In the Longing for Consistency Department, John Tsitrian wonders where, oh where, have the deficit hawks gone?
A more unnerving embrace of surrealism is the casual manner in which deficit hawks have waved off the specter of increasing federal debt built into this bill. South Dakota Senators John Thune and Mike Rounds have both called existing deficits “unsustainable,” but enthusiastically embrace this bill just the same. Congress’ Joint Committee On Taxation says that the $1.4 trillion in revenues lost by the tax cuts will only be partially offset by $458 billion in revenues gained by its boost to the economy. That leaves a $1 trillion dollar hole in the federal balance sheet in 10 years. Thune, Rounds and their equally indifferent counterpart in the House of Representatives, SD Congresswoman Kristi Noem, have built their careers on complaints about federal deficits, yet here they are, cheering on the addition of another trillion bucks to our federal ocean of red ink. Their collective admiration for the notion that tax cuts will stimulate enough economic growth to pay for the deficit has been pooh-poohed by history so many times that you wonder if our elected reps go catatonic when confronted by this type of analysis. Moody’s Analytics says the economic stimulus argument is baloney, as does the track record of tax-cutting itself. Reagan, George W. Bush, Kansas Governor Sam Brownback–all have tried this gambit and failed. Sharp increases in debt followed their much-ballyhooed tax cuts [John Tsitrian, “Deficits? What Are Those?” The Constant Commoner, 2017.12.15].
And remember, Noem, Rounds, Thune, and their boss Donald Trump are all counting on future Congresses to extend the tax cuts that they are sunsetting to meet the debt caps in the current budget framework. In other words, they are daring future policymakers to let taxes rise back to current levels, thus setting in motion a plan that will likely increase the deficit even more than the numbers we are hearing now.
If Noem, Rounds, and Thune can claim the benefits of trickling-down economic growth that isn’t written into their plan, opponents should be able to weigh against that voodoo economics the proven difficulty Congress with letting a temporary tax cut expire.
The Tax Foundation whipped up a preliminary analysis of the conference committee tax bill released by Republicans late Friday. They say that as written, with sunsets, the plan increases the deficit over the next ten years by “$1.47 trillion on a static basis and by $448 billion on a dynamic basis” (where “dynamic basis” means assuming economic growth). The Tax Foundation says that if all the tax cuts are made permanent, the deficit goes up “$2.7 trillion on a static basis ($1.4 trillion on a dynamic basis) over the next decade.”
But check out this damning note on income:
In 2018, taxpayers’ overall after-tax income will increase by 1.8 percent, with a 1.6 percent increase in after-tax incomes for the top 1 percent. Over the long run, the plan would lead to -0.3 percent higher after-tax income on average for all taxpayers and -0.2 percent higher after-tax income on average for the top 1 percent in 2027, on a static basis. When accounting for the increased GDP, after-tax incomes of all taxpayers would increase by 1.1 percent in the long run [Tax Foundation, “The Tax Cuts and Jobs Act: Preliminary Economic Analysis,” 2017.12.08].
The Tax Foundation finds the same problem with the conference committee bill that I pointed out against Senator John Thune’s propaganda for the Senate version: overall, as written, the Trump plan takes more money from more Americans than the Obama/Bush tax system does right now. The only way Americans come out better from this tax plan is if it sparks magical economic growth that darn near every bit of empirical data proves does not happen.
But hey, since Noem, Rounds, and Thune are rejecting the idea that deficits are bad, we can ignore the deficit-hawkery they are sure put back on when they come to cut Social Security and other entitlements next year. After all, Social Security supports over nine million jobs and a trillion dollars of economic activity, and surely that economic activity makes up for any piddly deficit increases….
Related Listening: Senator Mike Rounds is working the airwaves saying that “most of the media outlets, they’re not talking about what the benefits are to the average taxpayer.” Um, Mike, read the Tax Foundation’s analysis again: “Over the long run, the plan would lead to -0.3 percent higher after-tax income on average for all taxpayers and -0.2 percent higher after-tax income on average for the top 1 percent in 2027, on a static basis.”
