With the U.S. national debt already exceeding $15 trillion, tax reform championed by President Trump and increased spending are adding to the country’s deficits.
Trump’s trade policy is turning out to be worse than expected and the growth surge mostly reflects a temporary sugar high from last December’s tax cut. The caveat has to do with corporate investment.
Sales tax revenues have recovered. Fiscal year 2019, which started in July, should be a good year thanks to Federal disaster aid. The real question though is what happens when Federal aid starts to fall.
To minimize the risk of greater global imbalances, U.S. policymakers should rethink U.S. fiscal policy and focus on the transatlantic imbalances, not the bilateral trade deficit with China.
At this point, profit shifting by multinational corporations doesn’t distort Ireland’s balance of payments; it constitutes Ireland’s balance of payments.