Yet more on the terrible tax plan…

December 4th, 2017 at 4:15 pm

Similar pieces wherein I’m trying to work out some of the longer term implications of what’s happening with tax policy, the debt, and the forthcoming attack on spending programs that, you know, actually help some people.

Over at WaPo and TAP.

I’ve not forgotten that there’s much else going on. I’ve got forthcoming pieces on the attack on financial market regulation, which, unless you’re following this, goes deeper than you thought, and current economic conditions as a baseline against which to evaluate a bunch of silly claims that will soon be made about the impact of the tax plan on growth.

Print Friendly, PDF & Email

4 comments in reply to "Yet more on the terrible tax plan…"

  1. Jill Shaffer Hammond says:

    There’s one aspect to the whole tax cutcutcut bill that really gets me riled: Now the decades-long deliberate shift to reliance on the payroll/FICA tax revenues has hit the wall.

    For decades — except during the surpluses of the Clinton years — revenues from taxes on personal incomes (graduated), capital gains, interest, dividends and corporate profits have not been sufficient to cover the costs of the government that is apart from social insurance (Social Security, Medicare, etc.). Those deficits, that shortfall, is what has grown our national debt

    Following the tax reform in the 1980s, an increase in the payroll tax (flat rate from dollar one/no deductions on wages and salaries) was to build up surplus that would be the reserve for the boomers retiring. The flat tax on our earned wages has for 30 years supported, and been in surplus, to pay for Social Security. That has been held as part of the national debt (18% last time I looked, twice as much as China holds). In other words, our flat-rate wage taxes have financed all the R deficits, like, you know, Bush’s wars.

    So far that debt obligation to the Social Security Trust Fund has held, and could still till 2030(?).

    Now, because they need the money to pay for tax cuts on the incomes of the wealthy, the Rs are stealing those FICA revenues and intend cut our Social Security and Medicare.

    i know this may be a simplistic and highly subjective view ( I just got my Soc Sec statement for the coming year — 3rd time in a row my COLA has been eaten by my Medicare Part B premium), but it sure feels a long running shift and shaft.

    If Rs want a super-duper military, and big subsidies for fossil fuel corporations, and any more wars, they should have the guts to raise taxes for those things. On the people who profit most.

    i’m not too far wrong, am I?

    • Jared Bernstein says:

      Yep. Somewhere along the way, both sides decided they could provide X value of gov’t with a lot less than X in revenues. That can work for awhile, but–and I’m way more dovish than most in this town–we want revs and outlays to start lining up as we close in on full emp.* Meanwhile, R’s have long gunned for Soc Sec, Mcare, etc. and will always use deficits as a motivator–even when they build up those deficits!

      BTW, at least as reported, China’s debt-to-GDP is way higher than ours.

      *There’s a really interesting new economic analysis I’m reading that shows countries with lower debt/GDP ratios respond much more aggressive to downturns–ie, they have more “fiscal space” and they use it.

      • Jill Shaffer Hammond says:

        My reference to China is to the Chinese holding US debt. As in: How much will we borrow from China to give US corporations a tax break?

        Interesting that the Chinese government does so much deficit spending in their own economy.

  2. Druid says:

    Long ago (perhaps 5 years) I was reeducated on the finances of Social Security (by Paul Krugman), and what I learned is that common interpretation is absolutely wrong. I learned at that time that Paul Ryan understands budgets but he doesn’t understand finance, and he’s more than clueless about macroeconomics.

    Social Security needs to be expanded rather than shrunk. It works, and it is a brilliant economic solution.

    Most Republican government officials, including the top person, probably don’t understand Social Security financing at all. It isn’t a simple subject, but given the lack of trust in our experts today, it is understandable why so many people fall for the con.