In the fullness of time the recent U.S. tax cuts will prove to have been a major policy mistake and I'll give you several reasons why.
Oh, I know, amidst the stock market party and companies seemingly throwing free $1,000 bonuses around suggesting a coming hangover is like urging moderation to the loudest drunk at the bar. He'll just get pissed off in addition to being pissed and you get nowhere with reason.
But hey, here goes:
Point 1: Tax cuts at this time will prove to be a strategic error. While they may temporarily delay the end of this business cycle, they are nevertheless not changing the outcome. This has one big implication: When the next recession comes tax cuts as a stimulus tool will no longer be an option.
So congrats, a key stimulus policy tool when needed is no longer a weapon in the arsenal. We just disarmed ourselves. Or in other words, we just gorged ourselves leaving the winter reserves much depleted.
Central banks have been urging governments to implement structural reforms so that the next recession can be better managed and its impact moderated. Tax cuts are not structural reform, they are a short term sugar high benefiting the few despite all the propaganda that is being dished from those that seek to distract.
What? You think that all these companies handing our precisely the same bonus amount ($1,000) is reflective of exactly the same business situation as opposed to a marketing gimmick?