Trumped-up trickle-down tax cuts

2 December, 2017 at 18:19 | Posted in Economics | 4 Comments

wealth will trickle downWho would have thought that Lafferian supply-side economics and ‘trickle-down’ horseshit would be resurrected? Yours truly, for one, thought we had buried those zombies for good. Trump and the GOP thought otherwise and have now decided to give wealthy business owners and corporate shareholders an early Christmas gift this year …

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4 Comments

  1. Reagan proved deficits don’t matter. Only Dems and retiring Repubs didn’t learn the lesson. To prevent cuts in social spending PAYGO should be repealed. Instead, according to Wikipedia, Democrats have resurrected and extended PAYGO. Rich Republicans understand finance and the world dominance of the US Dollar, but cynically troll Democrats about balanced budgets because Dems keep letting themselves get trolled. Dems should study finance and bring to consciousness the fact that US debt is so highly valued in world finance that repo rates sometimes go negative, meaning borrowers are paid if they can put up Treasuries as collateral for a day. The more US debt, the stronger the dollar.

    • Sure enough the case for tax cuts has been supported with “sophisticated models” – whatever that is supposed to mean.

      • Senate Majority Leader McConnell has promised the tax cut bill will be revenue-neutral. But this is just like a financial asset, a promise to pay in the future. If the promise doesn’t materialize, will McConnell be penalized? Was Reagan penalized for promising lower deficits as a result of tax cuts, then not delivering? In the same way that politicians make promises today and get political capital that they never have to repay even when the promises default, finance firms have figured out how to make promises to pay today, spend money against the future promises today, and never have to pay when the promises come due.

  2. An important figure supporting corporate tax cuts is Robert Barro. Barro is as crucial to the whole macroeconomic enterprise as Sargent, Fama and Prescott and was the major figure behind the revival of Ricardian Equivalence, a crucial philosophical foundation of New Classical and New ‘Keynesian’ economics.


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