House Speaker Paul Ryan might have a tax bill victory on his hands, but many are still challenging the claims he’s made about the benefits of the bill.
On the “Today” show Wednesday morning, host Savannah Guthrie talked tax cuts with Ryan and called into question his claims about the bill spurring economic growth, asking if Ryan is “living in a fantasy world.”
In particular, Guthrie highlighted Ryan’s assertion that the cuts would encourage CEOs to reinvest the money in their businesses, creating jobs and raising wages. Ryan contended that “the studies show us that that’s exactly what does happen,” saying that as the cuts provide an “incentive to invest in American jobs.” Guthrie challenged his assertions, saying that a number of CEOs have explicitly said that they do not plan to reinvest, but rather do “stock buybacks” and “line the pockets of shareholders.”
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Guthrie quoted former New York City Mayor Michael Bloomberg, who called the tax bill a “trillion-dollar blunder” in an op-ed last week. He called it “pure fantasy to think that the tax bill will lead to significantly higher wages and growth.”
In the op-ed, the former mayor noted that at a Wall Street Journal event attended by CEOs, an editor asked the audience whether the tax cut would lead the business leaders to invest more. Very few hands went up. According to Bloomberg, this is because CEOs “aren’t waiting on a tax cut to ‘jump-start the economy.’”
Guthrie then turned the question to Ryan, saying, “I’ll ask you plainly: are you living in a fantasy world?” “The fact of the matter is corporations are already sitting on a ton of cash. They have record profits—$2.3 trillion. Why aren’t they raising wage and creating jobs nows?” she continued.
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Ryan argued that much of the cash is “trapped overseas” and that once the tax laws are fixed, “we will get reinvestment back in the economy.” He continued, “Every study under the sun shows us: you lower the tax rates, make us more competitive, you will see faster economic growth in America.”
When pressed whether this economic growth would make up for the loss in tax revenue, however, Ryan said it was impossible to predict. “Nobody knows the answer to that question because that’s in the future,” he said.
The tax bill passed in the Senate early Wednesday morning. It is expected to go to President Trump for in the next several days.