Rounds also tells Hub City Radio that “this one is not designed as a redistribution plan.” But it is, Mike, it is. America’s wealthy end up with a larger share of national wealth than they enjoy under current policy. Instead of admitting you’re wrong, Mike, you’re just dismissing every source of information in the media as biased.
Deficits and irony were shown the door with Dick Cheney during his presidency when he said “Deficits don’t matter”. The proof was in the pudding at that time and showed exactly the mind set of the Roypublican mindset. When this thing blows up again, the Roypublicans will blame the Democrats and the Democrats will come in like they always do and clean up the shattered economy. After that is done, we will elect another bunch of Roypublicans that were worse than the last bunch and on it goes. By then, the deficit that don’t matter will be about 27 Trillion so Roypublicans will need another tax cut. Vote them out is the only way to show that deficits do matter and must be controlled.
My question is where is the outrage form the far-right? When the Democrats increased the deficit the right were on Facebook, this blog and in letters to editors blasting Obama.
Yet now-not a word.
Just a bit hypocritical
Three points:
1) Exploding the deficit is used by one party against the other, or by spending opponents against supporters, all the time. Democrats become deficit hawks when the spending is for defense and tax cuts; Republicans are deficit hawks when discussing entitlement spending.
2) In the case of the tax bill, many Republicans believe the predictions of deficit growth are unduly pessimistic because, in large part, they are based on modest economic growth figures and often discount the effects of “dynamic scoring” – the changes in economic behavior that happen when tax incentives and disincentives change.
3) Some analysts point to historic deficit numbers as expressed in percentage of GDP. Under this approach, the more GDP expands, the higher the deficits that can be supported without upsetting economic equilibrium. Using the historical average of 3% annual deficit and a current GDP of about $18.5 trillion, this theory would posit that an annual federal budget deficit of $555 billion or so is supportable.
BTW, check the blog links on the right side of this page for a link to my latest Nonprofit Quarterly feature article on the tax cut bill and how it will affect nonprofits and donors. Thanks, Cory!
“hypocritical” is too big a word for republicans. if rush doesn’t say it daily at least 100 times, they won’t get it. most greedy slime on the planet.
Rounds also tells Hub City Radio that “this one is not designed as a redistribution plan.
So intent and design aren’t synonymous in wingnut world?
Rounds is the swamp.You think he would have meetings just another coward who runs.
Mr. Wyland, dynamic (as opposed to static) scoring yields imprecise and uncertain estimates, generally tending to be overly optimistic about tax revenue growth and the resulting size of deficits. Here’s a piece about how they missed the mark in Kansas. http://www.governing.com/gov-institute/voices/col-stat-disappointing-experience-dynamic-scoring.html Your point about the political use of deficits is right on, which is why it’s so easy to call out our South Dakota Republican congressional trio, who’ve practically built their careers on deficit-hawkishness and now seem indifferent to the one that’s about to increase dramatically. As to deficits relative to GDP, you’re as right as those who dynamically score the economy and see it growing fast enough to absorb the deficit about to be expanded. I think it’s bull and so does this U.S. News analysis of dynamic scoring going back to the Reagan tax cuts. https://www.usnews.com/opinion/economic-intelligence/articles/2017-11-17/the-gops-dynamic-scoring-tax-reform-sham
Mr. Tsitrian:
1) As Yogi Berra is supposed to have said, “Making predictions is tough, especially about the future.” There’s valid reason economics is referred to as “the dismal science.”
Predictions made based on static scoring have their own problems with accuracy. The problem with reading news reports about studies is that the general public never hears about either the assumptions made in the study or the limitations of the study identified by the study’s own authors. Congressional Budget Office or Joint Committee on Taxation numbers aren’t received Wisdom; they’re flawed and they admit it. We just don’t hear about it unless we actually read the reports.
2) The Kansas example is interesting for a number of reasons, including its limitation to a single state when so much commerce is interstate and international. Additionally, the promised state spending reductions that were expected to accompany the tax cuts never materialized. Both sides (all slides?) have more than enough fodder to construct their arguments and alternative scenarios.
