Simplifying the tax code would be great, but Fink is skeptical about the impact.

By Matthew Heimer
April 28, 2017

Investors have spent the last six months being bullish about the potential boost that President Trump’s tax reforms could give to the economy. But the leader of the world’s biggest asset manager isn’t feeling the euphoria.

Larry Fink, CEO of BlackRock blk , told an audience of investors and financial advisors on Friday that he thought expectations for the impact of the tax cuts had become “extreme,” and that other factors would restrain U.S. economic growth even if the entire tax package was enacted by Congress.

The Trump administration unveiled a rough outline of the President’s tax reform plan earlier this week, including reductions in the individual income tax rate and a sharp cut in the corporate tax rate, from 35% to 15%. Treasury Secretary Steven Mnuchin and other administration officials are arguing that the resulting boost in long-term economic growth will generate enough tax revenue to keep those tax cuts from increasing the deficit or the national debt.

Analysts have estimated that U.S. economic growth would have to reach anywhere from 3% to 4.5% a year over the next decade in order to make the tax proposal “deficit neutral.” The Congressional Budget Office estimates that growth will be only 1.8% a year over that stretch under current law.

Fink threw cold water on the idea that tax cuts alone could close that gap. During a Q&A in front of an audience of several hundred financial pros at the Morningstar Investment Conference, he praised the White House for pushing for a simpler tax code. But he said he could see economic growth reaching, at best, “two and three quarters, maybe two and a half, but not three [percent]” in the wake of the cuts. Consequently, the Trump team’s tax plan in its current form would lead to deficit growth that would be “bad for the country.”

BlackRock’s CEO said that the country’s changing demographics were one of the big obstacles to economic stimulus. The ratio of older Americans to working-age Americans has been steadily increasing, a factor that has depressed economic growth in the U.S. and other industrialized nations. Fink observed that the Trump administration’s efforts to curb immigration were likely to exacerbate that problem, by shrinking the working-age labor pool.

Fink also said that the White House was likely overestimating the economic impact of a “repatriation” deal, under which U.S. corporations would bring home profits that are currently parked overseas to avoid high corporate taxes. Fink said he believed a substantial majority of the hundreds of billions of dollars that could be repatriated would be paid out in share repurchases, rather than invested in infrastructure projects or job creation.

A wave of such buybacks would be a windfall for shareholders—including BlackRock, which manages some $5.4 trillion in assets, about half of it in stocks. “There’s nothing wrong with repurchases,” Fink told the audience, “but the noise around the stimulus” from such a plan had become “extreme.”

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