This article was published by The McAlvany Intelligence Advisor on Wednesday, January 31, 2018:
When Samuel Morse asked for suggestions on what his first message over his telegraph should be on May 24, 1844, Annie Ellworth suggested a verse from Numbers 23:23: “There is no magic charm, no witchcraft, that can be used against the nation of Israel. Now people will say about Israel: Look what God has done!” [Good News Bible translation.]
The same might be said about the effect that the magic elixir of deregulation and cuts in tax rates is having not only in the United States, but globally as well. Economists at the International Monetary Fund just announced that, thanks to the combination of those two potent medicines, it has revised its global economic growth estimates for each of the next two years to 3.9 percent.
This is a staggering 70 percent improvement over the average global GDP growth experienced during the unlamented Obama years.
And it’s just getting started. Walmart, Boeing, Apple, Comcast, and more than 200 other companies have announced what they’re doing with their tax savings, impacting directly the paychecks of an estimated three million workers. Now comes ExxonMobil with its announcement: $35 billion of new money is going to be pumped into its operations in the United States. The company’s CEO, Darren Woods, gave credit where credit is due:
These investments are underpinned by the unique strengths of our company and enhanced by the historic tax reform recently signed into law….
These positive developments will mean more jobs and economic expansion across the United States in a myriad of industries.
This $35 billion is on top of the $23 billion to $27 billion the company said last year that it would be investing globally over each of the next three years. And there’s more to come, said Wood: “We’re actively evaluating the impact of the lower tax rate on the economics of several other projects currently in the planning stages.”
Translation: Monday’s announcement is just the beginning for ExxonMobil. The company has 20 billion barrels of proven reserves of crude oil “equivalent” (oil and natural gas) and a refinery capacity of nearly five million barrels a day. Its 20 refineries are spread across 14 countries and it operates 100 major exploration projects around the world. It recently purchased $6 billion worth of oil leases from the Bass family on top of the Permian Basin in Texas and New Mexico, and is expected to expand further its operations in North Dakota above the Bakken Formation.
Wood praised tax reform for providing his company the opportunity to redirect its resources to more profitable opportunities:
These are quality investments for our shareholders that are made even better by tax reform. These are all possible because of the resource base developed by our industry along with sound tax and regulatory policies that create a pro-growth business climate here in the U.S.
Wood estimated that the new investments, once completed, will add an estimated 12,000 new workers to his company, which already employs 73,500 people. The implications for the economy are obvious, and enormous: Exxon rarely misses an opportunity to move capital into profitable projects, adding to its already enormous $330 billion asset base. It will still pay taxes on those additional profits, just at a much lower level. Those nearly 90,000 people on the payroll will also be paying taxes, also at lower levels than before.
Here’s the math. The American economy generates, according to the latest data from the Bureau of Economic Analysis, $19.7 trillion worth of goods and services in a year. At 3.9 percent growth, that number next year will be $20.5 trillion. In five years it will approach $24 trillion annually.
The global economy, according to Statista, generates $79.2 trillion a year. At 3.9 percent growth, next year that number will be $82.2 trillion. In five years it will be closing in on $100 trillion.
That number is simply incomprehensible. Doubt it? Check Sources below for a picture of what just $1 trillion, stacked in piles of $100 bills, looks like. And then multiply that by one hundred.
Of course, all of this is utterly incomprehensible to far-left Democrats like Nancy Pelosi and Debbie Wasserman Schultz. So they’re against it. Nancy says those bonuses are just “crumbs” while Debbie calls them chump change. This being a mid-term election year it’s hard to fathom why they would parade their ignorance about what is happening thanks to deregulation and tax reform. Perhaps they have a death wish.
In the meantime the economic growth being unleashed by the policies of the Trump administration is leaving them behind and turning them into historic relics.
The Wall Street Journal: Exxon to Spend $50 Billion in U.S. Over Next Five Years
The Washington Times: After Trump tax cuts, ExxonMobil to invest $50 billion in U.S. business
The Washington Examiner: Pelosi, Wasserman Schultz rip $1,000 tax reform bonuses, ‘crumb’
Statista.com: Global GDP in 2017: $79.2 trillion