Are we playing with economic fire?

The newly enacted tax cut may bring benefits, but there are risks


Congress has passed and the president has signed a tax cut. Exactly what it means and to whom is still uncertain. But an additional $1.5 trillion in debt is no small matter. There is so much out of whack in Washington, one hardly knows where to start.

So with the new year here, most folks are putting their noses back to the grindstone, focusing on what they know, continuing to do what they have been doing and collectively hoping nothing unravels in the next year or so.

Throughout the year-end and into January, there are many “state of the state” and “state of the economy” presentations. For the fourth year running, the pundits are saying the same thing – steady as she goes, little to no inflation, historically low interest rates, plenty of capital to lend. All is good! Some do mention the increasing probability of a mild downturn, perhaps three to four quarters, but nothing like 2009.

The most dominant emerging theme is the shortage of qualified workers. There is a mismatch between those wanting to work and being eligible for positions open. There is no quick fix to this, other than existing workers staying and working past their desired retirement age. The irony is that the shortage of workers prompts more technology innovation, including robots.

One recent Counselors of Real Estate study cited that over 40 percent of all jobs could be obsolete in 15 to 20 years (undoubtedly some hyperbole there). To us baby boomers, that seems like a very big number, but to younger folks it is not out of the question.

Some neighbors were considering buying a 10-plus-year-old car we had for sale. He had an app on his laptop that accessed the service codes in the car! He does most repairs and many are replacements of electronic components himself! Not for your average Joe, but very interesting.

The point is that technology forces change and a shortage of skilled workers further accelerates change. Hence, the old adage “the only thing constant is change.”

This column is being written using Google Voice Recognition. We have not had a full-time secretary/administrative assistant in our office for more than five years. I was reviewing some standardized real estate forms today, the first line under contact information was “fax number of agent.” The what? We still have a fax machine in our office. It sits on the floor in the corner. We use it once a month to send in the copier count for our 16-year-old copy machine. I am sure there is an app that supersedes this, but some changes take longer than others.

(A few months ago, the fax machine fired up and started spitting out an incoming fax. A young associate, who was sitting nearby, asked “what the heck is that?”)

Returning to tax cuts, TD Bank’s quarterly economic forecast, “Onward and Upward,” is pretty upbeat but not entirely: “Tax cuts could make the porridge too hot given projections for solid growth and very low unemployment, the U.S. economy does not need fiscal stimulus at this stage of the cycle. There is certainly room to improve the U.S. tax code to close loopholes and make business taxes more competitive, but it is not clear that the overall level of nationwide taxes needs to be reduced within a debt-laden government.”

In fact, if this tax cut package does not stimulate the economy, it will come back to haunt the president and the majority in Congress. Again, quoting TD Bank, “There is no free lunch. These tax cuts are likely to worsen a fiscal situation already set to deteriorate due to rising expenditures related to an aging population. Either Congress offsets this with spending cuts, which leads to an economic drag, or debt levels rise and interest costs eat up a greater share of the federal budget.”

So after almost a year, the president and Congress passed a tax cut that may or may not be a good thing. I am very much a champion of right-sizing government. Cut the Congress, members and staffers, to half-time. We could do twice as much with half as many! But failing that, we here in New Hampshire need to get back to work because someone has to pay taxes!

Bill Norton, president of Norton Asset Management and principal of Harrington & Reeves, is a Counselor of Real Estate (CRE) and a Facilities Management Administrator (FMA). He can be reached at

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