Should President Trump’s proposed tax cuts become a reality, how could the markets and investors be impacted?
Bob Wiedemer: Part of domestic political uncertainty are the tax cuts. It's probably the biggest, single, most important change that President Trump could make. He could cut taxes for corporations, individuals, this would hopefully spur growth, certainly spur some earnings growth in stocks, but there's a lot of uncertainty there. I mean an awful lot of uncertainty in just what we're going to get out of tax cuts. So far, there's been talk, not much action. It's hard to get everybody to agree on tax cuts and I think that's a key part of what's going to lead to domestic uncertainty this year--when?... If?... How much tax cuts are we really going to get? As I like to point out, Ronald Reagan got Democratic support for his tax cuts, so far, the Trump Administration has not been able to get a lot of Democratic support for these tax cuts. So, we'll see what happens, but clearly a big part of domestic political uncertainty going forward.
One thing that looks pretty clear at this point is that the tax cuts being talked about are going to be funded by borrowing money. They're going to be funded by the deficit. We're not likely going to be able to get tax cuts offset by revenue increases. There's some talk about that, but there doesn't seem to be any reality behind it. One thing we're going to see is tax cuts are going to lead to bigger deficits that could be scary. It certainly not good longer term and I think again part of investor uncertainty... is this really any way to grow a country? We like tax cuts, but just by boosting our debt, is that really smart? I think there's going to be some issues over that and a lot of uncertainty in the markets and in the investment community created by that.