Jerry and I were discussing deficits and I came across these excellent graphics that show how devastating the Trump Tax Cuts and Spending Increases have been with regard to increasing deficits. I hope our kids can forgive us self centered folks someday.
7 comments:
If the deficit mattered, we wouldn't be cutting taxes. But I also suspect that statistics tends to overestimate the strength of the economy. If the economy were really performing well, we would have more inflation.
---Hiram
Hiram,
Apparently to the GOP, deficits only matter when the Dems are in charge.
Thankfully we have the FED to maximize growth while controlling inflation. If Trump had his way inflation would be rampant.
I don't think they ever matter. But the reality is they never go down because there is neither a constituency for lowering spending or for raising taxes. The systemic result of that political reality is that the deficit will always go up, just at different rates.
Trump, who has told us quite often that he understands debt better than anyone, has demonstrated the solution to this problem in his own business career. Simply declare bankruptcy.
--Hiram
I think cumulative deficits matter a LOT.
But you are correct that future citizens don't get a vote in this.
Only us selfish current citizens who want low taxes and high benefits...
I'll just leave this here.
Congressional Research Service: The Economic Effects of the 2017 Tax Revision: Preliminary Observations
"In 2018, gross domestic product (GDP) grew at 2.9%, about the Congressional Budget Office’s (CBO’s) projected rate published in 2017 before the tax cut. On the whole, the growth effects tend to show a relatively small (if any) first-year effect on the economy. Although growth rates cannot indicate the tax cut’s effects on GDP, they tend to rule out very large effects particularly in the short run. Although investment grew significantly, the growth patterns for different types of assets do not appear to be consistent with the direction and size of the supply-side incentive effects one would expect from the tax changes. This potential outcome may raise questions about how much longer-run growth will result from the tax revision.
CBO, in its first baseline update post enactment, initially estimated that the Act would reduce individual income taxes by $65 billion, corporate income taxes by $94 billion, and other taxes by $3 billion, for a total reduction of $163 billion in FY2018. Corporate revenues were about $40 billion less than projected whereas individual revenues were higher, with an overall revenue reduction of about $9 billion. From 2017 to 2018, the estimated average corporate tax rate fell from 23.4% to 12.1% and individual income taxes as a percentage of personal income fell slightly from 9.6% to 9.2%.
Real wages grew more slowly than GDP: at 2.0% (adjusted by the GDP deflator) compared with 2.9% for overall real GDP. Such slower growth has occurred in the past. The real wage rate for production and nonsupervisory workers grew by 1.2%.
Although significant amounts of dividends were repatriated in 2018 compared with previous years, the data do not appear to show a significant increase in investment flows from abroad. While evidence does indicate significant repurchases of shares, either from tax cuts or repatriated revenues, relatively little was directed to paying worker bonuses, which had been announced by some firms."
And for more on that report.
VOX The GOP tax law’s lopsided giveaway to corporations, explained in one sentence. Congress’s official think tank finds the Republican tax cuts helped corporations, not workers.
I certainly can agree that the tax cuts did pretty much nothing directly for me or my family... No big cuts, no big raises, no big bonuses, etc.
Though I suppose keeping the stock market propped up has been good for my net worth.
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