The "voodoo" and "zombie" epithets in this column are based on old stereotypes about the Haitian religion and on anti-Haitian prejudices. Presumably Mr. Krugman did not intend that, but he and the Times should know better by now.
@Mark Dow
Vodou practitioners also believe that if someone ignores their loa it can result in sickness, the failure of crops, the death of relatives, and other misfortunes.
Besides the "phalanx of billionaire-funded think tanks promoting trickle-down economics, and a loyal army of right-wing politicians supported by wealthy donors" who back the tax cuts, there are also occasional academic economists willing to put a fine intellectual veneer on these policies.
I think they deserve a mention here as well.
@byomtov
"...a phalanx of think tanks...politicians...occasional academic..."
But, have the academics published the proper analysis?
The Congressional Budget Office appears to be owned by the 41 academics who both publish on the effects of taxation on economic growth and cite each other for support
These analysis feed into MEG and OLEG, the economic models of CBO, the Joint Tax Committee and the Treasury Tax Policy agency.
These models show slight effects of taxation on economic growth.
Until recently, research focused on elasticity of labor supply. Since 1981, our employed labor supply increased by over 83 billion hours of work, a 50% increase. By comparison, employed labor supply in high tax France dropped by 3 billion
The research fails to predict this stunning difference. Can a body of research predict if it can't explain?
Nobel Prize winner Prescott found France's high tax rates caused them to start work later in life, retire earlier, take more sick leave, be less likely to work as a second income earner in the household, to work less ambitiously, to work less intensively, and form less valuable companies
Result? Europe's stock market's is less than $8 trillion to our $30 trillion
Elasticity along the intensive margin (hrs/wk) and "extensive" margin (probability of working) appears to fail to incorporate the labor elasticity creating our economic juggernaut
Piketty: "all modern economies grow at about the same rate"
U.S.? 2.9%
Europe? 1.1%
My tax bill increased after the "cut" so, based on my small sample, it appears that the Republicans are just shifting more of the tax load from the wealthy to the average income earners. Also, the so-called cut is just a precursor to their attack on our few social programs.
@Clark Landrum
"...shifting more of the tax load from the wealthy to the average income earners..."
Maybe, maybe not.
We reduced federal income taxes for all families of four making $53,000 or less to zero.
Yet, total federal revenues are 3% higher than they were in 2016. This means that wealthy taxpayers have to be paying a lot more in taxes. 103% of zero is zero, we can't be making up the loss of revenues from taxes on median and low income families.
Those names were slipped in to see if anyone is paying attention. The theory is, if seemingly minor details are ignored, some major details might be ignored. Van Halen did a similar thing with their concert munchie requirements. One item was M&M's (absolutely no brown ones). If they found brown M&M's in the bowl they knew that someone was not paying attention to details. For our country, the consequences of White House imbeciles not paying attention can be much more severe than a out-of-tune guitar or dead light bulb.
@Pete Steitz
"...consequences..."
GDP growth in 2018: $1 trillion
Federal debt growth: $780 billion
GDP growth in 2016: $480
Federal debt growth in 2016: $587
It appears that intern John Cleese contributed heavily to this report because it's a joke. I hope he delivered it with full ceremony as The Minister of Silly Walks.
Don't forget John Cleese from the Ministry of Silly Walks. Which is an apt place for all of Trump's policies and reports to come from.
Sadly, Captain Kathryn Janeway battled the Kazon and the Borg, brought her entire crew home safe from the Delta Quadrant and ENDED UP IN the Trump Administration (as an unpaid student intern yet)?!? I thought that she would have made Admiral by now. Only in the Trump administration.
The authors of the report are providing a very large clue when they indicate that the interns providing "fact-checking" are fictitious people. (e.g. Peter Parker, Aunt May, Bruce Wayne, and Jabba the Hutt).
Steve Rogers?
If appears that superheroes and former Montreal Expos pitchers all had a say in creating this manual of mendacity....
I always remember the late John Kenneth Galbraith's beautiful description of trickle down economics as the claim that “If you feed enough oats to the horse, some will pass through to feed the sparrows.”
2
@Steve Bright
arent you describing government and its effects?
The zombie shambles on because the alternative, experts actually managing the economy and money supply, are anathema to free-marketeers and the ‘animal spirits’ they continue sacrificing hardworking Americans for.
For some reason, too many of those in line to present themselves, and their families, on the altar of Zombie Economics and it’s creator, Scarcity Capitalism, find it easier to continue believing in faith-based hand-waving and incantations, rather than the hard data and basic logic that statistical analysis supports in fields like medicine, science, and technology. I suppose the better for the billionaire priesthood to continue manipulating in the Church of Wall Street? But average Americans just can’t believe the hand-waving and incantations are a con; Capitalism isn’t a religion, it’s a tool. And a brilliant one at that, if only we’d allow those who know how to use it, to use it for the many instead of the few.
1
When has supply side economics not rescued us?
We reduced taxes in 2017 Result? first $1 trillion growth ever, up from $488 billion in 2016.
We reduced taxes 70% to 50%, economic growth was 7.3% in 1984. Highest growth in 65 years.
We cut taxes 50% to 28%, economic growth was 4.9% and 3.6% in 1987 and 1988.
80's tax cuts created the highest six year period of growth, 31% since Kennedy tax cuts in 1960s (37%).
Congress cut taxes 1948, highest 3 quarters of growth in history 16.4%, 12.7%,16.3%.
We cut taxes 75% to 25%, growth in the 20's ? 37%
Kennedy cut taxes 91% to 70%, growth of 6.5% and 6.6% in 65 and 66
Clinton cut capital gains taxes 29%, 98, 99 growth? 4.5%, 4.7%
Bush2 cut taxes in 2001, growth of 18%
Czech Republic cut personal income taxes to 13% and corporate to 19%, employment rate climbed 63.6% to 74.6% and average growth has been 4% from 13 to 17
Nigeria cut personal income taxes to 24%, growing at 7%/yr for a decade now largest African economy
England eliminated personal income tax in 1815 averaging 4% GDP growth for 35 years.
Vietnam? Just grew 6.5% and 6.6% after reducing their taxes below the U.S.
Augustus reduced tax rates on conquered lands, the Roman Empire expanded to its peak of 60 million in the following 200 years.
I thought John Snow was good too - After all Winter is Coming!!!
@debbie doyle
The Winter of our discontent.
In a few short months, you will make similar criticism of Progressive candidates for the Presidency (with the exception of Sen. Warren, no doubt). So, it is fair to ask, what is your tolerable time horizon for the realization of the benefits of a policy after implementation?
The Trump Billionaire Tax Cut is just the latest proof that trickle down economics doesn't work--at least if the goal is to make the economy work for everyone. If the goal is to make the rich richer & the poor poorer, it certainly does that.
@Bill
"...goal to make the economy work for everyone..."
Tax cuts by 14% in 2017.
In 2018, the economy set 10 all-time records for combined total employment of Blacks and Hispanics driving their unemployment rates to the lowest in recorded history and to their greatest degree of equality ever.
Grover Norquist wants government to be so small that it can be drowned in the bathtub. No better way to accomplish that than to defund it with the hope that it'll starve. Cut taxes under the guise of supply side voodoo economics, gut gov't revenues, raise debt until there's that 'stoic' sense that we now have to make 'tough choices' that will deprive people of food and medical care.
Seen this movie before. It sucked last time too.
@BillBbill
Cut taxes under the guise..."
GDP growth in 2016? $488 bill
Deficit growth $588 bill
GDP growth in 2018? $1,015 bill
Deficit growth $ 789 bill
Federal debt service as a percentage of GDP? 1.6% a nothingburger
Is John Cleese one of the interns too?
1
Paul Krugman missed John Cleese.........
1
As Gomer Pyle was wont to say, “Surprise, surprise, surprise.” Trickle-down theory still doesn’t work and only truly benefits the heavily Republican tippy top of the wealth ladder.
But apparently it still provides enough cover to keep lowering taxes for the already fabulously wealthy. And if you cut taxes low enough maybe you can even fulfill the the Republican dream of broad-based cuts in programs like Social Security, Medicare and Medicaid. And for sure it keeps those political donations streaming in from the now-even-wealthier Republicans who put you in office in the first place so maybe now you can stay there forever.
The 2017 tax cuts were never really about improving the American economy. They were always and only about fattening the fat cats—and the political power that ensures. No wonder Jabba the Hutt put his name on this report.
1
@Steel Magnolia
"Tax cuts were never about improving the economy..."
We reduced the taxes paid by all families of four making $53,000 per year or less to zero.
The total tax burden on such families, federal, state, local, is the lowest the world.
Maybe that was what it was about.
So, have we been served the arsenic first or is this still to come to resolve the cluster mess that they have already set for the economy. What a mess. This is what happens when you let the foxes rule the chicken coop.
1
@heysus
"What a mess..."
Maybe not entirely.
Wages increased more than at any time since 2007.
Mortgage delinquencies are down 26% over the last two years.
Welfare dependency as measured by food stamp enrollment is down 3.7 million.
You call it Voodoo. some others call it fraud!
1
@manfred marcus
"Some call it fraud..."
Maybe not all.
After we reduced the top federal rate to 28% in 1986, GDP growth in 1987 and 1988 was 3.6% and 4.2%
Combined corporate and personal tax tax revenues hit records in both years.
In the 37 years following the start of the tax cuts in 1981, our economy grew 65% jobs while the countries of the EU grew less than 35%.
If we want to kill the “tax cut zombie”, obviously the answer is to destroy it’s brain.
@Corbin
"...tax cut zombie..."
Maybe we are not zombies. Maybe we have looked at panel data across nations and seen that the Czech Republic has new records for employment of 74% which we haven't seen since the 80s.
Maybe we have noticed that Nigeria grew 8% a year for a decade and is now the largest economy in Africa.
Maybe we have noticed that Vietnam has grown 6.5 and 6.6% over the last two years.
Maybe we noticed that New Zealand has added jobs at a faster pace than any other country in the United Kingdom.
Maybe we noticed that all of these countries have lower tax rates than the U.S.
Maybe we adjusted our U.S. panel data to take into account regulations expanding from 100,000 pages in 1980 to their current 190,000 pages.
Maybe we adjusted our U.S. panel data to take into account total welfare spending in the U.S. expanding from $90 billion in 1980 to $800 billion in 2016.
Maybe, tax rates have a much larger effect on economic growth than you have been led to believe.
Maybe, we are not zombies, maybe, we are scientists.
The list of student interns indicate that one of their responsibilities was "fact-checking". I want to thank John Cleese for doing such a stupendous job, along with Batman & those other interns Dr. Klugman mentions.
I have to wonder though. Are ANY of these listed interns real people? Mackenzie Dickhudt? Kacey Manlove? Mostafa Kamel? Or is the point of the joke that all the interns listed are imaginary and that absolutely no one did any fact-checking at all on this report?
1
Kacey Manlove, at least, is a real student intern. Mostafa Kamel is an Egyptian poet; I doubt he conducted significant fact-checking for this project.
Once again, the 1% have trickled on our heads, and told us it's raining.
Woe is us. We're in a lot of trouble. - H. Beale
2
@the dogfather
In 1980, Taxpayers with an AGI of $80,000 or more paid $47 billion in personal income taxes
In 2018, Taxpayers with an AGI of $237,000 or more paid $900 billion in personal income taxes.
Families of four making $53,000 or less paid zero.
If that's not rain, what is?
A family of four in China making $53,000 is in the 45% tax bracket. And, that doesn't include their much higher social security and much higher VAT/sales tax.
Mr. Krugman it is about time you get on the Trump Train and admit that he really is the greatest President ever. I know some of your Liberal friends will stop hanging out with you but if they do they were not true friends at all.
Everybody knows you really love Trump. In a Platonic way of coarse. After all you can't seem to stop writing about him.
Free yourself Mr. Krugman and get on the Trump Train. You know you want to!
Mr. Krugman; Can you respond to Devore at Forbes Mag?
thanks.
@SMC
Devore's points?
Manufacturing jobs in 2015/2016? 63,000
Manufacturing jobs in 2017/2018? 454,000
Federal
Government jobs in 2015/2016? +40,000
Government jobs in 2017/2018? -9,000
Appears to be a change in philosophy and results.
Republican theme song: "....the rich get richer , the poor get poorer, in the meantime in between time ain't we got fun." End their fun. Vote 2020
@Jack Strausser
"...the poor get poorer..."
In 2018, we set ten all-time records for combined total Black and Hispanic employment.
Each year the Fed survey reveals the number of people who can afford $400 for an emergency. That number increased by ten million in 2017 and likely another 17 million in 2018.
Maybe when the rich and richer the poor get richer too.
The list must be comedic. John Cleese is in it!
“Anything is better than lies and deceit!” (Leo Tolstoy, "Anna Karenina"}
So, next time let's vote for "Anything" instead of Trump. Oh wait, the majority of us did not vote for Trump in 2016. And that is no lie!
