Noem Promises Impossible 9.1% GDP Growth from Tax Reform

Congresswoman Kristi Noem plays double fantasy on KSOO, claiming her Libertarian-dream tax reform can produce impossible economic growth:

“The small business rate would be at 25 percent. We consolidate the seven individual tax rates down to three. (When) we get rid of a lot of these loopholes and deductions essentially the majority of Americans could pay their taxes with a post card if we were to put this in place.”

By enacting a tax reform package as described, Noem believes the American economy would see a rate of growth around 9.1 percent [Dan Peters, “Kristi Noem Claims That Lower Taxes Is the Answer,” KSOO, 2016.10.25].

How Kristi got to her econ class at SDSU.
How Kristi got to her econ class at SDSU.

We know that “simplifying” tax brackets just makes taxes more regressive and does favors for Kristi’s rich friends. But promising 9.1% GDP growth?! Holy cow!

Let’s get some economic perspective on that absurd GDP claim.

Since pulling us out of the recession, President Obama has overseen GDP growth bouncing between 1.5% and 2.5%. After the first Bush recession, the first President Clinton saw GDP bounce between 2.7% and 4.7%. President Reagan (and Bruce Springsteen record sales) got GDP to 7.4% in 1984.

Economist Thomas Piketty figures that declining rates of population growth and productivity will restrain global economic growth to 1.5% to 3% a year this century.

Kristi’s guy Donald Trump is promising up to 4% growth. That’s not going to happen:

For Trump’s plans to succeed, they would have to overcome forces in the economy, such as rising automation, an aging population and low-wage competition overseas, that have led even conservative economists to call 4 per cent growth an improbable goal [Jonathan Lemire and Nicholas Riccardi, “Trump’s Economic Plan Is an Impossible Formula: Economists,” AP via MetroNews, 2016.09.16].

Even 3.5% (a retreat from Trump’s 6% hyperbole last year) is a hard stretch:

To stabilize the debt with economic growth, Clinton would need real GDP growth to average 2.7 percent annually (or 2.8 percent with sequester repeal). Trump would need to increase growth to an average of 3.5 percent annually over ten years. The last time the U.S. sustained 3.5 percent growth over a ten-year period was during the tech boom of the 1990s. But given our aging population, that rate of growth would be much harder today; it would likely require a level of productivity growth that has not been achieved in any decade in modern history [“What Would Clinton and Trump Need to Do to Address the Debt Along with Their Policy Agendas?” Committee for a Responsible Federal Budget, 2016.10.18].

China and India are posting around 7% GDP growth because they have growing middle classes, lots of people buying lots more stuff. Our middle class isn’t growing, and it’s been buying about all the stuff it can handle (see also Apple profits declining because we already have iPhones). The only way we approach super-seven Chinese or Indian GDP growth, not to mention a nutty-Noem-niner is if we open our borders to tens of millions of low-income workers or burn down everything we own except for our credit cards…. and under Trump-Noem-onomics, the latter is more likely than the former.

As a South Dakota Democrat, I am dedicated to wild optimism. But not tax reform or any other doable federal policy will bring 9.1% GDP growth in 21st-century America.


36 Responses to Noem Promises Impossible 9.1% GDP Growth from Tax Reform

  1. mike from iowa

    Sounds like a certain wingnut congressweasellette jumped the traces and landed in a patch of loco weed her horse knew better than to touch.

  2. I’ve got two words for that… in-sane. What kind if drugs would one take that would make one so delusional? Where did Bush’s unilateral wet dream tax breaks get us? Broke(er). The shotgun method doesn’t work. You need to give tax breaks to employers who do, and continue to have a record of creating jobs and driving our economy.

  3. Darin Larson

    Some people will say anything to get elected. It shows you how clueless she is. In the age of Trump, this is what you get. First liar never stands a chance. Do I hear 10% GDP growth? I think we could cut taxes and grow GDP by 20%. There is no need to be honest. Why stop at 9.1%? If we cut taxes for the rich, why not say GDP will grow 91%? Who says the economy won’t grow that fast if we cut taxes? Economists say that, you say? Says you! They are all in the pocket of HRC don’t you know that?

