How much economic growth will the U

The effects of this tax cut are two fold. The first is the real effect from the changes in marginal costs and benefits and the second is the effect from the optimism from the tax cut. Since this bill mostly targets the corporate tax rate the real effects will be seen in the long-run. The values of these corporations will go up in the short-run as we have seen in the stock market and there will be more jobs in the short-run. Consumer spending and savings will also increase as disposable income will increase. The greatest effects though will be the effect of the lower tax rate of future business opening and entrepreneurship. Overall, the American economy has a greater incentive for business activities.

The greatest short-run effects will be the physiological one as Keynes calls it "animal spirits". This will lead to greater spending and investment purely because people are more optimistic about the economy. The only problem with this tax cut is that is being financed through borrowing. Spending has continued to increase which mean the government will still be taking money from the economy in another way. This may be good in the short-run but it is not a good strategy if you want long-run growth. Overall, the effects of this tax bill will be greatly positive specifically in the long-run if spending can be controlled.