Republicans, Trump, and the Deficit

It looks like President Trump is continuing the trend of Republicans increasing the national debt more than Democrats:

If the proposals were enacted, the deficit in 2018 would total $792 billion (or 3.9 percent of GDP), an amount nearly identical to the deficit in CBO’s baseline projections (see Table 1). By comparison, the deficit in 2017 was $665 billion (or 3.5 percent of GDP).

In 2019, CBO estimates, the deficit under the President’s budget would rise to $955 billion (or 4.5 percent of GDP)—about $17 billion less than the shortfall projected in the baseline.

According to CBO’s estimates, the cumulative deficit under the President’s policies would total $9.5 trillion over the 2019–2028 period (see Table 2).

Given that this assumes huge cuts in discretionary spending that are very unlikely to happen, even these are rosy numbers. Who would have thought that a huge tax cut for corporations and the rich would increase the deficit?

Anti-poverty programs work

Republicans continually want to cut programs that help the poor saying they don’t work. here’s a counterargument:

In each case, Weber and Wu found that the effect of each program has been materially underestimated by traditional measurements. That’s because the earlier estimates are based on Census Bureau surveys that underreport benefits from these programs. As a result, the authors say, the effects of food stamps and TANF are underestimated by one-third to one-half, and the impact of Social Security is underestimated by as much as 44%. Their research covered 2008-13, the period of the Great Recession.

Meyer and Wu find that Social Security alone has reduced poverty among the elderly by 75%; the other programs do more for non-elderly households, though at lower rates.

The official measurement indicated that the poverty rate fell by a scant 4.4 percentage points from 1960 to 2010, ending at 15.1%. Adjusting for flaws in the measurement however, Meyer and Sullivan determined that the percentage of Americans living in poverty had fallen by more than 26 percentage points, to about 4.5%.

The people who are poor are much better off because of these programs, this won’t matter to Republicans but maybe it will to others.

This is the way Trump adds jobs

President Trump is big, like most Republicans, on cutting regulations because, they say,  regulations cost jobs. The OMB, which is now run by the Trump administration, is mandated to put out a report on the costs and benefits of regulation:

OMB gathered data and analysis on “major” federal regulations (those with $100 million or more in economic impact) between 2006 and 2016, a period that includes all of Obama’s administration, stopping just short of Trump’s. The final tally, reported in 2001 dollars:

  • Aggregate benefits: $219 to $695 billion
  • Aggregate costs: $59 to $88 billion

By even the most conservative estimate, the benefits of Obama’s regulations wildly outweighed the costs.

According to OMB — and to the federal agencies upon whose data OMB mostly relied — the core of the Trumpian case against Obama regulations, arguably the organizing principle of Trump’s administration, is false.

Oops. A couple examples:

For example, new fuel economy standards for medium- and heavy-duty engines had (in 2001 dollars) between $6.7 billion and $9.7 billion in benefits. But they cost industry $0.8 billion to $1.1 billion.

The MATS rule, aimed at reducing toxic emissions from power plants, had between $33 billion and $90 billion in benefits (in 2007 dollars, for some reason), but it cost industry $9.6 billion.

So the benefits easily outweigh the costs. But jobs:

The conclusion — which is in keeping with the broader literature, as I described in this post — is that there may be local and temporary employment effects from environmental regulations, either positive or negative, but at the aggregate national level, such regulations simply aren’t a significant factor in employment. Their effects are lost amid the noise of demographic shifts and macroeconomic drivers.

Oh, well that’s what the tariffs are for, to save jobs:

TTP estimates that the tariffs will, on net, cost about 146,000 jobs, two-thirds of which are production and low-skill jobs. This estimate doesn’t take into account any possible retaliation from our trading partners.

So, Trump’s moves to help the economy, cutting regulations and putting in tariffs, will have more costs than benefits and will cost the country jobs overall. That’s a win by Trump standards.

Trump wants credit

The tax bill that gives the vast majority of its benefits to the rich and corporations has passed and President Trump is worried he won’t get the credit:

President Trump signed the most consequential tax legislation in three decades on Friday, even as he complained that he has not been given credit for his administration’s accomplishments during a turbulent first year.

In typical Trump fashion, he cared more about appearances than the actual thing:

There was some discussion in Congress and at the White House that Trump should consider delaying the signing until early 2018 as a way to delay automatic spending cuts that could have been triggered by the tax cuts.

In addition, some companies said that delay would give them more time to adjust to the major changes that the new tax code will mean for their businesses.
However, once Congress reached a deal this week to avoid the possibility of the spending cuts, White House officials signaled that Trump wanted to sign the bill into law as soon as possible.

Also in typical Trump fashion he only wants the credit for the good stuff:

Gary D. Cohn, the director of the White House’s National Economic Council, said Wednesday the administration tried more than two dozen times to eliminate the carried interest loophole and that, as recently as this week, Trump asked why it was not gone.
Cohn, a former top Goldman Sachs executive, said opposition from lobbyists and lawmakers on Capitol Hill was intense and that the best that could be done was to extend the “holding period” for investments that qualify for the tax break to three years from one.
“The president strongly believes, and he ran on this, that carried interest is a loophole,” Cohn said at an event sponsored by Axios.