    You notice that she said around 9.1%–not around 9%. Adding the .1% to the 9% implies the accuracy to which she is speaking. Ya, it’s around 9.1%, but it could be 9.2%. She’s really got a handle on economic policy when she can predict within .1% what the GDP will pay with a tax cut for the rich. She should work for the US Bureau of Economic Analysis who has trouble calculating GDP for the last quarter to the accuracy that Noem can predict it for years in advance.

    She’s either an idiot or she thinks that we are all idiots.

  4. I’m with Mike from Iowa. She’s frickin’ nuts to make this claim! All the tax cuts, military spending and farm welfare on Noem’s wildest wish list wouldn’t get us anywhere close to a 9.1% growth rate. And inflation would go absolutely hog wild at a growth rate of 5 or 6%. What’s most troubling is that she’s either THAT ignorant or THAT dishonest. Not sure which – probably a healthy dose of both mixed with the knowledge that nobody holds anybody accountable in SD with an R behind their name.

  5. I am looking forward to the introduction of Noem’s “magic bullet 9.1%” bill when congress decides to go back to work in a couple of months. Certainly she wants to get that in the pipeline right away so as not to punish South Dakota by delaying action on this fabulous plan of hers.

  6. I read an article that said one of the Dems biggest priorities next year is also a huge tax cut….for corporations!

    http://www.politico.com/story/2015/09/charles-schumer-paul-ryan-tax-infrastruture-moderate-214167

    Problem is that plans like this seldom work. Something like this was last tried in 2004 and it did not have the intended results.

    http://www.cbpp.org/blog/evidence-overwhelmingly-against-another-tax-amnesty-for-overseas-corporate-profits

    The point is that tax cuts are a bipartisan issue. Democrat and Republican are just labels that don’t mean what they used to. Now, it’s just the big money and everyone else.

  7. mike from iowa

    Good links, LS. I remember a time when wingnuts wanted to drop the tax rate on repatriated money to around 5% instead of the 35% Korporate tax rate. Good deal for someone, not for America.

  8. mike from iowa

    I guess your 2nd link was the 5% repatriation rate. My humblest apology.

  9. I’m all for being able to fill out taxes on a postcard – but there are thousands of lobbyists which will prevent that from happening because they all want their special deductions and loopholes.

    A 25% rate on small businesses might actually be too high once you take away loopholes and deductions, but I know it is about as accurate as predicting a 9.1% GDP growth rate.

    Noem either missed a decimal (which would result in an ugly rate of less than one percent), or she is summing the total growth over a longer period. So for example President Hillary Clinton’s first term of four years that would be 2.3% a year on average. Not stellar, but a whole lot more realistic than 9.1% in a single year.

  10. W R Old Guy

    There is a front page article in the RCJ today by Bob Mercer explaining that South Dakota has a budget shortfall for FY 2017 in the 1st quarter and it’s going to get worse.

    Sales Tax revenue is declining instead of increasing but the big shocker for me was that the budget needed a 16.9 % increase in sales tax collections to meet targets. The shortfall in the 1st quarter now means a 20% increase in sales tax collections is necessary to meet the budget need.

    16.9% increase in collections in one year? That makes Noem’s 9.1% GDP growth seem reasonable.

  11. I think it’s possible if we go full on communist like China….

  12. Donald Pay

    She’s nuts. A mature economy will never grow at 9.1 percent, ever. She ought to move to China, where her tax plan might actually be an improvement. Does she put any rate information in her plan? If it the bottom rate was 0%, the middle was 15% and the top was 80%, I might be persuaded, but I’m sure that wouldn’t meet with favor from her wealthy minders.

    If you want higher growth rates you have to look for “the next big thing,” and that, ladies and gentlemen, is renewable and decentralized energy. South Dakota and the US are pissing away future growth because the Republicans are bought by the fossil fuel and nuclear industries. Gee, thanks, Noem.

