Goodbye to economic sanity
There’s no economic justification whatsoever for a tax cut at this time. U.S. GDP is growing, unemployment is close to 4 percent (below what is commonly considered “full employment“), corporate profits are at record levels and stock markets are soaring. It makes no sense to add any federal government-induced stimulus to all this private sector-caused economic activity, let alone a tax cut as big as this one.
But they’re not doing it as stimulus, they’re doing it to make very rich people even richer.
This is actually the ideal time for Washington to be doing the opposite. But by damning the economic torpedoes and moving full-speed ahead, House and Senate Republicans and the Trump White House are setting up the U.S. for the modern-day analog of the inflation-producing guns-and-butter economic policy of the Vietnam era. The GOP tax bill will increase the federal deficit by $2 trillion or more over the next decade (the official estimates of $1.5 trillion hide the real amount with a witches brew of gimmicks and outright lies) that, unless all the rules have changed, is virtually certain to result in inflation and much higher interest rates than would otherwise occur.
The GOP’s insanity is compounded by its moving ahead without having any idea of what this policy will actually do to the economy. The debates in the Ways and Means and Senate Finance Committees and on the House floor all took place before the Congressional Budget Office’s analysis and, if it really exists, the constantly-promised-but-never-seen report from the Treasury on the economics of this tax bill.
That’s because all they care about is getting something passed and making rich people richer. That’s it. It’s a party of psychopaths.
Slightly off topic (sorry about formatting, too) from https://twitter.com/klshall :
You forgot one thing – they also want to ensure that not one penny of their money goes to help people they consider the wrong people – in short, anyone who has never had an opportunity because they had the bad judgement to be born to poor parents…double down if that person happens to be non-white, non-male, non-Christian, or any combination of above.
The argument hinges on tax increases – reversions to old rates, even – being politically impossible in the future to fix this giveaway. When so much of that money is going to a handful of families and when votes are still more-or-less one per adult… do we have to abandon hope that sufficient voters would approve taxing people with more money than God as much as, say, Reagan did? So we can have stable Social Security, Medicare, drinkable water, disaster relief and roads?
I mean, I very well know that the votes are skewed by gerrymandering and the politicians fund campaigns primarily with unlimited soft money from the donor class, but counting on even red-state voters to vote for toxic water supplies, dirt roads, and working til you die year after year after YEAR seems to come out of despair more than perfect objectivity.
I don’t suppose that educating the voting public – and darn well increasing its proportion among eligible voters! – is easy, much less inevitable. But the article seems to make it out as impossible.
Considering the projected $2 trillion deficit, where are the funds to finance it coming from? China perhaps?
That’s alarming.
Jeff Engel @3
“I don’t suppose that educating the voting public….”
Sometimes, during some wishful thinking I’ve wondered about the merits of an epistocracy. Given that a significant proportion of people seem to vote against their own class interests, perhaps a certain level of educational qualifications should be compulsory before citizens had the right to vote. It will never happen of course and the so-called liberal democracies will continue as de facto plutocracies.
The conviction that our taxes are too high goes deep and deeper. I argued this with several young people (milllennials, mostly) who are very liberal, but have bought into the constantly repeated lie that our economy cannot grow unless we cut taxes. They have heard it their entire life, and they have not bothered to check it out, because so many people have told them this.
And among my non-liberal friends? They will find a way to blame the tanking of the economy on something else – abortion, gay rights, feminists, liberals, and Obama – these are only the top things on the list. That list goes way, way down. They cannot believe that things can be made better with taxes, because they believe firmly that all government is wrong, all government is bad, and any money that goes out of their paycheck to the government is going to support some “welfare queen”, always interpreted as an overweight, unmarried black woman with 19 kids, all with different fathers, who simply refuses to work even though she is able bodied.
And they will repeat over and over again about their neighbors who are on “welfare for life”, and no matter how many times you point out that welfare benefits in this country only last five years, and that is the total you are allowed to be on welfare through your life, even if you show them the actual bills passed in the late 1990s, even if you show them all the evidence in the world (including Obama’s long form birth certificate), nothing will convince them that “their neighbor” is not on welfare for life. (I put their neighbor in scare quotes, because I suspect a lot of these neighbors are simply stories they have heard and are passing on, not people they actually know).
And, they keep assuming that a tax cut would be a ‘government-induced stimulus.’ No such effect has ever been demonstrated. ‘Give the rich more money and hope they feel generous’ is not a stimulus to anything except perhaps yacht-building and golf course construction.
Government spending, in infrastructure and hiring, DO stimulate the economy by putting more money into actual circulation. Enlarging Fafner’s hoard benefits no one.