At a Wall Street Journal CEO Council forum on Tuesday, John Bussey, a WSJ associate editor, asked the gathered top executives to raise their hands if they planned to use the huge corporate tax cut hurtling through Congress to increase capital investment, a key selling point for the tax bills from the White House and congressional Republicans. Almost no hands went up. "Why aren't the other hands up?" asked President Trump's top economic adviser, Gary Cohn, sitting on stage. Gerard Baker, WSJ editor-in-chief, echoed the question.
"Maybe the CEOs were tired," The Washington Post speculates. "Maybe they didn't hear the question." But in fact, there are serious reasons to doubt that companies would plow their extra money into new factories and equipment, or new hiring. As Trump points out, stock indices are already at record highs and companies are pulling in record profits, and if they aren't investing now, why would they start after tax cuts?
Secondly, the Post notes, in a survey of more than 300 executives at large U.S. corporations over the summer, most said they would use a tax windfall to pay down debt, buy back stock, or merge, with capital investment low on this list. Third, interest rates are rising, dampening the effects of tax cuts. When Axios asked economists about the GOP tax proposals, "we found little confidence that either the House or Senate proposals would boost GDP growth and wages, the stated aims."
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So Cohn finding few takers for investment in a public forum might have been as telling as it was awkward. But at least he didn't ask them to clap. Peter Weber
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