3) I don’t say that I support tying deficits to GDP. Rather, I note that people not particularly worried about federal budget deficits often invoke this statistic and this argument. Who those people are depends on the motivation for (additional) deficits at any given time.
https://crooksandliars.com/2017/12/sen-orrin-hatch-confesses-writing-corker
Hatch buys Corker’s vote and in the process helps his own wife’s real estate business and rewards outfits that have given Hatch over half a mil in campaign contributions. Then he claims it was part of the house bill which it was not.
Can’t nobody tell the truth no more? Skol Vikings!
Thank you, Mr. Wyland. I’d like to see your opinion backed up with some facts and history that remotely support dynamic scoring as an analysis worthy of supporting fiscal policy in this country. And where did Yogi get his training in economics?
Corker proves he is just another roypublican crook and liar. From the Wall Street Journal no less:
“”Sen. Bob Corker failed to properly disclose millions of dollars in income from real estate, hedge funds and other investments since entering the Senate in 2007, according to new financial reports filed by the Tennessee Republican.
Mr. Corker late Friday filed a series of amendments showing that his personal financial reports as originally filed included dozens of errors and omissions. The new filings came after The Wall Street Journal asked the senator’s office about some irregularities in his prior financial reports.
The senator is the third-ranking Republican on the Senate Banking Committee, which oversees the real-estate and financial-services sectors.
The new forms show that Mr. Corker had failed to properly disclose at least $2 million in income from investments in three small hedge funds based in his home state. He also didn’t properly report millions of dollars in income from commercial real-estate investments due to an accounting error. And he didn’t disclose millions of dollars in other assets and income from other financial transactions.””
In the meantime, Kevin Brady and the other roypublican crook and liar, NOem, will have to redo the cut cut cut tax screwing as it is all bullpuckey and we all know it just like they do. One thing is for certain, Medicare, Medicaid and the Holy Grail, Social Security are heading for the trash heap.
Kristi Noem got elected to office decrying Booker’s share of the national debt. Now she has evolved to voting to increase Booker’s share of the national debt. Remember, this Republican tax plan will simply add to the deficit we already would have without the tax plan. So Kristi Noem and the Republican Party have not only accepted deficits, but want to make them bigger.
You blame Corker, you blame republicans, you blame everyone but those that will not even participate in the legislation (democrats) but the truth be known that vast majority of you will be better off with this tax bill. I will not tell you it is the best bill. The best bill would include cutting the spending of this government. It will more than benefit the majority of Americans. Much more than freaking increasing the tax rates.
Run one of the online tax bill calculators to see how you will benefit and show me even one example of where anyone in South Dakota will not benefit.
The only people with right to bitch about this tax bill are those in New York, California and the other high taxed states being taxed by those very states the rest of us are supporting.
BS, OldSarg. New York, California and the other high tax states pay more into the federal government than they get back. Their federal taxes are supporting low tax red welfare states like South Dakota that receive far more than they pay into the federal government.
If any roypublican can explain why this huuuuuuge tax cut to the lower and middle class (hint: peanuts) will sunset in 7 years and then you pay the new bill, and why corporations see a permanent tax cut, I want to hear it. 38% of middle class Americans will not see a damn penny of cuts in this fraud. http://www.denverpost.com/2017/11/29/senate-gop-plan-tax-cuts-wont-help-38-percent/
We have seen this movie before. The star at that time was George W. and Shooter Cheney when they jammed down the tax cut that broke the country until President Obama rode in and saved our asses. Now we have the Apprentice leading the corruption with all roypublicans on board the highway to hell. If you liked 2008, you are gonna just love this 2019 nonsense. Either update or get a passport or get ready to dance the hokey pokey, because that’s what it’s all about.
With all the name calling here, sometimes I can’t keep track of what all the slurs are about. Mr. jerry, can you please enlighten me what a “roypublican” is? Is it a Republican of some sort? And, by your use of this term, are you conveying you live in Iowa?
