Real tax reform is needed but it should be paid for in order to ensure that we grow the private sector as we shrink the public sector.
That means cutting taxes, eliminating loopholes and reducing spending. Without such cuts, the economic boost from lower taxes would be more than offset by spiking debt service payments on the record amount of outstanding debt. Now we have that same foreboding number 666; this time regarding the amount of red ink during the 2017 fiscal year. Nevertheless, we must pray this rapidly rising debt figure does not forebode yet another step closer for the demise of the middle class.
But on a reported earnings basis—the number you report to the SEC under penalty of the law and according to GAAP standards--the 12-month trailing PE is 25.5 times earnings.
The S&P 500 was 666 in March of 2009 and it is trading at 2,560 today.
Declining government revenues and long-term costs associated with an aging population, including higher Social Security and Medicare spending, are expected to continue pushing up deficits over the coming decades.
read more The federal budget deficit widened in the fiscal year 2017 to the sixth highest on record, creating a budget shortfall of 6 billion.
The overspend resulted primarily from an increase in spending for Social Security, Medicare, and Medicaid, as well as higher interest payments on the debt due to rising rates that drove up outlays to trillion, which was 3% higher than the previous fiscal year.
This has compelled investors to pile into passively managed ETFs that indiscriminately send the stocks contained within it higher regardless of the fundamentals.
But once central banks become sellers of those assets the exact opposite dynamic will become true.