Of course, Trump had a different take on losing the popular vote: “In addition to winning the Electoral College in a landslide, I won the popular vote if you deduct the millions of people who voted illegally."
Psychology research says that most people do not lie, only a few do. So it must be that those "few" become Republican politicians, Fox News celebrities, right-wing conspiracy theorists, and GOP Voodoo economists who toil 24-7 to make the rich richer.
Make America Truthful--Again (MATA)
The one "intern" nobody seemed to pick up on after John Cleese, Jabba the Hutt, Aunt May, Peter Parker, Bruce Wayne, and Kathryn Janeway, was Mustafa Kemal (mis-spelled as Kamel), better known in History as "Ataturk", the father of modern Turkey.
People like Krugman have no sense of humor but the rest of us rather enjoy the fact that the Administration can have some fun. Get over it You economic fossil.
John Cleese, intern ? Now for something completely different !!!
Why do the zombies keep shambling on? Plenty of human meat corralled over at Fox News.
@Spence
"Why do the zombies keep shambling on?"
Perhaps it is shambling, perhaps they are more alert and vigorous than we give them credit for.
Maybe they are devoted to a higher cause. The rescue of the 1 billion people of Subsaharan Africa, the 1.7 billion of South Asia and the 540 million of Latin America all working in economies trapped by oppressive tax rates having to experience grinding poverty working jobs paying less than $4 per day, when they can get them, in a subhuman existence.
Oh yes, and another of the interns was John Snow, oops, Jon Snow.
Is it really necessary to use the name of a religion with roughly 60 million adherents worldwide as a byword for stupidity / mendacity? "Voodoo economics" is a racist trope. Find a new one.
1
Today in the Times this description regarding the crashing 737:
"Confusion, then prayer, in cockpit . . ."
Somehow it also fits the current economic prestidigitation of the Trumpest Republican forecasters.
The by-now-insane reliance on Trickle Down Economic theory is just a form of mental incontinence with no redeeming value beyond the ability to conceal the intellectual wet pants it so blithely creates.
Doug Giebel, Big Sandy, Montana
@Doug Giebel
"...insane reliance on Trickle Down Economic theory..."
Maybe its insane but maybe it isn't. There is some history.
After the U.S. reduced tax rates in 2017, growth hit $1 trillion for the first time ever, up from $488 billion in 2016.
After the U.S. reduced tax rates from 70% to 50% in 1983, economic growth was a stunning 7.3% in 1984. The highest growth in the last 65 years.
Job growth from 1980 to now is 65% as compared to the Eurozone which expanded by less than 35%
Maybe tax rates do affect the rate of economic growth.
Ah, yes, the Republicans will keep on doing that voodoo that they do-do so well, while those of us not in the 1% get piled higher and deeper in the doo-doo.
And I don't think there's any spray strong enough to clean out the mental spaces of those who keep on believing this doo-doo and keep on voting for them.
1
@Glenn Ribotsky
"...clean out the mental spaces..."
Yes, we do have these cobwebs and dustbunnies of obscure facts and questions.
Like, why is Kazakstan growing at 6% a year?
What happened when Albania reduced their tax rate to 10%?
What happened after Mozambique reduced their tax rates?
Yes, all of this mental clutter that needs to be cleaned out.
Play US for fools once with deficit-widening tax cuts that do nothing for the real economy, then shame on Republican leadership.
Play US for fools again, and again, and again .... with deficit-widening tax cuts that do nothing for the real economy, then shame on Republican economists and believers of Republican snake oil economics.
@Mr. Anderson
"...deficit widening tax cuts..."
Perhaps it is widening but perhaps, in some ways, not.
GDP growth in 2018? $1,015 billion, $1 trillion
Deficit? $779
GDP growth in 2016? $488 billion
Deficit? $584 billion
Debt service as a percentage of GDP? Only 1.6%, less than half of peak.
Don't blame Batman.
John Cleese!!
Money, money, money, money, monnnnny. Intellectual prostitution is the answer to the question. Opinion for sale as long as it requires no thought and no soul. Plus a ride in the "rightwing" mobile for selling your soul. Holy alchemy Batman. You really can't change lead into gold.
@Paul
"You really can't change lead into gold."
Hmmm.... Maybe some people can. Steve Jobs and Wozniak created a company out of pure air that is now worth $900 billion. Since we started on this journey in1980, the U.S. now dominates the top 100 corporations with over half the market value. Europe with a larger population and a head start only has 17%.
Maybe reducing our tax rates in the 1980s helped fuel this turning of thin air into gold.
They couldn’t even spell Jon Snow’s name correctly.
As in: wall, winter, white walkers, etc.
Fool me once, shame on you. Fool me twice, shame on me. Fool me ten, twenty, thirty times... What does it say about the people in this country that the guys peddling the same phony economic nonsense and lies keep getting elected?
@SkL
"...phony economic nonsense..."
Maybe its not phony.
Real disposable personal income growth in 2016: $244 billion
Real disposable personal income growth in 2018: $597 billion
Real evidence.
I have to share this with somebody there; Kellyanne Conway's husband has been questioning Trump's mental fitness. Trump called him a "Whack Job" not a "Wacko", but a "Whack Job". A "Wacko" is a commonly held term for a mentally ill person, while the term "Whack" is a Mafia way of saying to kill someone. Did Trump learn the term "Whack Job" from the Mafia in New York?
1
Clearly, for Trump, the truth is whatever he can get other people to believe, as long as he can profit from it somehow in the end. It's his way of doing business.
My question is, to what extent do Trump's wealthy supporters share his understanding of the way things work. The financial catastrophe revealed the extent to which Wall Street plays a role in creating bubbles. While there were many investor losers, there are people who profited- the people who worked on commission, and the people who bet against the market. While hedge funds were originally conceived as a way to minimize risk, don't they also provide an opportunity for some people to profit handsomely from other people's losses? If you can make more money simply betting against the market than by warning people about it, is it really in your interests to let everyone know what you're thinking?
Don't the wealthiest investors simply have the option of investing in other countries? Is it any problem for them if the American middle class disappears, so long as there are other markets to take it's place?
The Eternal Life of the Tax Zombie is brought to you by Fox News!!
...a privateering entity that is essentially a military-design Psychological Operations Weapon, now supercharged by data-driven propaganda phraseology.
It's a stand-alone, off-the-shelf, self-financing, Covert Public Indoctrination Operations Enterprise.
...And evidently Highly Effective!
@Just Another Heretic
"...Eternal Life of the Tax Zombie..."
Can we ever be sure that they are the zombies?
Job growth of lower tax U.S. 1980 to 2107? 65%
Job growth of higher tax Eurozone 1980 to 2017? Less than 35%
Will no one acknowledge the greatest of all Americans on the list... Captain America himself, Steve Rogers
4
@OA I would like to see Carol Danvers, aka Captain Marvel.
You missed Superman (Bruce Wayne), Capt. America (Steve Rogers), and Monty Python's John Cleese. And you're supposed to be a Nobel Prize winner - seriously!? :)
7
@Michael Bruce Wayne is Batman. Superman would be Clark Kent. :)
7
Trickle down economics is the Zombie that will never go away, soon to celebrate 40 years as the greatest scam ever. One can hardly wait to see the propaganda machine go into high gear when Wall Street craters and the next Recession punishes the faithful masses. Suddenly deficits and "government spending" will be all over the corporate media. People will be told to tighten the belt they can't afford to buy.
@dajoebabe
In 2016, the median corporate tax rate for large corporations (IRS definition and study) fell to 4%. Since you are a NY times reader, I will assume you know the difference between median and the their average of perhaps 18 to 20%.
That 4%, so incredibly low, raises the distinct possibility that Corporations will redeploy the billions that they are spending pursuing tax favored activity and now pursue taxable activities.
Tax revenues may very well explode on the upside.
IPO's dollar volume already increased 300% over the 2016.
To put it another way, supply-side economics doesn't work. Conceivably it would if there were a shortage of capital, but there is no such thing - economics talk about a "savings glut". There is no evidence that such a shortage existed during the times before 1965 when tax rates were much higher than at present. But supply-side economics includes providing funds for investment at low interest rates - or even negative rates as in Europe - or in drawing funds from other countries by running trade deficits. These have not worked any better than tax cuts. The problem, as agreed by most liberal economists, is that demand has not been growing very fast, and the reason that demand does not grow is obvious - wages have been flat since the 60's.
Krugman tries to claim that monetary policy is not supply-side by saying that it operates mainly on housing. It may do that at times, such as when the Fed produced unemployment over 10% in the early 80's, but those times and the way that the Fed handled the housing bubble of the oughts do not provide evidence that this influence can be constructive. Mortgage rates reached record lows in the last decade but housing starts show no sign of giving much of a boost to the economy.
Yet the monetary-policy zombie shambles on.
1
@skeptonomist
"Wages have been flat since the 60s..."
Perhaps, perhaps not.
Real median personal income increased by 38% from 1981 to 2000. The poor did even better.
Less than 4% since then.
What happened starting in 2000?
1. The burden of personal income taxes as a percentage of GDP hit an all-time record.
2. Welfare began its explosion. Food stamps went from $18 to $125 billion. Disability went from $80 to $225 billion.
3. The Fed abandoned the defacto gold standard Volcker established in 1983. Gold which had been below $425 for 22 years exploded from $425 to $1,800. Speculators in housing, oil, timber, art, commodities walked away with over $3 trillion that otherwise would have gone into productive investment.
Now, perhaps, we are back on a path to recovery. Our stock market to GDP ratio is the highest among developed countries. Our GDP growth is $1.01 trillion and the breakeven inflation rate in 5 year inflation adjusted bonds is 1.6%.
Apparently, trickle down does work when you properly cherry pick. Give billions in tax cuts to the plutocrats and they will trickle it down to the think tanks. It must be a good time to be an "economist", at least on the right.
3
@Kim
Maybe there's more than cherries. Maybe there's some strawberries, oranges, wheat, sorghum and soybeans and pecans:
1 Economic growth 2018? First trillion dollar year in history vs $488 billion in 2016
2 Fulltime jobs 3.1 million in 2018, 200% of 1.56 million in 2016.
4 Manufacturing jobs up 440,000 2016? Down 7,000
5 Job openings 7,300,000 up 46% from 2016’s 5.0 mill jobs
6 Unemployed 6.5 million in 2018 vs 7.5 in 2016
7 Stock market: $29.2 trillion up $7 trillion
8 Mortgage delinquency rate down 26%
9 Combined Black and Hispanic jobs set 10 all-time records in 2018, at higher wages than in 2016
10 Consumer confidence highest in 20 years
11 Unemployment 3.8%, lowest since 1969.
12 IPOs, $46.8 billion in 2018, up 250% from 2016.
13 Real disposable personal income up $597 billion in 2018 vs $244 billion in 2016
14 Total wealth $99 trillion, up $7 trillion since 2016
15. Business investment growth up $334 in 2018 versus $52 in 2016
16. Total federal revenues, increased 3% from 2016 to 2018 Negative 1% in 2016
17. Adults with $400 to cover an emergency: 2016? 137 million. 2017? 147 million, 7% increase.
18. Wage & salaries up $390 billion in 2018. 2016? $255
19. Inflation in 2018? 1.6%
20. 3.7 million have escaped food stamp welfare since January 2017, a 9% reduction
21. Murder down 1.8% in 2017 and likely down another 4.5% in 2018.
22. Debt service on total federal debt is 1.6%, less than half of peak.
Substitute the word "contribution" for "taxes".
This makes it clearer. The rich didn't cut their taxes. They cut their contribution, which relative to their income, was already meager.
(Paul Krugman again wins the Sharp Eye for an Econ Guy prize by demonstrating his prowess as a cultural polymath who knows the secret identities of comic book super-heroes. How fitting for a fictitious report to credit fictitious interns. And isn't Jabba the Hutt the Secret Service code name for Trump? I think it replaced Humpty-Dumpty when Trump declared a national emergency over the wall. )
22
@Yuri Asian
"Their current contribution was already meager..."
Perhaps. But, perhaps not for the reasons we think.
Every year Buffet complains that his tax burden isn't high enough and supports raising income taxes.
But, is he really supporting more taxation on himself and his own stockholders? Or, is he playing a game?
Buffet's lifetime earnings are over $100 billion and none of it is subject to personal income taxes. It is all in the form of unrealized capital gains. Completely tax free. Further examination might reveal that all of Buffet's competitive advantage in the marketplace comes from tax avoidance. Berkshire Hathaway pays no dividends which would be subject to personal income taxes. It distributes all of its earnings as unrealized capital gains which are completely tax free.
Perhaps, Buffet is really supporting increasing tax rates on his smaller competitors.