  13. Roger Elgersma

    Reagan taught us that cutting taxes did not balance the budget. But Reagan saying that cutting taxes will help the economy and balance the budget gets one elected.

  14. Richard Schriever

    Well, of course since GDP is measured in DOLLARS, one could easily get GDP to increase 9%, merely by assuring an inflation rate of 10% and creating no ACTUAL CHANGE in productivity. Sheesh.

  15. Well, know we know why she wants to kick her agriculture committee to the curb and be on Ways and Means, as she clearly knows more than any of those city slicker economists know. NOem is just like Trump in so many ways that the world of make believe to them is real. The best we ever did was 16 and change for one quarter in 1950 when we had a 90% tax base on the wealthy. http://www.politifact.com/truth-o-meter/statements/2015/nov/15/bernie-s/income-tax-rates-were-90-percent-under-eisenhower-/

    So, I would agree with NOem, we could have that kind of growth if we went to the Eisenhower years of tax rates. I like IKE says NOem. Me too says jerry.

  16. Just exactly who are the “rich friends” of a Castlewood, SD farm and insurance family? Seriously. Please name some of these rich friends.

  17. Darin Larson

    Noem went with the 9.1 because she was trying to be like Trump. Trump doesn’t settle for anything less than a 9 and he prefers 10’s. Janet Yellen would be out on her ear as soon as her term was up, naturally. A Russian supermodel would take Yellen’s place. There’s no truth to the rumors that she would be Putin’s puppet and tank the economy. Trump already has that job sewn up.

  18. Darin Larson

    Really Thomas, you read Cory’s article on Kristi talking about a 9.1% GDP growth rate and your question is what rich friends?

  19. More evidence that South Dakotans cannot do math.
    NO EM should start with closing farmer/rancher tax breaks — then at least she’d begin having credibility. And no, they don’t ‘grow my food’ as I mostly eat fish and greens – none of which come from SD farmers.

  20. If Mr. H gets into the legislatures he will have all the data to do the right math. Should that happen I expect people will check on his math to make sure it is not French Math.

  21. Don Coyote

    @John: “And no, they don’t ‘grow my food’ as I mostly eat fish and greens – none of which come from SD farmers.”

    If you’re eating farmed fish instead of wild caught you are most likely eating fish fed with feed that comes from grains and legumes.

  22. Don Coyote

    @Jerry: “So, I would agree with NOem, we could have that kind of growth if we went to the Eisenhower years of tax rates.”

    1) The 50’s GDP growth rates were due primarily to the military spending in the Korean War and for the simple fact that the US economy had no competition because most of the world’s economies lay in ashes post WWII.

    2) Most of the tax revenues during the Eisenhower Era came from the middle class because of 24 steep tax brackets that weren’t indexed for inflation. A bottom tax bracket of 20% meant that everyone paid at least a 1/5 of their income in Federal income tax. Very few people paid the top rate of 91% due to tax sheltering.

  23. mike from iowa

    Thomas-like Troy Jones sez- do you’re own research.

  24. Richard Schriever

    Thomas, here are Noem’s campaign funding sources from opensecrets.org:

    Top 5 Contributors, 2016 – 2016

    National Assn of Real Estate Investment Trusts $22,500
    Poet LLC $17,700
    First Premier Bank $16,200
    Blackstone Group $15,800
    Impala Asset Management $15,800

    I also recall a 2010 article about the Kristi critter doing a fund-raising hob-knob in my old haunts of Orange County California with some mighty “rich friends”.

  25. Coyote, the war ended in 1953, Here are the facts for Eisenhower and his move to make taxes a more equal way to for all to share in the wealth this great country provides. http://politicsthatwork.com/economic-record-president/eisenhower Ike was keen to keep the social programs that were established by FDR in place against a bitter foe called Goldwater. That is history, on to the present. If NOem thinks that she can have 9.1 then my question would be, who are we going to go to war against? We are already stretched pretty thin, when do we re-institute the draft for her promise? Will we invade Canada (it is close Ms. NOem, but kind of cold) or do we go to Mexico (it is close as well, but warmer) with tacos and stuff.

