Big banks are celebrating record-breaking second-quarter profits of more than $60 billion, while workers are seeing their wages decline compared to this time last year. The impact of the tax bill is not turning out how Republicans, including Congressman Steve Knight (R-Palmdale), said it would.
Reuters reports banks saw their profits soar 25 percent higher than this time last year, coming in at $60.2 billion. According to the Federal Deposit Insurance Corporation (FDIC), more than half the gains can be attributed to new tax rates in the Republican tax bill.
As the bill was moving through Congress, Knight said the plan “puts American families first.” The Trump White House was even more specific: Kevin Hassett, chairman of the White House Council of Economic Advisers, said reducing corporate taxes would spark “an immediate jump in wage growth.”
If banks are seeing record profits, what kind of change are American families seeing?
Compared to July 2017, wages in July 2018 fell by 0.2 percent, after adjusting for inflation, according to the Bureau of Labor Statistics.
The fact that Wall Street prospers while Main Street struggles was expected by economists.
“It was our expectation that the major elements of the tax plan likely wouldn’t trickle down into stronger wages for the average worker,” said Michael Gapen, chief U.S. economist at Barclays, according to Bloomberg.
Knight backed a bill which left workers behind, but it’s not a loss for Knight himself. After all, almost 1 in 4 dollars contributed to Knight’s re-election campaign comes from the “finance, investment, and real estate” sector, according to the Center for Responsive Politics.
Knight is indirectly benefitting in other ways.
Casino magnate and GOP mega-donor Shelden Aldeson reaped almost $700 million in savings, thanks to Republicans like Knight. After the bill was signed into law, Aldeson donated $30 million to a super PAC affiliated with Republican House Speaker Paul Ryan.
Now that same super PAC pledged to spend at least $2 million to help Knight’s re-election campaign.
Workers are struggling, but bankers and Knight are doing just fine.