Those competitors already pay in New York City:
Federal 32%+Social Security 12.4% (they pay both sides) + Medicare 3.4% + UI 5% + State 8.5% + NYC 3.5% + Sales tax on what is left 8.8% = 67%
Responding to the pressure generated by Buffet, Ocasio would increase this marginal rate of 67%, which Buffet says is not high enough, to 92%.
16,000 taxpayers/businesses Ocasio targeted with her 92% (70% plus adds) "marginal tax" employ over 20 million people and would be completely wiped out as competitors of Buffet's due to the $72 billion extra tax load. Buffet's extra burden? $0
Guide with knowledge
1
Apparently, John Cleese was also one of the diligent interns--quite a career change for him, or, considering the farcical nature of the report, maybe not?
15
People don't change their religious beliefs easily.
@Larry
"People don't change their religious beliefs easily"
Yes.
Maybe it all goes back to the collectivism of the Great Depression.
Hoover increased taxes on imports to 60% and "marginal" personal income taxes to 63%.
And, of course, that had nothing to do with the Great Depression.
You’re all missing the best part of the column: the graph where PK has recaptioned the data “Killing sheep with arsenic.”
Brilliant.
All Trump and the Republicans ever do is lie.
This is just one more instance.
The only way out of our problems is to get rid of Trump and the Republicans.
2
@Democracy / Plutocracy The trouble is, Republicans have become experts at cheating their way into office (gerrymandering, Electoral College maneuvers, voter suppression, etc.) because they can't win otherwise. And of course they claim the Democrats are the ones who practice "voter fraud." (Hey, how else could Democrats keep winning the popular vote?)
1
Rule #1 - never let facts get in the way of conservative doctrine.
Rule #2 - When the facts are undeniable and disprove conservative doctrine, see Rule #1.
5
@markymark
"...never let facts get in the way..."
Maybe there are a few facts not in the way:
1. GDP growth in 2018 of $1,015 trillion, up from $488 billion in 2016.
2. Real disposable personal income up $597 billion in 2018 up from $244 billion in 2016.
3. Every single one of the jobs created in 2018 were full-time jobs, all 2.4 million of them.
4. Not only were were all 2.4 million jobs full-time jobs but an additional 700,000 part-time jobs created in 2016 were escalated to full-time for a total full-time job creation of 3.1 million. Up from 1.56 million in 2016.
@markymark
"...never let facts get in the way..."
Maybe there are a few facts not in the way:
1. GDP growth in 2018 of $1,015 trillion, up from $488 billion in 2016.
2. Real disposable personal income growth of $597 billion in 2018 up from $244 billion in 2016.
3. Every single one of the jobs created in 2018 were full-time jobs, all 2.4 million of them.
4. Not only were were all 2.4 million jobs full-time jobs but an additional 700,000 part-time jobs created in 2016 were escalated to full-time for a total full-time job creation of 3.1 million. Up from 1.56 million in 2016.
Soon we will all be serving the rich.
Did anyone else notice that John Cleese was also included in the credits at the end of the report? Does that mean that this report was compiled by the Ministry of Silly Walks?
22
I suspect we do know Professor Krugman and trump's lemmings are jumping off the cliff because he said so.
Trump claimed he'd get growth of "four, five and even six percent" -- way, way beyond the White House projections even with the voodoo and the imaginary arsenic.
Another possible reason (besides fun) for including superheroes in the credits: if undiluted by all the WASPY fictional-character names such as John Snow, Kathryn Janeway, Bruce Wayne, et al, the preponderance of Asian and Indian names would be even more glaring than it is. A bit embarrassing for the white-supremacy theorists who populate our current government...
Nice to see John Cleese get a mention :)
Tax cuts for corporations and the wealthy were never meant to benefit the bottom 90th percentile of Americans.
The use of this cynical rationale fools no one. It is merely a means by which the greedy further enrich themselves. It is sad that struggling Americans trust Republicans to care for their needs. I believe they buy into fear mongering about dark people and remain thoroughly ignorant of what would genuinely improve their lives.
1
@Truthseeker
"Tax cuts for corporations and the wealthy were neer meant to benefit the bottom 90th percentile"
But, maybe they did....
In 2018, total combined employment of Blacks and Hispanics set ten all-time records driving their unemployment rates down to the lowest levels ever recorded and to the greatest degree of equality in records going back to 1970.
Double voodoo is not the same as voodoo squared, i.e 2v \neq v^2.
As Abraham Lincoln (who was of course — ironically — a Republican) once said....
Republicans approach everything dishonestly. They're always explaining their greed and avarice through fables.
@Tim
"They're always explaining their greed and avarice through fables..."
Maybe. But, maybe some fables are based on reality.
Median Household income of low tax U.S. $61,400
Median Household income of high tax Europe $36,500
My hope is to be abducted by aliens, who after eons longer to figure economics out are no longer suckers for trickle-down arguments. They should have gone far beyond rocket science to know how to build and fly actual flying saucers that can leave earthly flying machines in the dust, be at least as sharp as the Star Trek characters at psychology and other fields of interest to humans, and not ever be conned by guys like Trump. They should also have an evolved sense of ethics that rightly evaluates the virtues and weaknesses of a society and knows injustice when they see it.
The alternative, staying in a dominion of shabby rulers like Trump and commoners drifting toward internecine and international war, with insurmountable disagreement on what are the facts of a matter, all this is a highly undesirable future and one I sure didn't ever vote for.
@Garlic Toast
"...facts of the matter..."
GDP growth in 1965 and 1966? 13%
GDP growth in 1970? 0
As long as too many Americans believe that abortion, LGBT bathroom rights, gay marriage, gun ownership without background checks, Muslims, immigrants, sexism, racism, ethnic prejudices/cleansing/scapegoating, coal mining jobs are valid issues that they believe the Republicans, Tea Party or DJT can resolve, the DJTs of this country will remain in power. Encouraged by the lies of Fox and Friends and the news snippets provide by the legitimate News sources, CNN, MSNBC, ABC, etc., too many Americans keep believing that elections are beauty contests to be won by the most bombastic. Bullies will continue to remain in power and VooDoo/HooDoo economics will continue to persuade those unfortunate Americans that their lives will be fantastic if only the holy grail espoused by DJT and his minions/enablers are followed. Ironically Mrs. Clinton told the truth about that frightened group of folks who do not understand that the world is never made better by the policies created by the incompetent and ignorant because there are always ulterior motives by the more competent whose goal is money.
1
@Rita Harris
"...their lives will be fantastic..."
in 2018, combined total employment of Blacks and Hispanics hit ten all-time records driving their unemployment rates to the lowest levels on record and their degree of equality to the highest on record.
Real disposable personal income increased $597 billion, up from $244 billion in 2016.
Full-time jobs increased 3.1 million up from 1.56 milion in 2016.
Dr. Krugman, the obvious plan is to bankrupt the country so Trump can sell all the infrastructure cheap.
Only those who pay tax can have a tax-cut. Money given to those who do not pay tax is a transfer payment. The socialist point-of-view is that productive work and layaboutism are equivalent, that property rights do not exist, and that the government owns the nation's wealth which it can give to or take way from whomever it pleases--so much for individualism, free markets, capitalism, etc. On this showing productive people are actually government slaves who work to support the indolent. If they receive a tax-cut they should be ashamed of getting back some of what they've earned and probably don't deserve it. Layabouts are innocent of shame (yes, they're shameless), and deserve whatever they're granted because by socialist dogma productive behavior and layaboutism are equal, in fact, in practice, layaboutism produces superior results: income without effort. Does the socialist world-view somehow lead us downhill?
@Ronald B. Duke
Nonsense. It is specifically the laws of the United States that allow the wealthy to legally accumulate so much money. Our laws were changed, starting in the 1970s, to allow personal wealth accumulation on a staggering scale to address the problem of stagflation. In the end, the economy recovered because of deficit spending (remember the Reagan military buildup?) but, rather than taking an honest look at the recovery and learning its lessons, Republicans trumpeted the tax and business-friendly changes in our legal code as the root causes. It is easily demonstrated that unleashing the American entrepreneur was not responsible for the recovery, or for major growth in our economy in the intervening decades, but the myth has stuck and been maintained by those with a vested interest in the current system.
At this point, the old ideas that were pushed to solve the stagflation problem have been proven false. Social and economic mobility is dropping in this country and wages for many decades have been more-or-less flat. It's time to modify our system to once again serve the best interests of the country.
1
Did the coal minor whose 9 out 10 jobs disappeared in the last 25 years suffer from layaboutism? And the banker who thoughtfully entered his career just as Deng Xiaoping opened China and later Bill Clinton admitted it to the WTO? Was that choice productive foresight, do you suppose, or dumb luck?
Did today’s executives foresee how the tax code would be revised twice under administrations that failed to secure even a popular majority, much less a mandate?
What is profitable is not necessarily productive. Where profits are captured often varies from where the investments are made. The internet is a great example. Google wasn’t even a company when the internet was created with research funded by the department of defense. And recording companies are somehow collecting royalties for works distributed over a medium they did nothing to bring about and did much to stifle, including suing their customers.
The free market you’re so fond of is shaped by myriad public policies and investments. If national policy enables vast profits from globalization, which it has done, what do recommend? Allow those who accidentally benefited to keep their windfall? Shut down globalization? Or tax some of the proceeds to benefit the other 90% whose votes determined that policy, but who got nothing for it?
1
@Ronald B. Duke
The rich are the indolent and the layabouts. They don't work and simply watch their investments multiply. Almost everyone else young enough and fit enough to work does so, because they have to, and pays a higher tax rate on their earnings too.
Another great article Mr Krugman! I almost fell out of my chair laughing uncontrollably after reading the title of the graph, Killing sheep with arsenic, Economic Report of the President. Always informative and always on point, thank you!
“After "being taken to the woodshed by the president"[8] because of his candor with Greider, Stockman became concerned with the projected trend of increasingly large federal deficits and the rapidly expanding national debt. On 1 August 1985, he resigned from OMB and later wrote a memoir of his experience in the Reagan Administration titled The Triumph of Politics: Why the Reagan Revolution Failed in which he specifically criticized the failure of congressional Republicans to endorse a reduction of government spending to offset large tax decreases to avoid the creation of large deficits and an increasing national debt”
https://en.m.wikipedia.org/wiki/David_Stockman
@MayberryMachiavellian
"...Revolution Failed.."
Maybe, maybe not.
Increase
in household wealth since 1980? $100 trillion
Increase in Federal Debt $18 trillion
___________
Net $80 trillion
Eurozone net worth? $55 trillion
As Prof. Krugman commented, just the endless insane Reaganomics with the same outcome, increased deficit/debt and ever increasing economic inequality with diminished and insecure quality of life for millions of vulnerable Americans. Ah, unsustainable and intolerable!
@Ken McBride
Maybe, just maybe, Reagan wasn't insane...
U.S. Median Household Income: $62,400
Eurozone Median Household Income: $36,500
The Tax cuts and jobs bill was simply robbing the nation as it was growing anyway. It was Trump's greatest heist and biggest deception. There was another one today; Trump appeared at the GM Lordstown auto plant shut down last month appearing to appear as the hero who was going to get it reopened but he is why it was shutdown. Why? Because he repealed the Obama regulations that required greater fuel economy and that resulted in GM focusing on making gas guzzling trucks and SUV's.
Indeed, Trump is a con artist and master of deception.
1
Wholly Voodoo is right. Tax cuts for the rich are like giving a junkie his or her fix.
The GOP game plan since Reagan has been to order a tax cut to their rich patrons jacking up the economy which of course will leave us in a mess when they leave requiring a Democratic president to come in and clean up the mess. And Trump is the natural inheritor of this planned destruction.
@just Robert So right--the pattern of "fiscally responsible" Republicans cutting taxes and attacking the social "safety net" followed by "tax-and-spend" Democrats restoring the safety net and raising taxes is an ongoing dance that few voters seem to have noticed. Maybe more will take note now that Republicans are blatantly cutting taxes while spending on questionable "necessities" (like The Wall) and still threatening Medicare and Social Security.
The continued belief in voodoo economics shows either a willful misunderstanding of both how business investment decisions are made by competent businesses (i.e. tax rates don't make a big difference in their decisions) or a willful misunderstanding of how economies work, or some other such faith doctrine, e.g. voters won't notice how stupid we are. Simply put, people in favor of voodoo economics should not be in charge of the economy.
Perhaps they absorbed hallilucinogenic powder through their feet, as Wade Davis pointed out that "zombies" in Haiti do. Instead of becoming zombies, these voodoo practitioners become full-on cynics - a not dissimilar state of mind.
Yes, under very specific circumstances, a corporate/wealthyperson tax cut might make a difference. Those circumstances would likely include a shortage of capital available for strong investments, for some reason. With the globalization of capital available for businesses, this hasn't really existed for decades.
@cljuniper
gross and net business investment hit all-time records in 2018
maybe confidence in the future affects capital investment levels as much as the price of capital
Red Ink Republicans (RIR) would have us believe trickle down works. Right? Actually, they know it doesn't but saying it does can make them millionaires.
