are on the books, and its backers have some good news to report.

Gross Domestic Product grew at an annualized rate of 4.1 percent in the second quarter of the year, the strongest three-month period since 2014. Stocks are trading at historic volumes. And the unemployment rate, hovering around 4 percent, is the lowest it’s been since 2000.

But there is no shortage of troubling signs that come along with this good news.

Inflation-adjusted wages remain flat, the share of federal revenue paid by corporations has fallen substantially and the deficit is ballooning. You would expect to see any of these indicators during a recession, but when they occur during a period of economic expansion, they should set off alarms. If workers aren’t getting raises now and the government can’t pay down its debt during a boom, what will happen when it busts?

It’s a good time to compare these results with what the administration and its allies in Congress were saying last year.

Secretary of the Treasury Stephen Mnuchin and others in the administration promised that these tax cuts would pay for themselves by stimulating growth. If the corporate tax breaks are actually responsible for a higher GDP, he’s partly right. But the related deficit is growing much faster than tax cutters had predicted and it is now projected to reach $1 trillion over 10 years, adding $100 billion a year to the national debt. These tax cuts definitely don’t pay for themselves.


While economic expansion is good, the growth is not spread equally. After the first quarter, the Bureau of Labor Statistics estimated that as a result of the tax cuts, the average worker would take home an extra $6.21 a week, or $322 a year if paid for 52 weeks. That’s far below the White House’s projection of a $4,000 to $9,000 a year increase in-take home pay.

But some boats have been lifted by the tax cut’s rising tide. A study by Politico this week found that although there were a few well-publicized examples of companies who gave bonuses to their employees, the biggest winners have been corporate executives who are paid in company stock and were able to make a killing selling shares back to their employer.

“Since the tax cuts were enacted, Oracle Corp. CEO Safra Catz has sold $250 million worth of shares in her company – the largest executive payday this year,” Politico reported. “Mastercard CEO Ajay Banga sold $44.4 million of stock in May, the largest single cash-out by an executive of the company in at least 10 years, months after the company announced a $4 billion buyback of its own stock.”

The authors found many other executive jackpots that were almost as “eye popping.”

When it comes time to pay the bills for this wild ride, don’t expect corporate America to do its part. Thanks to the cut of the corporate tax rate from 35 percent to 21 percent, the share of tax revenue paid by corporations is the lowest it has been in 75 years, even as corporate profits soar. Any attempt to pay down the deficit will have to come from individual taxpayers and cuts to entitlement programs like Social Security and Medicare, on which middle class families rely.

The administration can celebrate its strong quarter, but there are enough signs of trouble ahead to suggest that the party won’t last.

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