Sorry Mr. grudznick.
“”If Alabama voters on Tuesday elect Roy Moore to the Senate, the Donald Trump-diseased party once known as the Republicans may as well call themselves Roypublicans.
There will be no way to shake the stench of this homophobic, Islamophobic, sexist, racist apologist and accused pedophile. He is them, and they are him. Any pretense of tolerance and egalitarianism, already damaged by a Republican history of words and deeds, will be completely obliterated.
There will be no way to simply say that Moore is the abominable outgrowth of Alabama voters’ anger.
Moore has been fully endorsed by the Republican “president” of the United States, the leader of his party, and is now fully supported by the Republican National Committee. Last week, R.N.C. Chairwoman Ronna McDaniel told CNN: “The president has said we want to keep this seat Republican. The R.N.C. is the political arm of the White House, and we want to support the president’s agenda.”
The pre-Trump Republican Party is dead; The zombie Trump party now lives in its stead, devoid of principle, feasting on fear and rage, foreign to moral framing.”” Charles Blow, New York Times 12-10-17
Hence, Roypublican, in dishonor of Roy Moore and his welcome affiliation with the former republican party. That party has proven it no longer exists under the name republican, it now exists as Roypublicans. No sir, I do not live in Iowa, but I once stayed at a Holiday Inn Express.
I, sir, am a Republican, and I don’t care for Mr. Moore.
Well then sir, as least you know what camp you are in. There is no republican party any longer. It is the party of Roy. The homophobia, the racial hate. All hail. the Roy.
Did Mr. Moore get elected? I must have missed some news.
More Roypublican nonsense from Brady and NOem, sure you want to stay in this cesspool? https://www.c-span.org/video/?438660-1/ways-means-chair-press-conference-tax-reform
The only thing this party wants is to steal from you sir and you want them to by sticking true.
No Dems and most wingnuts were totally left out of negotiations on this monstrosity until lobbyists finally released a copy of it. It was a deliberate plan by wingnuts to exclude Dems. This is all on Old Screwball’s head.Ypu, OS, you own this fiscal disaster. Man up.
grudznick: “I, sir, am a Republican, and I don’t care for Mr. Moore.”
So Grudznick, would Jones have had your vote? When faced with the choice Alabama voters had, does party win out over person?
I had not studied the issues extremely thoroughly, Mr. o, as I do not live in or vote in Alabama, but I have to say with the lack of a third option, I would have probably had to vote for the other fellow who was not Mr. Moore. But that is only talk now after the fact from an old fellow who couldn’t have voted in Alabama anyway. But grudznick hates what my friend Lar calls Kiddie Diddlers.
MORNING!!!!!!!!!
IT’S TAX RELIEF DAY!!!!!!
WINNING!!!!!!
…none of which bitter teasing (less jubilant than vituperative) refutes any of the facts presented above: this bill is voodoo economics, not tax relief.
Cory, run the tax calculator on yourself and tell us all how it is going to impact you.
On December 6th, The Hill reported on Paul Ryan’s next despicable but not unexpected goal:
House Speaker Paul Ryan (R-Wis.) on Wednesday said House Republicans will aim to cut spending on Medicare, Medicaid and welfare programs next year as a way to trim the federal deficit.
“We’re going to have to get back next year at entitlement reform, which is how you tackle the debt and the deficit,” Ryan said during an interview on Ross Kaminsky’s talk radio show.
These thugs just sold America’s fiscal future so the koch bros could have more billions and no they are concerned about debt and deficit relief and are more than willing to make the poor pay for the taxcuts for the wealthy.
We know, except OLdBlister, what is wrong with this picture. What I want to know is what is wrong with the people that swallow wingnut lies without a whimper? And then vote for them.
and no they are concerned about debt and deficit
should have said “and no they aren’t conderned about debt and deficit”
Lyin’ Ryan also aid this mouthful of bull pucky- Health-care entitlements such as Medicare and Medicaid “are the big drivers of debt,” Ryan said, “so we spend more time on the health-care entitlements, because that’s really where the problem lies, fiscally speaking.”