12
@TimToomey
"...trickle down works."
Vietnam growth 6.6%
Arsenic and Old Lace might work also -- based on a true crime where a woman promised her boarders "lifetime care" and then murdered them for their pensions.
Elderberry whine with arsenic, strychnine, and cyanide; a delusional Theodore Roosevelt digging locks for the Panama Canal in the basement where the victims are buried, and so forth.
Trump also promised healthcare where "everyone's going to be taken care of". Of course, he similarly promised not to cut Medicaid and that no one would lose coverage, neither true in his proposed budget.
He likes to pose in front of the Teddy Roosevelt White House portrait, although the two men had opposite policies on the environment. Or as Teddy in the play said, "I shall be in my office vetoing some bills."
Even black comedy doesn't work well for the Trump White House and its policies though.
Of course I never went to an Ivy-League college (Thank God) so how on Earth could I ever understand that if you hand $1000 to a rich person, it gets hoarded - give the same to a poor person and it gets spent.
The Greed Over People Party never intended to stimulate anything. It was/is a cynical handout to an already bloated rich class that will NEVER EVER be satisfied until all the money is theirs.
2
@Plennie Wingo
"...NEVER EVER be satisfied until all the money is theirs..."
Maybe, but it didn't work in 2018.
In 2018, combined total Black and Hispanic employment set ten all-time records driving their unemployment levels to record lows and their degree of equality to the highest levels ever seen.
This phenomena is best seen in disposable personal income which increased at a record pace of $597 billion in 2018, up from $244 billion in 2016.
We're heading for stagflation.... and, as was the goal all along, the social programs all have a big bullseye on them....
1
@EEE
"We're heading for stagflation..."
Maybe, but the big money on Wall Street may not agree with you. These guys who make their money by better predicting the economic future a nano-second before their competitors are investing billions in inflation adjusted bonds with an break-even inflation prediction of 1.96%.
Also, our stock market cap is $29 trillion, giving us a Stock market capitalization to GDP ratio of 1.5 to 1.
That's a prediction of over 3% growth moving forward.
No other major economy is above 1.0.
But, it could all vaporize in a second if the future changes. And, it always does.
Holy rib-poking, Batman! That list of interns is the Easter egg of Easter eggs! Many laugh out loud listings, and I can't help but wonder if any of these people are real. Perhaps the claims about the growth rates of real GDP come from the future. After all, one of the interns is Kathryn Janeway. But, then, the quality of the report could be called into question due to the involvement of the intern John Snow, who knows nothing. But what can we expect from a president who invents his own reality not only every single day but several times during that day?
Oh, I did a search for 'most famous fictional economists' to see if any may have appeared as an intern, but the only name that I recognized was 'Paul Krugman'. I'm sure he'd take this jibe in much better humor, though, than our thin-skinned, insecure Prevaricator in Chief.
1
Infrastructure? Who needs it? What I need is for someone to pay for my car repair bills for things like broken springs, struts, etc.
Thank you, Sir Krugman. Rational folks like you and me know desperately that tax cut on the supernova rich is a voodoo economics. Republicans stick to an imaginary magical fantastical economy.
@Uly
"...tax cut on the supernova rich is a vodoo economics..."
Mayb, maybe not.
We just reduced the taxes for all families of four making $53,000 per year or less to zero.
Yet, despite this, total federal revenues in 2018 were 3% higher than in 2016. This increase had to be driven totally by the rich because 3% of zero on the poor and middle class is still 0% of 0.
All the revenues had to come from the high end of the spectrum.
In 1980, the top 1% of all taxpayer had an AGI of $80,000 or more and paid $47 billion in personal income taxes. $80,000 adjusted for inflation is $236,000 in 2018. Taxpayers with an AGI of $236,000 or more paid over $900 billion in 2018.
Didn't happen in the high tax Eurozone. This same group in Europe paid less than $400 billion despite being subject to much higher tax rates and being pulled from a much larger population of 540 million.
@Uly
"...tax cut on the supernova rich is a vodoo economics..."
Maybe, maybe not.
We just reduced the taxes for all families of four making $53,000 per year or less to zero.
Yet, despite this, total federal revenues in 2018 were 3% higher than in 2016. This increase had to be driven totally by the rich because 3% of zero on the poor and middle class is still 0.
All the revenues had to come from the high end of the spectrum.
In 1980, the top 1% of all taxpayer had an AGI of $80,000 or more and paid $47 billion in personal income taxes. $80,000 adjusted for inflation is $236,000 in 2018. Taxpayers with an AGI of $236,000 or more paid over $900 billion in 2018.
Didn't happen in the high tax Eurozone. This same group in Europe paid less than $400 billion despite being subject to much higher tax rates and being pulled from a much larger population of 540 million.
Trickle down tax cuts stay alive in the same way "There be dragons..." did. Superstition, not science, guides this administration.
1
Supply side has always been a con. It has never
worked and never will.
Why? Math
16
@bill b
GDP growth in the U.S.? $1 trillion or 2.9% first trillion dollar year ever
GDP growth in higher tax EuroZone? $210 billion or 1.2%
@John Huppenthal
Don't compare us with the EuroZone. There are too many differences to make the comparison meaningful.
Look at Kansas. They have been cutting taxes like a crazy old man. They believe firmly in trickle down. But, they had to be ordered by the courts to spend money on their schools. They are home to only 2 Fortune 500 companies. New York and California have much higher taxes and are home to about 120 Fortune 500 companies. Somehow Supply side does not seem like such a gold mine.
I wonder, as people are wanting to cut taxes and be rugged individuals, what will be done with those tax cuts that is better than benefiting the citizens of the state/ country?
1
@RN
"...look at Kansas..."
Perhaps, perhaps not
Has Kansas ever been a high tax or low tax state? For the past 20 years, they have been completely average tax burden. Nor, do they have a culture of high growth.
Maybe, to extract the effects of taxation, it might be better to compare high tax states with low tax states over long periods of time.
We might look at the job growth of Nevada, New Hampshire, Texas, Wyoming, Louisiana, Tennessee, and South Dakota with a forty-five year history of low taxes. Bottom ten tax burden for 45 years. These are all the states who have been in the bottom ten for all 45 years. No cherry picking.
And, we might compare their job growth to that of New York, Wisconsin, New Jersey, Maryland, and Rhode Island with a forty-five year history of high taxes. Top ten tax burden for 45 years.
As a group, the low tax states grew more than 100% more jobs than the high tax states. They started out with less than half the jobs of the high tax states and ended up with more.
Not that long ago, New York had more jobs than Texas. Now, Texas has 3 million more. 30 states don’t have 3 million jobs total.
Perhaps Kansas mistakenly believed their 1.4 percentile point tax reduction could produce the same results as our national reduction of 42 percentile points in the 80s and have that effect quickly. Small differences seem to be extremely important but also seem to work their effects over many years at the state level.
Tax cuts aimed at the top generate about zero Marginal Propensity to Spend (if you give Bill Gates or Mitt Romney a $500 tax cut, they don't increase their spending at all).
But if you take a struggling family and cut their taxes by $500, their Marginal Propensity to Spend is pretty much 100 percent -- thus ensuring that the cut in tax revenue flows into the economy, stimulating it to grow, creating new jobs.
So, yes, cut taxes, but at the bottom, not the top.
This is so basic it should be taught in 5th grade social studies.
5
@Tim
“…tax cuts will do wonders for growth…”
Not all, but some might.
Tax cuts do increase growth. Tax increases slow growth down.
However, their impact depends on their multiplier effect.
In turn, the size of the multiplier depends on the marginal propensity to consume (MPC) of the people affected by the particular tax cut or tax increase.
The lower the income level of the people affected the higher their MPC and therefore the higher the multiplier effect.
Economics predicted that tax cuts for billionaires and centimillionaires would have very little stimulative effect (contrary to trickle-down theory, and Laffer curve notwithstanding) due to the relatively low MPC of billionaires and centimillionaires. This is exactly what happened.
On the other hand, eliminating the income tax on social security payments and the Medicare Part B tax should have a significant and immediate (“shovel-ready”) impact on growth and employment, because the recipients of these tax cuts have a relatively high MPC.
It might even give us the 3% annual GDP growth goal of the current administration.
Conversely, raising taxes on billionaires and centimillionaires (in order to reduce the budget deficit, for example) should not have a significant negative effect on GDP or employment.
However, reducing the budget deficit would reduce its twin, the trade deficit, thereby increasing GDP and employment.
@Keynes Incorrect. Keynes was a monetarist with a heart who favored the govt as borrower to put new money into the economy via the Fed. He did NOT favor tax cuts that would not result in creation of new money. Yet that's the kind of borrowing that takes place with supply-side tax cuts, because it's not linked to increased money supply growth. Without that, tax cuts only add to debt, not growth. Read Keynes again, especially chapter 11.
@Garlic Toast It's actually ironic that Keynes said that in Chapter 11, since chapter 11 is the legal section someplace that lays down some laws regarding bankruptcy, and those who fret about the US going bankrupt are also the ones who push for useless tax cuts whenever they get a chance.
For years and years, you and Larry Summers and all the other bigwigs have been pushing for more government, and now that the MMT has emerged and became popular rapidly and the country is on the verge of delving into the same trap that destroyed Romans, Ottomans, Soviets, EU and the like, I think that you (as a respected and decorated left wing economist) have some responsibility to recognize this major and imminent (Democratic Congress controlling the purse for the first time in 10 years) danger and speak constantly and strongly against it.
The absolute best line in this wonderful column is "He's well past the midpoint of his term...". Dear God, let there not be another, for we shall never survive it.
2
Soak the rich is an ugly phrase for an equitable and effective economic strategy (Eisenhower's 1950's anyone?) Why any individual would be able to accumulate more than say five billion dollars is completely beyond me. It can't possibly be spent and can only be passed down generation after generation to heirs who have no incentive or even ability to contribute to the society's greater economic health.
5
@Haynannu
"...it can't possibly be spent..."
Buffet spends $5 billion in many months.
"...even ability to contribute to society's greater economic health..."
Carnegie built an awful lot of museums and libraries. Gates is working full-time trying to cure AIDS.
The 16,000 taxpayers that Ocasio is targeting for destruction with her 70% (92% all said and done) marginal tax rate have over 20 million employees and created over 1 million of the 2.4 million jobs that were created last year.
That's greater economic health.
During the 1980 Republican presidential contest, George H.W. Bush chided Ronald Reagan for his reliance on "voodoo economics". Mr. Bush then proceeded to implicitly endorse that same magical thinking by serving as Reagan's VP for eight years.
I have wondered what would have happened if GHWB had not betrayed his principles for political advantage. Perhaps the GOP voodoo economics zombie would not have had such legs.
1
I've often wondered why mere decades of experience-based evidence fails to rid the right-wing of its self-serving economic delusions. Many Americans know the answer: facts really don't matter. It's the high-end tax cuts that do.
Oh, happy tax refund, folks!
7
“It is hard to explain something to a man when his salary depends on his not understanding it.”
@John LeBaron
"...economic delusions..."
From 1981 to 2000, real median personal income increased by 38%.
From 2000 to now? Not so good. 3.8%
What happened in 2000? The burden of personal income taxes on the economy hit an all-time record as surging personal income slammed into Bill Clinton's 39.6% tax rate.
That burden was higher than any time in history. Higher than in the 50s when we had a 93% income tax rate that no one paid.
Maybe higher income tax burdens discourage wage growth.
“And this rise in the capital stock will cause a surge in productivity. Except that there’s no sign of a surge in business investment: the report cherry-picks a few numbers, but overall orders for capital goods, probably the best real-time indicator, are showing nothing much.” Of course, this is wishful thinking because economic forces control humans instead of the other way around as you eloquently stated in the previous column.
@Enri
"There is no sign of a surge in business investment."
Net business investment in 2016: $448 billion
Net business investment in 2018: $648 billion
an all-time record
Increase $200 billion
Why is that?
I’ll tell you why.
It’s government by the 1%, of the 1%, for the 1%. (George Stiller quote).
The very wealthiest people pay the congressional politicians the most money to reduce taxes so that they can keep their wealth.
We have to get huge contributions out of politics.
10
@agbrodie
"...to reduce taxes..."
Taxes paid in 2018 were an all-time record. Despite the reduction in taxes for families of 4 making $53,000 or less to zero.
The "rich" not only picked up the burden for the lower and middle class, they paid a chunk more above that.
Why not eliminate taxes paid on SS income completely, for everyone, regardless of their total income? (COLA benefit increases would cease as well, until the savings people gained caught up to inflation. Then a COLA increase as needed. But never a tax on SS income.
The increase in income would be spent immediately and stimulate the economy, as opposed to the completetly predicted result of the current scam.
