Map of life expectancy at birth from Global Education Project.

Wednesday, December 06, 2017

Economics -101

Jonathan Chait has a few things to say about the Republicans in congress and their tax bill. As you may recall if you have not been in a coma for the past 9 years, the Republicans have been yelling and screaming that the federal budget deficit is a mortal threat to the long-term health of the economy and the very foundations of the Republic. Now they are in a mortal panic to pass a massive tax cut for the wealthy that will balloon the national debt by something like $14 trillion in the next decade.

They claim that won't happen because it will generate so much economic growth that the additional revenue will make up the difference. In fact, no reputable economist believes that, including right wingers who are normally in the Republicans' pocket. As Chait says:

Not even macroeconomic forecasters in the private sector — people putting real money behind the accuracy of their analyses — have concluded the tax cuts would come close to recouping their cost. Goldman Sachs forecasts the tax cuts would recoup just 20 percent of the lost revenue, and beginning in 2020, the growth effect “looks minimal and could actually be slightly negative.” A survey of 42 economists found only one who even agreed that, if the tax cut passes, economic growth “will be substantially higher a decade from now than under the status quo.” And even that endorsement of “substantially higher” growth falls short of endorsing the belief the tax cuts will be self-financing.
However, what will happen is that as soon as the deficit explodes, the Republicans will claim that we can no longer afford Medicare, Medicaid and Social Security -- although we can afford to expand the military budget -- because the deficit is unendurable. This is the game they have been playing ever since Ronald Reagan. The deficit exploded under Reagan and Bush I, was completely eliminated under the Clinton administration, exploded again under Bush II and was substantially reduced under Obama. Now the Republicans want to blow it up again and leave it for the Democrats to clean up. They are nothing but liars and hypocrites.

Also, too: Economists on the overall economic impact:

Though Republicans insisted repeatedly over the past few weeks that the $1.4 trillion in tax cuts, most of them geared toward wealthy individuals and corporations, would pay for themselves by stimulating economic growth, they presented no evidence to support their claims. Instead, the economists and former government officials predicted, the bill will drive up the federal deficit, shrink and destabilize the health care market, exacerbate already historic income inequality, and pressure Congress to make deep cuts to the social safety net and government programs.
 If you vote for Republicans, you are being conned. Duped. Used. Owned. Don't do it.

And also, too: This is pretty damn funny! Coal CEO: Senate tax plan 'wipes us out'


Don Quixote said...

I heard asswipe congressmen Kevin Brady and Pat Tiberi lying their asses off on NPR. It's really hard to tell if they believe the bullshit that comes out of their mouths, or are just living in an echo chamber of their own colleagues and the state-designated Fox Propaganda network. Either way, as a member of the general public, it doesn't really matter whether I get run over by a driver aiming for me or one who was in a drunk blackout. The injuries to me and to most Americans will be the same if the Republicans are allowed to

--increase taxes (on most of us)
--increase gun ownership
--create more wars (of course, both parties do that, but Republicans moreso),
--destroy the environment
--destroy public education
--hasten global warming
--eventually institute "ethnic cleansing"
--place the country under Christian Sharia law, designed to eliminate non-caucasians, control women, and hasten the "rapture"

You can probably see how all of the above policies are animated by what Freud would have called the "Thanatos urge."

Republicans are death mongers. Choose to be among the living and fight them with all the strength you can muster. If you're a Republican, the fight is within yourself.

Gay Boy Bob said...

This is pretty damn funny! Coal CEO: Senate tax plan 'wipes us out'

If your industry depends on tax breaks, then there's something wrong with your industry.

Cervantes said...

Yep GB, you're absolutely right. In general. There could be exceptions where there are positive externalities, but coal mining isn't one of them.

Gay Boy Bob said...


The problem is every special interest group thinks their exception will have "positive externalities" and will lobby for an exception. Clearly, theirs is a just cause and needs the breaks.

You did that same thing on the tax issue wishing to continue the carve-out for graduate students who attend expensive private universities.

Don Quixote said...

Well, if anthropogenic global warming doesn't exist, then GBB is right--coal industry needs an exception. Oops--global warming caused my man DOES exist. Damn!

Graduate students attending school doesn't destroy Earth. So much for GBB's typically illogical analogy. But logic never stops him :-)

Cervantes said...

Whether positive externalities justify a subsidy is an issue that can be argued on a case by case basis. It is not the case, however, that it is never appropriate.

Yes, graduate education is expensive. That's why it's important to make it available to worthy candidates regardless of their family resources.

Gay Boy Bob said...

"Clearly, theirs is a just cause and needs the breaks.

Please scan this statement for sarcasm. Coal, or any other energy industry, doesn't shouldn't get preferential subsidies in the form of tax breaks. If they can't survive without it, they need to let other more efficient sources provide the energy.

And if you want to make graduate education available to worthy candidates regardless of their family resources, GREAT! You could just not charge graduate students at all and be fair about it.

But you want is to have rich private ivy league schools decide who gets the breaks and who doesn't and then ask the taxpayers to subsidize your decisions!

Nice work if you can get it...