Early Saturday morning the Senate passed its version of the tax overhaul plan with a vote of 51-49. This hands a major victory to Trump and the GOP, considered the first major legislation in this administration. President Trump has made this the centerpiece of his economic plan, claiming that business taxes have made America uncompetitive on the global stage.
While the the House and the Senate still have to go through the process of reconciliation to harmonize the bills they each have passed, to get a final product for Trump to sign before the end of the year. No Democrat supported this legislation.
Senate Majority Leader Mitch McConnell (R-Ky.) said, "This is a great day for the country. We have an opportunity now to make America more competitive, to keep jobs from being shipped offshore and to provide substantial relief for the middle class."
This bill contains $1.4 Trillion in tax cuts, lowers personal taxes for individuals through 2025, and cuts the corporate tax rate from 35% to 20%. The bill does take away deductions for state and local taxes, a controversial measure that counters tax cuts for some.
The Senate version of the bill also eliminates the Obamacare individual mandate, a Trump priority, and opens a portion of the Arctic National Wildlife Refuge for drilling.
Media reports say Trump met with key senators before the vote to maintain the slim margin of victory, and that negotiations were frantic throughout the night. Some changes to the 479-page bill were actually handwritten into it before passage.
Author's note: This bill will stimulate business and the economy for the next 10 years. While our economy has already improved due to what we call the "Trump Effect," this effect is largely in response to the anticipation of Trump successfully implementing his economic plans, of which this is a major part. If this had failed, the economy could very well have taken a hit.
After 8 years of mismanagement by the Obama Administration, our economy is starting to get back to its historical robustness. GDP growth will be over 3%, and the Fed has started raising federal fund rates to prevent inflation. With the passage of this bill, the psychology of the "Trump Effect" is locked in, which assures continued growth for the next several years, barring a major economic event to the contrary.
While we do expect a "correction" in the stock market in the next few months, the overall outlook for our economy through the Trump years looks promising.