It’s easy to explain and would be supported by 90% of the voting public. It would be funded by the 70% tax on income over $10 million, and the proposed Warren yearly tax on net worth over $50 million, say 3%( or whatever was needed to make government revenue whole). And adjust the estate tax to kick in at estates over $1million on a graduated basis.
The closer on this goes something like “we tried it your way and it didn’t work, let’s try it this way. “.
Let Republican candidates explain how earners who make over $10million or net worths over $50 million would suffer.
11
@John C
“…tax cuts will do wonders for growth…”
Not all, but some might.
Tax cuts do increase growth. Tax increases slow growth down.
However, their impact depends on their multiplier effect.
In turn, the size of the multiplier depends on the marginal propensity to consume (MPC) of the people affected by the particular tax cut or tax increase.
The lower the income level of the people affected the higher their MPC and therefore the higher the multiplier effect.
Economics predicted that tax cuts for billionaires and centimillionaires would have very little stimulative effect (contrary to trickle-down theory, and Laffer curve notwithstanding) due to the relatively low MPC of billionaires and centimillionaires. This is exactly what happened.
On the other hand, eliminating the income tax on social security payments and the Medicare Part B tax should have a significant and immediate (“shovel-ready”) impact on growth and employment, because the recipients of these tax cuts have a relatively high MPC.
It might even give us the 3% annual GDP growth goal of the current administration.
Conversely, raising taxes on billionaires and centimillionaires (in order to reduce the budget deficit, for example) should not have a significant negative effect on GDP or employment.
However, reducing the budget deficit would reduce its twin, the trade deficit, thereby increasing GDP and employment.
@Keynes
"Raising taxes on billionaires and centimillionaires...should not have a significant negative effect on GDP."
Wasn't that experiment tried in 2016?
GDP growth in 2016? $488 billion
GDP growth in 2018? $1,015 billion
Full-time jobs created in 2016? 1.56 million
Full-time jobs created in 2018? 3.1 million
“…tax cuts will do wonders for growth…”
Actually, not necessarily.
Tax cuts do increase growth. Tax increases slow growth down.
The size of the effect depends on the multiplier.
The size of the multiplier depends on the marginal propensity to consume (MPC) of the people affected by the particular tax cut or tax increase.
The lower the income level of the people affected the higher their MPC and therefore the higher the multiplier effect.
A tax cut for billionaires will have very little stimulative effect (contrary to trickle-down theory) due to the relatively low MPC of billionaires.
On the other hand, eliminating the income tax on social security payments and the Medicare Part B tax will have a significant and immediate (“shovel-ready”) impact on growth and employment, because the recipients of these tax cuts have a relatively high MPC.
12
".... no, not even Reagan, who benefited from a severe Fed-generated recession early on his watch, followed by a Fed-generated recovery." Bingo, Batman. Falling interest rates were responsible for the Reagan "miracle" (at least to Republicans). I recall interest rates at around 12 percent near the end of Carter's presidency which fell rather rapidly after intervention by the Fed. If you compare similar tax cuts during the G.W. Bush administration when interest rates were already low, economic growth was tepid. Why don't Republicans just admit that they want to make the rich a little richer and be done with it? Apparently voters don't seem to care.
15
@RF
"Falling interest rates were responsible for the Reagan miracle..."
Maybe, maybe not.
30 yr fixed mortgage rate in June 1984? 14.5%
GDP growth in 1984? 7.3%, the highest growth year of the last 65 years.
Mortgage rates in June 2016? 3.6%
GDP growth in 2016? 1.6%
Micron said they were scuttling plans and cutting $500 million dollars from their capital budget. That has to reverberate all down the line of semi-conductor capital equipment manufacturers.
3
@Steve
Maybe, most likely spread over 4 years.
Net business Investment in Q4 2018? $760 billion
Net business investment in Q4 2016? $463 billion
Actually I think Krugman understates the seriousness of the infatuation with "austerity", i.e., trickle down economics.
I think many of the problems of the western democracies are due to an infatuation with austerity. The main observation is that it doesn't work: lower taxes on income from capital and lower regulations do not promote investment, they promote inequality.
But many (perhaps all) western governments, led by Reagan and Thatcher, bought into this mistaken theory. The population, in its anti-elite mood, decided correctly that government wasn't working for them, it was working for the rich.
Hence the Gilets Jaunes, Brexit, the northern league in Italy, and even Trump (though how (inherit 100 million) Trump managed to sell himself as anti-elite is beyond me.
11
@BarbaraAnn
"lower taxes on income do not promote investment..."
Maybe, but maybe not.
Net business investment in Q4 of 2018? $764 billion, an all-time record.
Up more than 50% from Q4 2016.
Maybe lower taxes have a greater impact than you believe. Inspire confidence in the future and stimulate capital investment.
The problem is, who doesn't like a tax cut? It's such a simple formula for electoral success and no voter will connect the tax cuts to anything bad that happens in the economy or to their own financial condition. Do tax cuts cause recessions and layoffs? Do tax cuts cause manufacturing jobs to be outsourced to Third World countries? To tax cuts cause mortgage interest rates to rise and savings account interest rates to fall? Sooner or later, tax cuts cause public services and public infrastructure to deteriorate but first only the poor and poor communities are hit. They cause the federal debt to swell, but Republicans are careful not to complain about that when they're in power.
10
@abigail49
Do tax cuts cause recessions and layoffs?
Not directly.
They will cause a recession and layoffs if they result in spending cuts.
However, they do increase the federal budget deficit, cause the dollar to appreciate, and therefore increase the trade deficit, which results in layoffs and can provoke a recession.
2
@abigail49
Do tax cuts cause manufacturing jobs to be outsourced to Third World countries?
Definitely.
The tax cut increases the budget deficit and makes the dollar appreciate.
The dollar’s appreciation makes American labor more expensive relative to foreign labor.
The American manufacturer may be forced to outsource production to a Third World country in order to compete with foreign producers and/or with American producers who may have already outsourced production.
1
So White House economists are like priests. They will not be daunted by their own repeated failures; they regard them rather ordeals. A brighter future will be just around the corner if we keep faith and endure criticism. The problem is this seems to be the best strategy to tether the supporters.
7
I didn't see Jabba the Hutt - must be an illegal alien - but I did see John Cleese in the list of interns.
The multi-trillion dollar gift to the capitalistic hoarders is working, otherwise the sun would not have risen again, and we wouldn't have a Super Moon tonight.
Income inequality is proof that tax cuts for the rich is working - working for the Republicans. Indeed, "cutting taxes on rich people and corporations will have magical positive effects on the economy" - on the economy of the wealthiest few and corporate titans. That's what Republicans really mean. They certainly don't mean that it has magical benefits on the economy of the rest of us who do not matter to them. "Yet the tax-cut zombie shambles on." Because there will never be "enough" for them.
The trump wall IS infrastructure to the Republicans. Real infrastructure investment that helps everyone in the country is, well ... socialistic! And that's why Republicans won't do anything on national infrastructure that is the essence of socialism.
By the way, what happened to the money for the wall that trump keeps telling his base is being built but does not really exist? Did he just pocket that money to his fake wall?
The only investments going on is investing in self - stock buy backs, bigger, higher and costly empty mansions in the sky and offshore accounts. Once the tax cut 'high' diminishes, these wealthy thieves will frack society for another hit of wealth transfers from society into their un-taxed coffers.
4
Why does inequality have such a bad name?
If you feel strongly about give your money away. Why do you want to give my money to the poor, disadvantaged and disenfranchised? Don't try to make guilty. It will not work.
I have mine, my children have theirs and we are keeping it.
It's just Darwinian!
Just like climate change you can't do anything about it.
@PAN Look for J.T. Hutt
1
@Pogo
Inequality has a bad name when the inequality is increased through outright theft, disenfranchisement, disadvantaging, impoverished and a rigged economic system that benefits those with the most.
Inequality has a bad name when society is gamed to transfer astronomical levels of wealth from it at the same time those with the astronomical wealth contribute negligible amounts back from their source of their wealth.
Society is the source of wealth. Without it we are all poor.
As long as you contribute your fair share back to the society that what you have depends on, no problems.
How do you force reason and fairness to prevail? We've been talking for years about the impotence of tax cuts to grow the economy, and about it's chief effect of increasing economic and political inequality. If the rich are too powerful now to tax their power and exorbitant wealth for the benefit of the rest of us, and restore the liberty, equality and fraternity of democracy that people of the past fought and died for, then what is the answer?
10
@Garlic Toast
"...the impotence of tax cuts to grow the economy..."
Maybe.
In 1980, the countries of the Eurozone had a larger economy than the U.S.
Today, we have a much, much larger economy than they do. While our jobs grew 65%, theirs grew less than 35%. Plus our new jobs were of much higher quality, more $/hour and more hours/week.
If you defund public schools and pay no attention to higher education, you can't complain about Trumps base who don't think, and perhaps can't think, critically, they just trust whoever tells them what they want to hear. Trump is good at promises, but his promises have no relationship to reality. His base has not found this out yet, but they will eventually, when it all starts to fall apart.
How long this fiasco called Trump can last is questionable, but it will start to unravel soon. You cant run a country like the US by disregarding the law and undermining government agencies, and by going on gut instinct and never doing your homework,never thinking things through, never relying on others with much more experience. It will all start to fall apart soon.
15
No one doubts the unassailable accuracy of Prof Krugman's revealing re-construction of this report. Proof will be in the nature of the criticisms of his analysis made by the other side. They will be in the form of general denials and pivots away from Prof K's specifics and segues into the wildest possible rosy scenarios. If Prof K were wrong, there's way more than enough professional economic firepower on PT's side to take the professor on in terms. The problems that will follow on the fundamental errors of the report and the continued implementation of the PT tax/economic policy will be significantly damaging. But the worst of the situation is tens of millions of Americans - whatever the 64 million who voted for Mr Trump in 2016 have either grown or shrunk to now - don't care, as evidenced by their unwavering uncritical support, not just of tax policy but of everything PT puts forth. What in blazes do fair-minded people, on reasonable assumptions, think/believe is ever going to bring them and us together?
4
@Jethro Pen
"No one doubts the unassailable accuracy..."
Perhaps, perhaps not.
In any experiment, you need a control group to get an idea of what would have happened if you hadn't applied a treatment (tax cut).
In our case, the countries of the Eurozone are an almost perfect control group. Their real gdp growth was $210 billion, ours was $680 billion. 1.2% versus 2.9%.
At least through the first year of the experiment, we can declare a preliminary success.
Fiction is the food of the masses they consume so well and lovingly. It's all about unreal hopes and satisfaction of desires.
4
@PATRICK
"Fiction..."
Maybe, but maybe there are a few facts for us to ponder...
1. Real economic growth in 2018? $680 billion versus $288 billion in 2016
2. Full-time jobs up 3.1 million in 2018, 200% of the 1.56 million increase in 2016.
3. Manufacturing jobs up 440,000 since 2016. 2016? Down 7,000.
4. Total job openings 7.3 million up 46% from 2016’s peak 5.0 million jobs
5. Unemployed 6.5 million in 2018 versus 7.5 million in 2016
6. Stock market: $29.2 trillion, up $7 trillion since November 2016.
7. Mortgage delinquency rate down 26% from 2016.
10. Combined Black and Hispanic jobs set ten all-time records in 2018, at higher wages than in 2016
11. Consumer confidence highest in 20 years, up sharply from 2015 and 2016.
12. Unemployment 3.8%, lowest since 1969.
13. Initial Public Offerings, $46.8 billion in 2018, up 250% from 2016.
14. Real disposable personal income up $597 billion in 2018 versus $244 billion in 2016
15. Total wealth $108 trillion, up $9 trillion since the 2016 election.
16. Business investment growth, driver for wage gains, up $334 billion in 2018 versus $52 in 2016
17. Total federal revenues, increased 3% from 2016 to 2018 Negative 1% in 2016.
20. Inflation in 2018? 1.6%
21. 3.7 million have escaped food stamp welfare
22. Murder down 6.3% in 2017 since 2016
23. Debt service on total federal debt is 1.6%, less than half of peak.
I seriously suggested months ago that Dem legislators needed to lead a federal strike because integrity and the rule of law are not concerns of the GOP establishment. Yes I know that’s unlawful too. Their president, judges and senators will ignore subpoenas or obfuscate as to such legally; then what? Just a week or so ago Sen. McConnell ‘publically’ proclaimed I control the votes of the Senate. Trump also threatened public violence by ‘his’ people if the government witch hunts grew more provocative!
Who in or by our government has the physical and lawful power to bring law and order and arrest certain public officials If needed? Guilt of massive criminally by high officials may not be proven yet but who is the ‘we’ of enforcement The GOP? The assumption seems to be our government will work properly on demand. But in reality it hasn’t because its levers do not have cooperative supervisors. Legal Gamesmanship is what we are witnessing and being entertained by. Let’s see where the evidence leads. Assume the worse, can any leader answer that simple possibility.