He was powerless to do anything, but he should get credit for the bill anyway.

The bill contains many things that have been shown to be bad for the economy, such as:

Kansas eliminated state taxes on pass-through income in 2012, and the outcome was not what backers had expected.
In the three years after the law took effect in Kansas, the number of residents claiming pass-through income jumped 20 percent. As a result, the state lost $200 million to $300 million in tax revenue a year, according to estimates by The Tax Foundation, with most of the gains going to wealthy business owners, some of whom simply restructured existing companies to take advantage of the lower rates. Facing a budget crisis, Kansas lawmakers repealed the tax cut earlier this year.

So, no problem Mr. Trump, we will give you all the credit for this awful bill.

Republican Tax Cuts

So the Republicans have passed their Tax Cuts for the rich bill in the Senate and it’s everything you have come to expect in a Republican bill:

With the Senate split 52 to 48, Republicans barely had votes to spare. But the bill’s passage was made possible by a near-complete Republican embrace of the idea that about $1.5 trillion of tax cuts will pay for themselves, by producing enough economic growth and additional federal revenue to offset their costs to the Treasury.

That belief was contradicted by several studies, including one from Congress’s official economic scorekeeper, which Republicans dismissed as overly pessimistic.

Mr. McConnell waved off any deficit concerns. “I’m totally confident this is a revenue-neutral bill,” he said. “I think it’s going to be a revenue producer.”

Ignore Senate rules: check; ignore facts: check; help the wealthy: check. And look at the actual bill which was made public about two hours before voting began (of course lobbyists helped write the thing so had it long before that) and included pages such as (click to see the pdf):

Doc1

Kevin Drum lists some the things added to get some votes:

The senator from Texas is getting a break for private (i.e., mostly Christian) school tuition. The senator from Kentucky won passage of a provision allowing car dealers to deduct interest paid on loans to stock showrooms. The senator from Missouri, whose son is a lobbyist for MillerCoors, scored a provision that cuts taxes on imported beer and liquor. The senator from Georgia, home of Delta Airlines, got a provision that penalizes foreign airlines. This is all being done via handwritten notes at the last second, and the result is that about $600 billion of taxing and spending has been redirected within 24 hours without a single hearing.

Congratulations Republicans, you have passed a horrible bill.

Donald Trump is a sick joke

So the pick to be the interim leader at the Consumer Financial Protection Bureau is:

Richard Cordray, the Obama-appointed leader of the bureau, abruptly announced he would leave the job at the close of business, a week earlier than anticipated. He followed up with a letter naming his chief of staff, Leandra English, as the agency’s deputy director.

The White House retaliated, saying that the budget director, Mick Mulvaney, who once characterized the consumer protection bureau as a “sad, sick joke,” would be running the agency.

Mulvaney tries the usual lies:

“I believe Americans deserve a C.F.P.B. that seeks to protect them while ensuring free and fair markets for all consumers,” he said in a statement. “Financial services are the engine of American democratic capitalism, and we need to let it work.”

Grab your wallet when a Republican says they want to protect the consumer. Mulvaney doesn’t like the CPFB:

Mr. Mulvaney, who as a Republican congressman from South Carolina was a co-sponsor of legislation to shut down the consumer bureau, had been widely anticipated.

Really doesn’t like it:

‘‘The place is a wonderful example of how a bureaucracy will function if it has no accountability to anybody,’’ he told the Credit Union Times in 2014. ‘‘It turns up being a joke in a sick, sad kind of way.’’

This is a typical Trump appointment, he wants to get rid of the agency he has been assigned to run. I’m assuming the courts will have to weigh in on this, hopefully we get to keep someone who wants to keep the CFPB for a little while longer.

Republican tax cuts

Hey, it seems that Donald Trump’s tax ‘proposal’ (basically one page of notes) has been analyzed. Take a look:

A new analysis by the Tax Policy Center finds that the tax cuts included in the Trump administration’s outline for tax reform released in April could cut federal revenues by as much as $7.8 trillion over 10 years, and that the benefits would go almost exclusively to the top 5 percent of earners.

Even if the plan included some very large tax hikes to offset the cuts (like doing away with personal exemptions and other common deductions) and taking into account effect on economic growth, the cost still comes to $3.4 trillion over 10 years.

The revenue raisers also serve to make Trump’s plan even more regressive. If you just look at the tax cuts he’s proposing, 60.9 percent of the benefits go to the top 1 percent of Americans. That’s a pretty astonishing tilt toward the rich. But if you look at the combined effects of the cuts and the revenue raisers, 76.3 percent of the benefits go to the top 1 percent, and 94.8 percent go to the top 5 percent.

Trump’s proposal gives the vast majority of the tax cuts to the rich and blows a hole in the budget? I’m stunned. Or the opposite of that.

Previous Older Entries

%d bloggers like this: