Forget the $1 trillion infrastructure plan and sweeping tax reform that President Donald Trump once touted. Neither is going to happen anytime soon, according to S&P Global Ratings.
“We no longer believe the federal government will be able to push through even a small infrastructure-spending package — much less the $1 trillion the White House has suggested,” said U.S. Chief Economist Beth Ann Bovino in a new report, “The Departed: Can U.S. Lawmakers Spur GDP Growth When They Return?”
Bovino expects instead “a small tax cut of $500 billion, rather than true tax reform” as midterm elections approach. It won’t be permanent, however, and therefore not as effective as a major tax reform package, which requires bipartisan support, said Bovino.
The smaller stimulus and tax cut, coupled with a growing aging population and cuts in immigration, mean that U.S. economic growth will “likely” slow to below the current 2% annual growth rate, said Bovino. She said the imposition of hard tariffs could further weaken the economy, but she doesn’t expect they will be adopted.