“We don’t want to get ahead of ourselves.” Really? What co-equal Branch is top dog then. It is time for the media to seriously engage the public on the worse case scenarios that are obvious. Divided leadership Is without wholesomeness or integrity of purpose and that’s a fact. Whodunnits is less important than what must be done and why. My grandfather was born a slave by rule of law not morality. Decision makers?
10
The Right has been successful at rewarding the Rich and punishing the Poor. That's hurt our country and helped the Rich.
The Right say we have to reward the Rich to encourage them to invest in the USA. Even if the Rich do NOT invest in the USA, rewarding the deserving Rich with reduced taxes will encourage everyone else to become rich.
Everyone else has NOT become rich, but saying they can sure sounds nice.
The Right say we also have to punish the Poor to encourage the Poor to work harder. We need to reduce government benefits, so the undeserving Poor, like infants and toddlers of parents working at minimum wage, will not get used to receiving food, clothing, healthcare, and shelter from the government.
That has happened. Many of the Poor do not seek any government help at all. They get none.
God bless the USA.
26
@BigGuy
"Punishing the poor..."
Maybe...but, maybe not.
In 2018, the economy set ten all-time records for combined total employment of Blacks and Hispanics driving their unemployment rates down to the lowest levels ever recorded and their degree of equality to the highest levels ever recorded.
I think the Dem House has a window to do some really things for the economy. For example, they could introduce and pass a bill that would give a $1500 bonus to everyone filing a tax return. That way the same $150 Billion that the 2017 Repub tax bill cost in revenue would go to the little people instead of to corps and the more well healed. They could also pass a bill that would provide money for every airport for modernization and airport transportation infrastructure. Let's say another $150 B. Trump loves nice airports (of which we have not too many at the present). The increase in the national debt wouldn't matter any more than it mattered for the Repub bill but fixing up our airports and transportation systems would be a very sound investment to borrow for 30 years at 3% interest. The gov could hold it on its books as an asset so there would be no increase in the deficit for the program. I think those measures would really stoke the economy, provide lots of construction jobs all over the country and provide lots of consumer spending money. The Repubs should llike it, (the deficit doesn't matter), it's a tax cut, and it's a big infrastructure program which is not really deficit spending (it's an investment), it's long term borrowing for new construction, kind of like buying a new house with a 3% 30 year mortgage. This kind of program could even maybe get the Repubs and Lefties, eh, I mean Dems working together.
5
@lester ostroy
Yea, you mean regressives and democrats.
Trump conducted an experiment, he cut taxes 14%.
Then the economy grew 2.9%, the first time in history that the U.S. has grown more than $1 trillion, up from Obama's $488 billion in 2016, 1.5%. More than a 100% improvement, even with inflation adjustemnt.
What did the control group grow? The countries of the Eurozone grew 1.2%.
From 2013 to 2016, total federal revenue growth by calendar year followed this trajectory:
2013: 12%, Obama increased marginal tax rates by 25% on our most successful small busineses.
2014: 8%
2015: 4%
2016: a negative 1%
We were in a death spiral.
Now, despite a 14% tax cut, total revenues are 3% higher than in 2016. And, they will grow every year into infinity.
2
@John Huppenthal
I see you're comparing apples to hand grenades.
Perhaps, if you want people to believe you, you should show parallels.
For example, economic growth in 2013, GDP was 1.8%. But then in 2014, it was 2.5%. 2015 was 2.9%. Growth was pretty good considering all those tax increases. Seems like they might even correlate with growth.
go figure.
65
@John Huppenthal
"And, they will grow every year into infinity."
Funny.
I would hope that the economy grew under Trump's tax cut because we borrowed a ridiculous amount of money - and gave it to the wealthy - to pay for it! With the unsustainable tax cut already running out of steam, it is highly unlikely that government revenues will "grow every year into infinity."
I stopped reading after that first lie, the one about Trump cutting taxes 14%. It has something to do with being disgusted at seeing somebody try to pass off the corporate cut as one everybidy got.
Honestly, are you guys even TRYING any more?
1
The Tax Cuts and Jobs Act was a triumphant Trump heist as the economy was already steadily and vigorously growing. It was a payoff to the wealthy individuals and corporations who financed Republican power. It was a grand deception as Trump called it a "Christmas Gift". But to whom?
Today, another grand deception occurred as Trump sought to appear as a hero of Auto workers in Lordstown, Ohio where a GM auto plant was shut down to focus production on higher profits making gas guzzling trucks and S.U.V.'s.
It all happened because Trump repealed the Obama regulations that mandated more fuel efficient vehicles.
Trump tried to deceive everyone into believing he was a manufacturing hero. Trump is ultimately responsible for the GM plant shutdown.
27
Voodoo and Batman are appropriate words to use when describing the tax cut that isn't, and the instransigent Republicans who refuse to challenge it. Of course the very wealthy are pleased with the cut--after all, they paid for it.
But the people who puzzle me are the not-so-wealthy Republicans who cling to every word and act of Trump like true believers, i.e., cult members. Since emotional comfort is central to the allure of cults, the followers of Trump are typical of cult members--they seek out people or things that can soothe their fears and anxieties. I don't understand that state of mind, and wonder every day why they don't question the Republican party's voodoo economics which bring them no benefits.
16
@Elizabeth Bennett
"...tax cut that isn't..."
For some people, yes. But, not for all people.
Congress cut taxes for all families of four making $53,000 or less per year to zero.
Here we have the classic struggle, ok. war between science and magic. Do we follow the science of economics or does the magic of voodoo economics rule. This divide has probably been going on since the discovery of fire. Someone saw a need and the possibility and figured it out, not modern science but still science. At that point I'm guessing that 75% of the people saw magic not science. And now, after how many centuries, we have Professor Krugman showing us the science of economics while 75% of the people would rather believe in the magic economics the Ruspublicans profess. You would think we would have made more progress.
10
@george
It's really starting to look like we humans are not going to be smart enough to save ourselves.
1
@george
"...science of economics..."
What is the science of economics as it applies to taxation?
The literature seeks to explain the impact of taxation on growth with three lines of attack:
1. Compare economic growth across years with different tax levels.
2. Compare countries with different taxation rates and different growth levels.
3. Compare different groups of taxpayers subject to different taxation rates.
But, has that body of literature played it straight with the rules of science- reasonably controlling for other factors that affect growth such as welfare and regulatory effects? Has it given proper weight to all three lines of attack? Has it made the proper assumptions when comparing different groups of taxpayers? Was the wealth accumulated by Apple employees really independent of Steve Jobs accomplishments?
Trump's definition of economic growth is "stocks go up." An appropriate barometer for someone who's attention span rivals that of a poodle.
The thing is, the middle and lower class economic groups do not have the extra income to invest in stocks. Some have retirement accounts through their employer, but many are forced to withdraw early for things like health care and the rising cost of living. As for the trickle-down effect, wages are still stagnating, despite what Paul Ryan told us about the extra dollar his assistant now takes home in her paycheck every week.
I think an interesting parallel can be drawn here between Trump and the psychological mindset of his base. They prefer short-term rewards (which his base never even receives) to long term ones. Such are the cravings of the over-stressed and under-educated.
The equity market has been propped up by the corporate tax cuts (which will not expire, unlike the individual tax cuts). But even that won't last forever. Another stock downturn is coming, and although I will certainly lose a good chunk of money, it may be necessary to get enough voters to turn on the president.
14
please don't insult Poodles!! they are smarter than the WH econs.
1
Why the need to denigrate poodles?
1
"Yet the tax-cut zombie shambles on. Somehow, despite decades of practical failure, there’s a phalanx of billionaire-funded think tanks promoting trickle-down economics, and a loyal army of right-wing politicians supported by wealthy donors who keep insisting that they have faith that the next tax cut will do everything it promises. Really."
...and a bunch of centrist Democrats who think that compromising with policies that never work will somehow cause Republicans to be nice to them, even though Republicans have greeted 25 years of compromise with rightward extremism, insults, and investigations.
Maybe if one of the parties actually advocated policies that are in the interest of the American People, then people would actually vote for their interests?
You can't beat the Party of Trump by compromising with them. You have to LEAD in the opposite direction.
26
Where’d you have it in mind to lead us? The sudentenland?
We are no longer the country that built the interstate system. We are no longer the country that put a man on the moon. We are no longer the country that fought in WWII. We are not a country that is in the forefront of any good social movement. We have a president who tweets a lot, who characterizes the media as an enemy of the people, and who lies even when confronted with recordings of what he said. We have a vice president who can't be alone with any woman who isn't his wife. We have a senate majority leader who has sold his soul for the power of having a "Republican" in the White House.
We are not a country that believes in shared sacrifice. We are country that is more comfortable forcing others to give things up. We don't value hard work. We don't value experience. We don't value life after pregnancy. We are not the country that helped Europe with the Marshall Plan after WWII. We can't even help ourselves and we do need our own Marshall Plan, NOW.
We have become a country that refuses to fund basic research, gives the richest corporations and individuals whatever they request to the detriment of 99% of us. We are not a Judeo-Christian country. We are a vulture capitalist country. The resulting anemia is having an effect.
127
@hen3ry --
just a thought..maybe pence shouldn't be left alone with another man, without his wife.
2
Hen3ry sounds like “they’re all the same party” “all bought and sold by the oligarchs and lobbyists.” IOW, just like the “all is lost” Bernie Sanders anarchist crowd. Did I leave out “Wall Street?” I know he’s only referring to the more conservative Democratic members of Congress who vote R because of who they represent not to pander to Republicans.
All of which sounds exactly what Republicans like David Brooks resort to when trying to normalize their Party’s behavior while watching it degenerate as far back as 2014 when Giuliani praised Putin’s leadership in the Ukraine on Fox “News.” He was preceded in 2014 by Ron Paul, Buchanan, Franklin Graham in their praise of Putin on moral grounds. It’s almost as if something happened in 2013 that gave them the nerve to finally go public. All the “never Trump” George Will’s & Bill Kristol’s watched. I wonder what Mueller and Comey we’re thinking? Maybe it was all familiar territory even at that time.
@hen3ry
"We are a country that refuses to fund basic research..."
Maybe, maybe not...
U.S. Health Care research in 2018? $50 billion
European Health care research in 2018? $16 billion
Total R&D as a country in 2018? Over $600 billion, 3% of our GDP.
No other country came remotely close to $600 billion.
Next best was China at $250 billion.
Larry Kudlow, credentialed as a "former Reagan White House official" recently of CNBC as their resident on-air purveyor of "trickle down" malarkey (along with about 75% of CNBC's other on-air personalities) continues the ever ending quest for benefits of Tax Cuts for corporations and the 1%. Except now he's with the Trump Administration. What's his one qualification that would put him back in another Republican White House? The answer is his decades of promoting to the American public with a straight face "trickle down" economics and tax cuts benefiting almost exclusively the wealthiest. Almost my entire adult life I've watched as the Republican party scammed the middle class of it's economic life blood. If nothing else take Larry Kudlow permanently off the television, I don't like throwing shoes at my age.
35
@Robert Pohlman
"...trickle down malarkey..."
When has supply side economics not rescued us?
Trump reduced tax rates in 2017, in 2018 we had real economic growth of $680 billion, up from $290 billion in 2016
Reagan reduced tax rates from 70% to 50% in 1983, economic growth was a stunning 7.3% in 1984. The highest in 65 years
Reagan reduced tax rates from 50% to 28% in 1986, economic growth was 4.9% and 3.6% in 1987 and 1988
Reagan tax cuts created the highest six year period of growth, 31% since the Kennedy tax cuts in the 1960s (37%)
Congress overrode Truman’s veto and cut taxes in 1948, we had the highest three of the highest quarters of growth recorded 16.4%, 12.7%, 13.6% the 1920's was 37%
Kennedy reduced rates from 91% to 70%, growth was 6.5% and 6.6% in 1965 and 1966
Clinton reduced capital gains taxes by 29%, economic growth in 1998 and 1999 was 4.5% and 4.7%.
Bush2 reduced tax rates in 2001 and had economic growth of 18% compared to Obama’s 13%
Czech Republic reduced their personal income taxes to 13% and corporate to 19%, civilian employment rate climbedto 74.6% and growth averaged 4% from 2013 to 2017.
Nigeria took personal income tax rates to 24%, growing at 7% per year for over 10 years and now has the largest economy in Africa.
England eliminated the personal income tax in 1815, averaging over 4% GDP growth the next 35 years.
Vietnam? Grew 6.5% and 9% after reducing their taxes below the U.S.
Whenever there is republican tax theft 2 things happen:
1. There is the assumption (built into fancy graphs) that the majority of said tax theft (going to the rich and corporations) will somehow be ''unleashed'' into the economy. Perhaps a mere 10% or so usually does get back in through manufacturing upgrades, but the rest (90% for you folk doing the math) goes into the pockets of the rich'offshore and into buy backs of shares. (which essentially does the same)
2. The tax theft is put on the country's debt/deficit sheet, while there are claw backs and downloading of all of the costs to the poor and middle class - as social programs get cuts, administrative costs are raised or implemented, tax credits are revoked and everything generally gets privatized. (republican gospel)
When it all doesn't work for the rest of us, then automatically and without reservation the blame is put on Democrats that they are the cause or didn't go along with the program. Then inevitably Democrats get back into power, and try to balance the budgets once more, but are filibustered.