  26. When we live at a time when facts and evidence are irrelevant to partisan bumper sticker level claims we set aside what the experience was of GWB and his tax cuts, what the experience has been in Kansas with their tax cuts, and queue right back up for it all to implode. Nobody ever seems to remember to trace things back to those who so wrongly claimed the fantastic results, we just move on to the next hollow promise.

    How can people be so wrong, so often on the same topic, and it just does not matter?

  27. Jerry: ” . . . who are we going to go to war against?”

    More importantly, who are we really going to tax to pay for that war? War creates growth because it increases production (for the things we will use to make war on our enemy). That creates growth ONLY if we pay for those things. GWB figured out how to have war and no growth – just don’t pay for the costs of war.

  28. “Just exactly who are the “rich friends” of a Castlewood, SD farm and insurance family? Seriously. Please name some of these rich friends.” hahahah

    like they advertise? If they did they wouldn’t buy $1.7 mill of access to Kristie.

    along the lines of Don Pay’s reasoning, perhaps GDP is down because government doesn’t function because of obstructionist republican politics that started (?) 1.09.19 while Obama was dancing.

    Just exactly who are the “rich friends” of a Castlewood, SD farm and insurance family? Seriously. Please name some of these rich friends Thomas asks. Who do you think wants a non-functioning (meaning republican-only decisions) supreme court?

    Merrick Garland. have you heard of him Thomas?

    “Senate repubs have refused to even give Garland a hearing—because they know they can not justify voting against him.***This is all about counting to five votes on the issues that matter most to republicans. *** If they pull this off its hard to see how we get back to any semblance to any process that focuses on a nominee integrity, intellect and temperament.

    ***For tens of millions of Americans, Bush v. Gore was a body blow to their faith in the Supreme Court as an institution devoted to the rule of law and not to politics.”

    Remember when the kids became apologists when they said as they became digitized, “privacy as you know it is dead”. Consequences??” Obstruction. Obamacare. Iran Nukes. Russia/Putin/trump. d. Verrilli Time p. 80, 10.24.16

    the consequences folks, is the limping economy, although perpetual growth is unsustainable, imo.

  29. Obviously Pat and Troy over at South Dakota’s #2 Political Website believe that Noem’s claim is patently ridiculous or they would be touting her “magic bullet 9.1%” plan on their heavily press release oriented blog. Or are they just waiting for her to have a staffer put her fairy tale in written form for them to post?

  30. Eve Fisher

    To put it simply, what the heck is she smoking?

  31. NOem is now an economist or better yet, someone who can school economists on how to get’r done. 9.1 growth is much like all the rest of the jabber that comes from these tea party types mugs, nothing substantive. Here is her dear one, ol’ punkin head himself going to school the generals in the art of battle https://www.youtube.com/watch?v=NISPG8i2BUs Just amazing that a man that was to busy to put on a uniform is going to tell a general exactly how to make a tactical movement in the heat of a battle. These two have so much respect for the military, my arse.

  32. I found this article in the Mitchell Daily Republic … interesting: http://www.mitchellrepublic.com/news/local/4145673-trump-questions-keep-rolling-noem

    Especially the quote regarding her support for Trump: “Well, I think he respects the Constitution,” Noem said. “I don’t think he’s said anything that’s said he wouldn’t honor the Constitution.”

    Has Clinton said she wouldn’t honor the Constitution?

  33. Nope, Clinton would never ever say such a treasonous thing. Nor would Clinton ever say anything as dumb as 9.1 GDP. NOem makes sh(+ up as she goes along, just like punkin head.

  34. mike from iowa

    Kristi Nomind sez- Hillary Clinton’s done a lot of things that are inappropriate, and that I hate and that I don’t approve of.”

    Such as eloquently defending herself from phony accusations of all kinds for over 30 years. Not having committed a single crime for which she could have been indicted, tried and/or convicted of in those same 30 years. I can see why Nomind and fellow traitorious bastard wingnuts would hate that. Yee haw! Go HRC!

