Veropaketti on piiloelvytystä

Morningstarin Bob Johnson näkee USA:n verosovun takana vaiettuja motiiveja.

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Morningstarin makrotaloustutkimuksen johtajan Bon Johnsonin haastattelu on julkaistu sivustolla www.morningstar.com. Voit katsella videon täältä.

Jason Stipp: I'm Jason Stipp for Morningstar. A potential compromise on the big tax debate has come up recently in the last week. It could have a range of effects on the economy.

Here with me to discuss that is Morningstar's Bob Johnson, director of economic analysis. Thanks for joining me, Bob.

Bob Johnson: Great to be here.

Stipp: So a few important pieces of this compromise, and it still has to pass through Congress, but we can kind of talk about what the effect of it could be. There are a few key points that you were telling me about. What do you point to as some of the big ones here in what's proposed right now?

Johnson: Well, I think the really fascinating thing about this bill is that it's really a stimulus bill, not a tax bill, and I think the theatrics around keeping the word stimulus out of it are pretty interesting.

Stipp: So what specific things do you think will be stimulative to the economy? So, obviously lower taxes could help increase spending, but there was more than just lower taxes in this proposal.

Johnson: That's correct. Obviously, the headlines that all Bush [tax cuts would be] extended, capital gains and whatever, which everybody had kind of expected, except maybe at the top, but everything came through there.

But what was really the surprise was the stimulus part of it, and don't make any mistake, it was a stimulus. They're going to reduce payroll taxes on individuals by 2% for the year, and that's a big number.

Stipp: So what is the math on that? How big is that? What does that mean in aggregate terms?

Johnson: In very round terms, wages in the U.S. society are about $6 trillion. So if you take 2% of that, you get to about $120 billion of stimulus, if you will, to the economy. To put that in some perspective, the total stimulus bill, including taxes, infrastructure, and aid to states, you put those three together, it was about $750 billion in total over three years for the last stimulus bill we saw or about $250 billion a year. This one, just the payroll tax part of it, is $120 billion all by itself.

Stipp: And that's money that's going to basically be directly in the paycheck. We don't have to have some sort of work project and have more people hired and they get paychecks. This is kind of a direct injection of stimulus?

Johnson: Talk about shovel-ready.

Stipp: Exactly. So, there were some other things in there. It sounds like that could be potentially a big one. There was also a deal on the estate tax. Do you think that could have an impact or was there anything else you saw that should be on the radar from an economic point of view?

Johnson: There were a couple things. I was surprised that they threw the estate tax in there. I'm wondering to get through some of the other portions of the bill that that's what they had to offer to get that through as a compromise. But it was a pretty dramatic cut. But again, estate taxes don't make a huge difference to the deficit. Very few people pay estate taxes anyway. So I don't think that's a big deal.

I think probably the bigger deal was that the unemployment got extended. And again, it's going to stay at the 99 weeks. We didn't go to a new bracket of 120 weeks of unemployment, at least in what I've seen so far. But there was also no, "Well, it's going to go 99 to 80 to 50 to 40 in any kind of pattern over the year." It's the whole thing stays as-is for the full year and then actually another month.

Stipp: So, looking at these things in the aggregate, does it move the needle at all and your expectations for where the economy might be next year? Does it add to your growth or would it move the needle up?

Johnson: It is big enough to move the needle, Jason. It's a stimulus bill, and it looks to me like it could add as much as 0.5% to everybody's GDP forecast.

Stipp: Okay. There's also some concerns about this, obviously, beyond the political concerns of the Democrats and Republicans. Neither one maybe is thrilled about it, but I think the Republican see it as a victory. But beyond that, there are some concerns about what this might do to the economy, because it's basically more spending. What's your take on the possible downsides and long-term downsides here?

Johnson: Well, that is the big worry is it does push the deficit up again. I thought the message out in November was kind of like, "Let's work on these deficits. They are important psychologically to the consumer."

And frankly, this is a bill where there was a conflict, and the answer was "Oh, let's spend some more. You know, fine, we'll give you that and you can spend your extra ... or you can decrease your tax, whichever it was," and it was really kind of a "something in it for everybody" in terms of more spending, and it is going to raise the deficit in the short run.

So, I think that's not a good thing. We've seen rates go up a lot. I mean, when we were at the peak of speculation with the quantitative easing programs, 10-year Treasuries got down into 2.5%, just under 2.5%. Now, after a little bit of time here, a little stronger economy, and this bill, now we're up well over 3% again on the Treasury bill. So, one negative effect in the bill is that it has raised rates and it's going to offset some of the good that the Fed did with their QE2 program.

Stipp: So, if you had to look and weigh what could potentially be the stimulus part, what could be some of the long-term negatives, do you think that the stimulus bill was necessary and especially in this amount? Is this something that ... if you had the President's ear, would you have advised this as something we needed right now?

Johnson: Well, that's kind of a religious question, if you will. It's hard to answer. It depends on your perspective. If you really felt that the economy was going back into the dumper again and that things were really, really weak out there, this is an effective stimulus bill. It does a lot of things the Republicans always like to see. It puts the money right back in people's hands. Maybe they would have liked to see the payroll tax extended to employers, so they did more hiring, but by putting the money in the hands of individuals, it is stimulative and stimulative right away.

My take has always been that we've had a recovery that's slow, but the last thing we really want is another intervention and get people expecting every time there's a little wiggle or giggle that, "Oh my God, we've got to go spend more money." And I think, that's not a good attitude to put in place, and I'm not wholly in favor of the stimulus that's in this bill.

Stipp: Well Bob thanks for your insights on the bill and the possible effects and for joining me today.

Johnson: Thank you.

Stipp: For Morningstar, I am Jason Stipp. Thanks for watching.

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Matias Möttölä, CFA

Matias Möttölä, CFA  Matias Möttölä, CFA, on Morningstar.fi-sivuston päätoimittaja ja rahastoanalyytikko

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