What about shutdown threats?

With the potential government shutdown looming, let's look at some perspective on government debt. As we discussed early in the week, the policy execution pendulum for the Trump administration has swung over the past four months, from winless to potentially two big wins by the year end. 

As I've said, with a massive corporate tax cut coming and big incentives for companies to build, invest and bring money back to the U.S. (from overseas), we should be entering an economic boom period--one we have desperately needed, post-recession, but haven't gotten. 

Still, there are people that hate the tax cut idea. They think the economy is in fine shape. And that debt is the problem. The Joint Committee on Taxation is the go-to study for those that oppose the tax cuts. The study shows not a lot of growth, and disputes the case that the tax cuts will pay for themselves through growth. 

What the headlines that cite this study don't say, is that the study has huge assumptions that drive their conclusions. Among them, that creating incentives to repatriate $3 trillion in offshore corporate money will only contribute about a fifth of the taxable value of that amount of money. And they assume that the Fed will hike rates at a pace to precisely nullify any gains in economic activity (which wouldn't be smart, unless they want to go revisit another decade of QE). 

Now, with this study in mind, people are fearing the debt implications, on what is already a large debt load. And they fear that global investors might start dumping U.S. Treasurys, as a result. This has been a misguided fear throughout much of the post-financial crisis environment.

Rhttps://www.forbes.com/sites/bryanrich/2017/12/06/government-shutdown-debt-deficits-and-tax-cuts/#180483ef3303ead more at Forbes