We celebrated Thanksgiving this past week. I hope it was joyous, filling and crammed with family and friends.
The Wall Street Journal reported that the Trump administration has loaded a substantial amount of data regarding first year graduates’ income and debt covering 36,000 programs and about 4,400 colleges, and is known as the “college scoreboard” which was initiated by President Obama. This is an important piece of information; I fully support the Trump administration’s focus on supplying data so that information is available to assist students and parents in making decisions about colleges and majors. I would note one caution, one of the examples cited was the University of Southern California whose graduates earning a Master’s Degree in drama and theatre owed approximately $101,000, but earn just slightly under $31,000 in their first year. This is one of those careers where there is a huge potential upside, and someone might be willing to take a gamble, the only question is – is it an educated gamble? If it is, I say go for it.
Trade talks with China appear to have hit a snag as the Phase 1 deal appears to be rolling over to 2020. This, of course, generates immediate, if not irrational reaction from the stock market, since any reaction to any news related to the US/China trade deal is irrational until there is finality. It is extremely difficult to determine what direction the Trump administration is going with China. Think the legislation for Hong Kong.
Recent reports regarding the USMCA reflect that Speaker Pelosi is choosing her words very carefully. She indicated that a “version” of the USMCA may be ready for action this year. This is a slightly different phraseology then has been used before and appears to imply that the Democrats will make changes to the agreement that will then have to be passed by the Senate and approved by the President and it looks as if there will be a need for new action by the Mexican government as well as initial action by the Canadians. It is clear the Canadians have hung back waiting to see what, if any changes were made and will now have to make a decision as to whether or not the agreement remains viable from their perspective, I suspect it will.
There is a somewhat troubling trend that’s occurring as younger Americans are dying from a variety of causes including the opioid crisis, suicide and some unusual levels of cancer including pancreatic cancer which have risen in the last decade or so. This is causing the overall life expectancy to decline for the first time in many, many years. Trying to get a handle on this is somewhat difficult but, there is data being collected which hopefully will reflect on the causes and point the way towards some potential solutions.
The CEO of the Adirondack Foundation, Cali Brooks, recently wrote about giving, citing a variety of statistics. She also raised a very interesting concept which is called bunching which means that individuals take deductions by literally bunching them into 1 year versus the next. As an example, you may give $10,000.00 this year when you might have only given $5,000.00 in order to take the best advantage of the impact of that deduction on your income taxes. There may be benefit under the current tax law to giving $10,000.00 in 2019 and $10,000.00 again in 2021 versus $5,000.00 in each year. I urge everyone to take a careful look at their philanthropy as well as their tax situation, to take best advantage, after a consultation with your accountant before year end.
One of the prime reasons that Republicans gave for the passage of the tax bill in 2017 was that it would generate increased tax collections and spur investment by business. It appears that the level of investment has been far below what had been anticipated and was included in the analysis of the impact of the tax bill on US revenue and the US economy. Obviously, if larger businesses are not making significant capital investments, that means that they are not purchasing large pieces of equipment, building buildings, etc. which means that the flow of money through the economy is lessened and results in potential slower growth. Increased tax revenue has not occurred, but rather has fallen as our debt has risen by a Trillion Dollars this year alone.
The next spending deal is now being negotiated between Speaker Pelosi and Secretary Mnuchin. This is an interesting development as Mr. McConnell has stepped out of the way and Mr. Mulvaney has also been removed from the process. It appears that the Secretary and the Speaker do in fact have a good relationship and have trust in one another which may allow them to come to a deal that will keep the government operating for the long term rather than the short term so that we don’t have these Continuing Resolutions (CR’s) pushing the government forward. The CR’s as they are known are very problematic as government agencies, particularly DOD, are in a position where they never really know what they are going to have available to spend long term and this negatively impacts contracting for any number of projects and makes it more expensive. Hopefully these two individuals will get the job done and come up with a reasonable spending package.
Bill Owens is a former member of Congress representing the New York 21st, a partner in Stafford Owens in Plattsburgh, NY and a Senior Advisor to Dentons to Washington, DC.
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