The cycle starts inevitably all over again when people are duped once more, and vote against themselves.
Time to break the cycle.
41
You know what, I’m so beaten down by all of it, I no longer want to get up. My family and I have experienced multiple personal calamities but we overcame them. I endured multiple corporate calamities as a result of M & A activities, changes in Management, changes in Corporate direction, changes in geolocation to the point where I was personally chewed to bits. If not for my children and grands, I could care less what happens economically to this country. And I’ve utterly given up on it culturally. Any population that would hand the reins of power to a malformed human such as our President deserves the misery into which he has plunged, swamped us.
I’d like nothing more than a grain of hope that the preponderance of the US population strives for Good for its own sake, beacause it is the most humane choice. Not because they can leverage it into a Bezos fortune, a Trump election, or. a personal/corporate tax break.
When I came of age, being American meant being rational, challenging, empathetic, and, mostly, an expression of human kindness. We were “cowboys” to the world because we cared enough to launch bold military invasions against crazed despots, operationalize the Marshall Plan to rebuild former enemies, pass the Voters Act, enforce anti discrimination laws, trigger The Peace Corps, and land on the moon.
Again, I can barely get up, not due to medical infirmity, but due to that absence of hope for a better way, the road less traveled, the heart of 1776.
84
Dr. Krugman - while I am not an economist I took enough economics in college to know that in terms of supply and demand it is the demand" that really matters. Companies do not invest in new plants and equipment unless they perceive more consumer demand. There is no such thing as a "build it they will come" way of doing business in capitalism. Again, companies and businesses must feel consumer demand before they make major investments. Supply does not build Demand, Demand creates Supply. The tax cuts and deregulation did not increase aggregate mass market demand, so it is no surprise that companies are buying back their own stock instead of investing in production for demand that is not there.
Given that we are a mass market demand driven economy, why in the devil would anyone believe that having a tax cut where 83% of those tax cut dollars went to the top 1% would somehow boost consumer demand. Was the idea that Warren Buffett, Bill Gates and others would all go out and buy lots of stuff? Is that what the GOP legislators were thinking?
34
@Sparky
I could be wrong. Perhaps what they were thinking was something like that, which might tend to indicate, as one premier economist-historian of the past thought, that supply and demand were artificial ideas, imposed upon the superstructure dominated by capital and manufacture. The given seems wrong; it is that we have a market-driven economy where the success of advertising and research combine to inform those who direct the market (s) how successful products can be and for how long, so that, in the interim, plans can be devised to successfully market the products again, once they have outlived their prime use value. Those things combined with innovation, the marketability of which depends upon those who control as well, constitute the controlled market, which is just about all there is to the dictatorship of capital.
3
@Sparky
So true Sparky. After all, how many new yachts can a billionaire buy because they have a few extra dollars?
The idea that this wasteful tax cut to the 1% would spur demand is ludicrous.
They have already bought all the vacation homes, jewelry and yachts they could ever want without the tax giveaway to them.
1
@marian
"...wasteful tax cut...would spur demand..."
Real gdp growth in 2018? $680 billion.
Real gdp growth in Eurozone 2018? $210 billion
Real gdp growth in 2016? $290
Maybe it did spur demand. Or, maybe it spurred confidence and investment in the future. Or, maybe both.
I think you begin with the appropriately named Laffer Curve. And then you end with the appropriately named Laffer Curve.
Which reminds me, laughing is an emotion closely related to crying. Has anyone here with other than a whole grain W-2 income statement and perhaps a few 1099s had a look at the results of "tax reform"?
If, for instance, you sold a house in 2018 and didn't reinvest the proceeds in another personal dwelling, well, have fun. Than have a strong drink or two.
I think the so-called tax "reform" Act should named The Federal Full Employment Act for Tax Preparation Firms, Accountants and Tax Lawyers.
18
@CPMariner
"...Laffer Curve..."
Laffer had this idea that you could get higher revenues with a lower rate down to the revenue maximization point.
In 1980, the top 1% of taxpayers, those with an AGI of $80,000 paid $47 billion in taxes at an average rate of 32%, 19% of all personal income taxes paid.
Adjusted for inflation, $80,000 in 1980 is $237,000 today.
In 2018, taxpayers with an AGI of $237,000 or more paid $900 billion in personal income taxes at an average rate of 24%, 55% of all personal income taxes.
Laffer seems to have nailed it.
Someone please tell me what significant pieces of legislation the Republicans from Reagan onward have passed whenever they've been in charge other than tax cuts that inevitably and invariably are designed for the benefit of wealthy individuals and corporations, and for the purpose of then enabling the Republicans to wring their hands about the extent of deficit and the debt so they can have an excuse to cut social programs that actually help middle-class and poor Americans.
The Republicans are a one trick pony: tax cuts. I'm not sure their members even understand anything other than tax cuts -- with the possible exception of gutting the Voting Rights Act.
The execrable Ann Coulter once famously said: "If Democrats were smarter, they'd be Republicans." As usual, she got it precisely backwards.
22
Don’t forget Katherine Janeaway (Star Trek), John Snow (Game Of Thrones), and John Cleese!
17
Emaciating the state has been the central tenet of the radical right for centuries, but a key twist over the last 50 years is the concerted efforts of well-heeled donors and their plants in the academy to take this "voodoo" mainstream. "Public choice" economists and others of their ilk have indeed been successful at taking these ideas mainstream. Now, "everybody knows" that lower tax rates stimulate economic growth, never mind that there has never been empirical evidence for this claim. But, these "theories" were never intended to be empirically validated. They were intended to be cultural tropes--tropes that groups with ulterior motives could use justify policies that systematically marginalize organized labor and people of color. In other words, it's not just about naked, economic self interest. It's about building and maintaining minority rule.
19
When politicians in power are bought and paid for by their wealthiest constituents, the trickle down myth will continue to flourish. Theoretically, the idea of wealthy corporate executives investing their newly found corporate wealth (from tax cuts) in business expansion and higher wages, certainly holds some hint of plausibility even though its mythological appeal never pans out in reality. A great many members of Trump's working class supporters actually believe Trump is legitimately concerned about their plight while simultaneously believing he possesses remarkable business acumen. Some twisted logic might conclude that a leader of the free world who says and does such outrageous and vulgar things, heretofore anathema to the noble office of the US presidency, must be sincere.
On a much more visceral level, some employees might fear the imagined repercussions of their employers not receiving tax relief, in the form of downsizing and layoffs, if not outright bankruptcy. Certainly, attenuated union power and influence only bolsters the power and influence of corporations over their employees and the ability of corporate fat cat executives to only get fatter.
11
Someone needs to explain to me how it is that our country prospered and was "Great" when the tax rates were higher back in the 50s and 60s. While there were many other factors that created the economic boom for the country and the working/middle class, the way the Reaganomics-trickle-down-voodoo economic tell it there's no way it should have been possible given the tax rates.
If only economists and progressives could just keep hammering that home at every opportunity to the average guy making average an income he might not vote GOP
21
@CaptPike66
I don't know the answer as to why some people think America was great in the 1950's and 60's but there's a guy named Jim Crow who does.
One reason cutting taxes is a popular policy is because people don't understand what the taxes are being used for. They think that any action taken by the government is detrimental to them, to the rich, or just a waste of time. I've listened to older people who should know better saying the most fascinating things about social security, unemployment, regulations on toxic substances and all of them can be boiled down to this: our government isn't doing anything for them. Who do they think gives them social security? Who pays for unemployment at the state level? Who gathers information about all sorts of chemicals at the federal level and decides what needs to be controlled or limited? (Hint, it's not the industries producing those chemicals.)
Americans, more than others, seem to think that being rich ought to insulate people from paying taxes. It's as if anyone who can't make millions should be penalized for it. But the rich use the same roads we do, breathe the same air, use government services, and are citizens or residents of America. Why shouldn't they pay their fair share in taxes? That goes for rich corporations as well.
Tax cuts hurt most people when it comes to government services that provide assistance. But, based upon what I've been hearing, most Americans don't think they'll ever need assistance. In a perfect life maybe. Life is not perfect.
50
Excellent insight. I’ve long believed in a tipping point of pork barrelling and outright corruption, after which citizens lose faith in their representatives’ commitment to treat their taxes w respect. The US is long past that point.
12
@hen3ry, Unfortunately most people stop thinking beyond their front doorstep. Most people bristle when you mention that there are many other factors, outside their control, that have had a hand in their successes. Most people bristle when you suggest that they might have had a personal hand in their failures. Most people think that the time they helped their neighbor lift a couch into the back of a truck is tantamount to an all-around, generous demeanor. Above all, most people want the government to "keep it's hands off their Medicare."
4
@Bartleby S
It's really starting to look like we humans are not going to be smart enough to save ourselves.
1
I wonder if the tax cuts could have actually even surpassed investment a little. Companies make investments because they think it is a path to greater profits. But the tax cut gave them huge windfall profits without having to do anything. At least for a while, this may have removed much of an incentive to work hard for their increased profits.
10
@Larry Figdill correction - supressed.
@Larry Figdill
"...i wonder if tax cuts surpassed investment..."
wonder no longer
the tax cut of 14 percent of income tax revenues of 2.5 trillion dollars amounted to 350 billion dollars
business investment didnt slacken in 2018, it hit an alltime record 3.7 trillion dollars in q4 of 2018 up 14 percent from q4 of 2016
Krugman wrote a week ago that labor productivity has risen 150% during the last 5 decades and links the statement to a website where I found the following text:
“Since the beginning of 2011, growth in real output in the nonfarm business sector has been slow, averaging just 2.7% percent. And most of the economic growth has been driven by increases in labor inputs and not by increases in labor productivity. The graph shows real output growth (green line) decomposed into growth in labor input (red line) and growth in labor productivity (blue line), where productivity is measured as real output per hour. Given that the output growth rates are only slightly different from—either a little above or a little below—growth in hours, the majority of growth in output has come from increases in hours instead of increases in labor productivity. Labor productivity growth averaged 0.7% over this period, accounting for just 27% percent of real GDP growth.”
Labor productivity growth amounts to the average growth of how much goods and services each individual can consume and, thus, is the driving force behind increases in the standard of living ... if labor productivity growth held steady at 2%, which is the rate seen in the expansion from 2001 to 2007, the living standard would double in 35 years. If labor productivity continues to grow at 0.7%, it would take 99 years to double the standard of living.”
Vodoo all right!
5
@Enri
What would the productivity numbers look like if we had a much healthier consumer demand, say if every business had 25% more customers? Meaning, are the slowing productivity results being driven in part by lackluster consumer demand?
4
@Enri
growth in 2018? 2.9% or 3.1% pick your poison.
gross business investment? 3.2 trillion increasing at an annual pace of 300 billion up from the 260 annual pace from 2010 to 2016 and the negative 76 billion in 2015/16
is confidence in a lower tax future helping us? was 2016 an inflection point in which we could have stalled indefinitely?
@Sparky
maybe your questions will be answered when the analysis of 2018 is completed. U.S. median household income likely increased over $1,000 to $62,400 as compared to the eurozone going up $100.
Yes, we all do know the answer. There's no boogie man here.
Pure and simple, folks don't want to pay taxes... at all really. And someone else's wants doesn't translate into taxpayers needs. Infrastructure is a common need, but welfare programs though helpful in acute situations, were never meant to treat chronic conditions. Thankfully that's why folks have two parents who care about them because the taxpayer doesn't seem to. The rich have gamed the system and the politicians. That's why tax policy favors the wealthy. It's not a new concept.
15
@No big deal
Helpful to acute but not chronic. I see. So if an auto accident leaves your leg with serious bleeding and a shattered femur, that's acute. So clamp off the bleeding, set the bone and be one your way.
A lifetime of serious pain from the sciatic nerve? That's chronic.
So take two aspirin and call my answering machine in the morning.
2
I think Professor Krugman missed that John Cleese, another well known economist, also had a hand in preparing this report..
14
@Jay Kreissl Also Jon Snow is misspelt as John. They knew nothing, apparently.
@Jay Kreissl
And a special appearance by Mustafa Kamel, John Snow, Aunt May... I think there's a few more there.
Also Captain America aka Steve Rogers
Based on the content and who their master is, I was expecting The Joker and Lex Luthor as lead authors. Joking aside, a number of the contributors were quite obviously ashamed enough to not want their real names associated with this obscenity.
8
People believe what they want to believe. If it were only about economics, you'd be on pretty solid ground. The message and all its supporting facts get buried among arguments about race, abortion, guns, immigration, climate change. Republicans have been smart about claiming all the single-issue people as their own. Economics hardly registers with them.
