December’s Domestic Economic Deliberations

In spite of a stronger dollar and surging stock market, precious metals have still managed positive growth over the past several months, due to ongoing international concerns and domestic legislative stagnation. Today however, President Trump promised the nation a Christmas present, in the form of tax reform designed to stimulate the economy. Considering that the Fed’s “Quantitative Easing” efforts over the past decade have failed miserably, it seems like a tall order to fill. The only major positive, to the current Bill’s passage, is the 52/48 advantage that Republicans hold in the Senate. But the most current Congressional Budget Office analysis says the Bill will add $1.4 trillion to the national debt over the next ten years.

Republican Bob Corker of Tennessee has said that he can’t vote for the Bill, unless it can be shown that the tax breaks won’t add to the deficit, once the byproduct of more rapid economic growth is factored into the equation. However, no such report has yet been generated by the nonpartisan Joint Committee on Taxation (JCT), which has been working on the House version which was passed back on November 16 and it’s been said that it could be weeks before even that might be available. Nevertheless, the President seems intent on putting the Bill to a Senate vote, before the end of the week.

If a vote is taken this week and Corker remains a “no” without JCT assurances, then the Republicans have no room for error. Meanwhile, there are five or six Republican Senators with “concerns” and another two “wild cards” in Flake and Collins, who could go either way. Collins ultimately voted against the Affordable Care Act and has already strongly disagreed with the Senate version, which includes repeal of the individual health insurance mandate as a means of Bill finance, which Collins feels would offset any benefit to the middle class. Even though Republicans have a long history of objecting to major votes taken without utilizing macroeconomic analysis, they find themselves with the need and desire but not the time to institute their own process.

Domestic economic heterodyne is sure to reach a crescendo, during the month of December, when tax break discussions dovetail with the debt ceiling debate. If the Tax Cuts and Jobs Act passes, then there will be hell to pay if the JTC’s analysis doesn’t support the cost offset during the debt ceiling debate and if it fails to pass, then the debt ceiling debate will have a slightly easier go, but either way the process is going to provide undue stress to the market and the dollar. So precious metals are well positioned to be major benefactors, as the dollar absorbs a domestic beat down. Don’t wait! Take advantage of today’s lower precious metals prices, while capturing peaking market profits and protecting your financial legacy.

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2 comments

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