  35. Thomas asked about “rich friends.” Let’s start with Kristi’s $2,700 donors:

    BLACKSTOCK, SCOTT TSSS LLC CEO THOMASTON GA
    BOISEN, BRADLEY C. SELF-EMPLOYED CHIROPRACTOR PLANKINTON SD
    BOSARGE, W. E. JR. CAPITAL TECHNOLOGIES, INC. FOUNDER HOUSTON TX
    BROIN, JEFF POET PRESIDENT DELL RAPIDS SD
    EVERIST, BARBARA M. RETIRED RETIRED SIOUX FALLS SD
    EVERIST, THOMAS S. L.G. EVERIST PRESIDENT SIOUX FALLS SD
    EVERIST, THOMAS S. L.G. EVERIST PRESIDENT SIOUX FALLS SD
    FREEMAN, BRADFORD M. FREEMAN, SPOGLI & CO. INVESTMENT BANKER LOS ANGELES CA
    GONZENBACH, JEANNE HOMEMAKER HOMEMAKER MILBANK SD
    GONZENBACH, MAX RETIRED RETIRED MILBANK SD
    HEGYI, ALBERT P. 1ST FINANCIAL BANK USA BANKER NEW YORK NY
    HEGYI, ALBERT P. 1ST FINANCIAL BANK USA BANKER NEW YORK NY
    HOFFMAN, KRISTI BLACK HILLS AMMUNITION OWNER RAPID CITY SD
    HUSTEAD, KAREN L. WALL DRUG STORE, INC. OWNER/PRESIDENT WALL SD
    HUSTEAD, TED H RETIRED RETIRED SIOUX FALLS SD
    KIRBY, DAN KIRBY FINANCIAL LLC INVESTOR SIOUX FALLS SD
    KIRBY, DAN KIRBY FINANCIAL LLC INVESTOR SIOUX FALLS SD
    KIRBY, STEVEN T. BLUESTEM CAPITAL COMPANY, LLC OWNER SIOUX FALLS SD
    KIRBY, STEVEN T. BLUESTEM CAPITAL COMPANY, LLC OWNER SIOUX FALLS SD
    KIRBY, SUZETTE H. HOMEMAKER HOMEMAKER SIOUX FALLS SD
    KIRBY, SUZETTE H. HOMEMAKER HOMEMAKER SIOUX FALLS SD
    LEDDY, MARK G VALLEY QUEEN CHEESE FACTORY, INC. CHEESE MANUFACTURING MILBANK SD
    LINK, JOHN E. JACK LINKS BEEF JERKY CEO MINONG WI
    LINK, TROY J. JACK LINK’S BEEF JERKY PRESIDENT MINONG WI
    METZGER, EDWARD SELF-EMPLOYED ENGINEER ATLANTA GA
    OLSON, KENNETH W. JR. K. OLSON, INC. FARMER ABERDEEN SD
    PERSINGER, LYNN HOMEMAKER HOMEMAKER DAKOTA DUNES SD
    PERSINGER, WILSON G. WILSON TRAILER COMPANY CO CEO DAKOTA DUNES SD
    PRITZKER, TONY PRITZKER GROUP MANAGING PARTNER LOS ANGELES CA
    RIEMAN, ALOYSIUS BLACK HILLS HARLEY DAVIDSON OWNER RAPID CITY SD
    RIEMAN, ALOYSIUS BLACK HILLS HARLEY DAVIDSON OWNER RAPID CITY SD
    RIEMAN, LEEANN BLACK HILLS HARLEY DAVIDSON OWNER RAPID CITY SD
    RIEMAN, LEEANN BLACK HILLS HARLEY DAVIDSON OWNER RAPID CITY SD
    RUSSO, ARTHUR R. RHODES PROPERTIES SELF-EMPLOYED ABERDEEN SD
    SCHWARZMAN, CHRISTINE HEARST SELF-EMPLOYED LAWYER NEW YORK NY
    SHAKOPEE MDEWAKANTON SIOUX COMMUNITY PRIOR LAKE MN