Oh, Hell, just read the whole thing!
http://www.sheilakennedy.net/2017/12/ryan-i-yam-what-i-yam/
mike from idiocy is upset the tax relief law isn’t benefiting him. He one of the few people that will see no difference in his income what so ever. He doesn’t earn interest, dividends and certainly has nothing to sell to experience a capital gain. For the rest of you who have risked your hard earned money and invested it for your future needs you will all benefit as will the hourly wage earners, salaried and self-employed. For the first time in over 30 years the great people of this Nation will be allowed to keep more of what they earned. This is a Christmas miracle. Well, except for mike from idiocy. He has become the Grinch.
Sorry mike “You’re a Mean One Mr. Grinch”
Bend over America, you are about to be raped by republican devils, lobbyists, millionaires, and billionaires.
A year from now, hopefully, you will realize the full impact on what Trump and republicans have done to you, but again you’ll probably enjoy the screwing you just got.
Mother Jones just posted an article highlighting how the tax plan is gonna screw farmers….http://www.motherjones.com/politics/2017/12/most-american-farmers-will-be-hurt-by-the-gop-tax-bill/#
Great article tom, thanks. Ag folks have been led to their self induced slaughter by too much fox news and not enough facts. Boys, you should be able to see the real winners of all of this, large corporate operations and the mafia that sets the prices. This is how the big boys get even bigger when you loose your operations, they will pick up your pieces with even larger operations. Then we all loose as the serf class rises. There is a solution though, boot roypublican Krebs to the curb and send populist Tim to Washington to clean House.
REPEAL AND REPLACE ROYPUBLICAN TAX PLAN
I agree, Jerry: the article Tom links is really good. Among the lowlights:
—Only 4% of farms make enough sales to qualify for the lower corporate tax rate.
—Only 0.4% of farms paid any estate tax in 2016.
—The increased deficit will make it even harder to pass a good Farm Bill next year.
—Repealing the insurance mandate will weaken the Affordable Care Act, on which lots of farmers depend for affordable coverage.
OldBlister- those Rapid City beans you eat sure work up a blow. You must be the only cretin stoopid enough to believe the bull you peddle. But, then, you are from North Mississippi.
Even when Schlumpf signs this disaster, there will be many changes necessary to correct drafting errors and such and Dems have already told stoopid wingnuts they are on their own. This is their failure, they own it.
The new tax law will benefit every American other than the very wealthy in the highest taxed states. Run the tax calculators before spewing your idiocy.
In the good news department from the republican disaster, George Soros stands to get a $122 million welfare payment.
CBO already did that OldSarge. $1.5 trillion debt. No, the middle class won’t benefit.
OS keeps babbling about “tax calculators,” but he never provides a source.
Once again, OS’s laziness requires me to do extra work.
The coolest “tax calculator” I’ve seen comes from the New York Times:
https://www.nytimes.com/interactive/2017/12/17/upshot/tax-calculator.html
NYT’s wonks crunch numbers from 220,000 households. They show numerous datapoints and calculate averages. But you can roll your mouse over each data point and see gains and losses in a variety of situations. NYT’s calculator shows tax cuts in 2018 for a majority of data points, but they also show lots of people making less than $50K seeing their taxes go up. OS’s statement, “The new tax law will benefit every American other than the very wealthy in the highest taxed states,” is thus false.
Boy, I’m sure glad I ran the tax calculator before responding.
Cory, what is the impact ON YOU? Tell use all how it impacts you. How much more money are you making Cory?
Village idiot asked the identical question on another threads minutes ago.
Cory does not need to answer the demands of an anonymous Putin troll.
That cut cut cut does not help me one bit, it is more or less a break even that will cost me even more when the stink comes off next year and worse the next and on it goes. No, this is slow death poison.
When you see this, you can see there are other losers as well. http://www.heraldscotland.com/news/15791805.Scotland__39_s_Christmas_gift_to_the_world_____a_massive_tax_hit_for_Donald_Trump/