18
Just remember: Doctor Carl Austin Weiss is was a great American hero.
2
I hope that there is regime change and that the very first thing that they do is get rid of this tax cut and if possible enact a tax plan that will look more like taxes were pre-reagan. That will enable us to deal effectively with the infrastructure and health care and student debt. I would like to see payments made to the US for those items be used like charities. That would get this country moving in a positive direction.
9
@trk
"...enact ...taxes that were pre-Reagan..."
hasnt that experiment been run? in 1980 france stuck with pre-reagan tax levels.
theyve added no work in 38 years while weve added 95 billion hours
our increase in tax revenues has dwarfed theirs even though they have much higher rates
they were 4% of the worlds economy in 1980, now they are less than 1.4%
maybe growth and tax revenues can be higher at lower tax rates
The current economy is being driven by the extremely low interest rates and the ensuing consumer spending. Banks are performing well because of this unusual phenomenon. However, there are some warning signs we should not ignore such as record automobile loan defaults. If the Fed increases their interest rates, and credit card interest rates increase only moderately, there will be more defaults. I'm expecting a "significant" market and economic correction soon.
I don't see stocks maintaining their current levels as buy-backs are usually a one-time occurrence from the repatriated profits.
4
@Lawrence
"...record automobile loan defaults..."
consumer debt defaults dropped to 8.6%, the lowest level ever recorded in
mortgage defaults are down 26% in two yeas to levels not seen since 2007 before the housing crisis
debt service as a percent of disposable personal income is 5.6% down from a peak of 6.7% up from a low of 4.5%
the auto loan issue is a lot of new buyers who arent used to making payments, but they are learning
Republicans keep looking for the fountain of youth that will renew America. It's not another tax cut.
The fountain is literally our youth, our adults, our seniors, our immigrants. It's a 21st century economy that doesn't depend on burning dead animals for sustenance. It's the country's infrastructure.
The Republicans don't have what it takes to understand any of this. Why? It's not another zombie tax cut.
11
@Martin
another zombie tax cut"
real gdp increase in 2018? $680 billion
eurozone real increase for their 540 million people? $210 billion
arent europeans the zombies?
An economist from the Reagan era gave a simple explanation of how "Trickle down economics" works. And called it, "Horse and sparrow economics". Feed the horse the highest quality expensive feed available, and later the generous horse will leave something in the road for the sparrows to fight over.
22
@Le Jeune
isnt that a better description of government?
full-time jobs created in 2018? 3.1 million
full-time jobs created in 2016? 1.56 million
100% improvement
The tax cut has not been, as Prof. Krugman puts it, "a big fizzle."
It was intended to accomplish two things: First, to distribute another massive upward transfusion of foregone public revenues into the hands of those persons and organizations most able to pay substantial taxes, i.e., those interests in our society least in need of another big wet tax kiss. And second, to further encumber the federal government with debt as part of a long-term Republican strategy ("starve the beast") to soften up the public for cuts to social programs and just about any other government effort that benefits ordinary people.
Far from "fizzling," it has proven spectacularly successful in both of those goals.
It has not produced substantial "growth" or "jobs," because those were not its intentions. Those were just the rhetoric used to "sell" it to a public whom its sponsors hoped would again prove gullible. We know this because the tax law did not require that all of the taxes forgiven to the wealthy had to be used for the publicly claimed purposes of the cuts. The Congress and president who passed it were either amazingly naive or amazingly duplicitous. After a generation of this, I'll choose the latter.
The rich are rich, and corporations are rich, because they are so expert at taking more than they give, and at buying the influence to rig the system in order to perpetuate their economic advantage. And that's why such economic policies are called "trickle down," NOT "pour down."
42
Reasons the tax-cut zombie shambles along: some know they are actually doing well from the cuts, some think they are doing well, and some believe that their turn to do well will kick in soon. Another reason is that the people bringing America the tax cuts are also the people who promote Gorsuch and Kavanaugh and a host of other right-wingers to federal benches. And of course, America will have the strongest military in the history of the world, the cheapest, most plentiful energy in the world, and the least restraint on corporate productivity and human ingenuity in the world. And all these factors rest on a degree of tribalism that is more divisive than it has been for decades. Such divisions affect all parts of society, so that we have single-issue voters, vanity voters, and downright rejectionists who have no faith in politics. Unless we--and the Krugmans of America--find ways to bring this home to our neighbors, we face four more years of Trump.
6
@Des Johnson
"...some believe that their turn to do well will kick in soon..."
maybe it did
in 2018 the economy set ten all-time records for combined total employment of Blacks and Hispanics
in 2018 wages went up at their highest rate since before the gret recession
in 2018, real disposable income went up $597 billion up from 2016's increase of $244 billion
"The thing I said would work didn't work. What will work is doing even more of it."
24
My guess is it was a republican,
who sold it for enormous profit, then told everyone it was for their benefit that he did it.
I like to think that he had to use his money for fuel to stay warm as he lay dying of starvation.
@jh Indeed, every time - so far - I hit myself in the head with a 2x4, it hurts like crazy! But next time, ahhh, feel the (tax) relief. I still wonder what went through the mind of the person/people who cut down the very last tree on Easter Island...This time, the gods will make it right.
10
@David This wonderful comment makes me wish the NYT had emojis for its comments. Thanks.
It’s not news that the tax cuts are not producing the economic growth that Mafia Don and his minions conned The Deplorables into believing. All Mafia Don did was make the wealthy wealthier (especially him and his mob family.) Now, with the deficit exploding, the needs of the American people, for example infrastructure spending, won’t happen. Larry Kudlow, a business media personality who knows little about real world economics, should be taken to the woodshed for perpetuating a fraud on The Deplorables. Assuming Dangerous Donald doesn’t destroy civilization in a nuclear war with N. Korea, future historians will look back on this period as one of the saddest and most bizarre times in history.
19
The only thing wrong with your comment is that these people make the mob look like geniuses.
The Republicans via trump enacted tax cuts as a way to further transfer the wealth created by working people to the people who consider letting their investments work for them. Republicans have one god and it is money. They worship money by worshipping people who have money no matter how it was accumulated. trump supporters would give their daughters to be used if they could just touch the buffoon in the whitehouse. If things don't change, America is finished!!
Hopefully there will be a strong national leader rise from the ranks of the Democrats who will lead us back to American Greatness.
9
@Polsonpato
Is "strong national leader" an oxymoron when applied to the USA in 2019?
Paul Krugman: "Why is that?" Irrational tax-cut zombie exuberance?
4
Trickle down and "A rising tide lifts all boats," right? How many times before have we heard this?
6
@A Rock In My Shoe The only "rising tide" in this country is produced by global warming and is flooding Miami. My hope is it reaches Mar a Lago soon.
1
@A Rock In My Shoe
'rising tide lifts all boats"
A few boats were lifted.
Fulltime jobs grew 100% faster than in 2016.
Real disposable personal income grew $597 billion in 2018 up from $244 in 2016.
Ten all-time records were broken for Black and Hispanic employment.
3.3 million people quit their jobs to move to higher paying and also more satisfying work.
a lot of work remains to be done. over 50 million people are dissatisfied with their jobs. many companies simply don't know how to create cultures that support employees.
millions of inmates are being released from prison and jail. for the first time, with job openings outnumbering the unemployed, they have a real prospect of jobs and turning their lives around
@arjayeff
"...global warming...is flooding miami...."
perhaps not yet. At current ocean rise rates, the ocean will rise 5 inches by 2100 and the ocean will be 3 yards closer to the resorts in miami.
instead of walking 100 yards to the ocean, they will be walking 97 yards
WE do indeed know the answer.... tax cuts fuel big donations into the re-election coffers of the Republican deceivers.
15
all of this with a bigger tax cut.. doesn't it seem simple that increasing spending with reduced taxes can hardly result in good outcomes for the economy
5
Remember this from the NYTimes at the end of last year?
https://www.nytimes.com/2018/10/17/business/trump-tax-cuts-revenue.html
Even by the end of the tax giveaway's first year, the numbers said it all. The wealthy are garnering an even greater share of the national pie, paying less in tax, and as a result there is no infrastructure plan because there is no money to pay for one.
The economy in 2018 as measured by the GDP did well enough, even grew, and many workers returned to the work force (mostly to low wage jobs), BUT comparing month by month tax revenue from 2017 to 2018, in absolute numbers tax revenue actually shrank.
Who ever would have expected that outcome when tax rates were drastically cut on those who have the money to pay significant tax?
No one who had graduated from elementary school.
13
Trickle-down voodoo is not limited to the US. It formed part of Emmanuel Macron's election platform. And even today his government relies on it to justify its reducing taxes on the wealthy.
5
@Choderlos, As part of a gig I've got, I've been following Macron rather closely, starting from just before the first calls that would begin the Gilets Jaunes (GJ) phenomenon.
Remember that the first significant message Macron gave the GJs was "You are right."
Macron didn't abandon his platform but he has changed a lot of details and he still has 3 more years in office.
I think The French are beginning to understand what he wants to achieve by the end of his term.
@Choderlos
"trickle down ...part of Macron's ...platform"
Nobel Prize winner Edward Prescott found that the higher taxes of France resulted in people starting work later in life, retiring earlier, taking more sick leave, taking more vacation, working less ambitiously, working less intensely, working less effectively and producing companies worth less.
As a result, the stock markets of Europe are at less than $8 trillion, less than 60% of GDP forecasting continued weak growth in their economies while ours is at $30 trillion, 150% of GDP forecasting over 3% growth.
@Harold
Yes, maybe we too can have $6 per gallon gas, 90% higher electric bills and use toxic firewood to heat our homes and hang our clothes out to dry.
A nation with crumbling highways, decrepit airports and decaying bridges is ill-equipped to compete on the global economic stage. Throw in a poorly educated populace without access to healthcare and you have a recipe for disaster.
Don't the wealthiest Americans also need decent airports and roads? Aren't they concerned about finding qualified employees? Isn't the drain on our economy of an expensive and inefficient healthcare system worrisome to them?
I guess not. They'd rather have a tax cut than a modern, healthy nation. After all, they can always skedaddle to the Cayman Islands when things really go to pot.
The American century: nice while it lasted.
42
Good thoughts, but no, the ultras do not need public roads and nice airports. They have their own infrastructure, private terminals and helipads at their estates in Grand Rapids (lookin’ at you Betsy) and Marco Loco. They no longer need public infrastructure even for their businesses - they’re not making anything, just churning public funds for education and the DOD through ‘elite’ banks. They are playing the float, it’s that simple. Why fund a road when your personal banker or hedge fund flunky will just offer you a jet and a chopper to get home for the weekend?
6
@Elizabeth A
Is there any correlation between the cost of our cities and the quality of our roads?
It only takes four minimum wage crews of five employees and $150,000 of equipment to keep the roads of a typical large city crack sealed, a million dollars a year on annual budgets of $175 million for a city of 100,000.
@Elizabeth A
Is there any correlation between the cost of our cities and the quality of our roads?
It only takes four minimum wage crews of five employees and $150,000 of equipment to keep the roads of a typical large city crack sealed, a million dollars a year on annual budgets of $175 million for a city of 100,000.
State and local tax receipts went up by $76 billion in 2018 as compared to $36 billion in 2016. That $40 billion is enough to fix a pothole or two.
Donald Trump predicted that we could achieve three percent growth. Dr. Krugman dismissed the Trump's prediction.
In looking at the graph that the professor derides as harshly as he derided three percent growth, there are a few data points that represent actual results, namely the growth with the TCJA during 2018. These data points average almost exactly 3 percent growth. We also can infer results for the Pre-TCJA baseline. Certainly the scourge of the 3 percent growth "fantasy" does not now contend that we would have had 3 percent growth any way. No, indeed, the Pre-TCJA baseline as presented by the Council of Economic Advisers is eminently reasonable, supported by Dr. Krugman's own words.
The rest of the graph is conjecture, based on economic analysis. Dr. Krugman tells us that he has better analysis suggesting that the predictions in the graph are overly optimistic. However, keep in mind that he also said we could not achieve long-term 3 percent growth, told us the stock market would never recover from Trump's election, and predicted that the internet would have no more impact on the economy than the fax machine did. Personally, I have more confidenec in the analysis of Council of Economic Advisers.
3
@charles
While you’re happy to infer results of a pre-TJCA baseline, all other forecasts are apparently off the table. The Wall St Journal reported a 2.6% growth rate in the 4th qtr. You’re welcome to call that “almost” 3%. I’d call it a good amount short. More importantly, to me at least, is the Federal Reserve forecast of 2.3% this year, 2.0% next year and 1.8% in 2021. Conjecture as you say, but something tells me you believed the Presidents somewhat optimistic predictions pre tax cut. The tax cut that leaves us all with a massive bill to pay
8
@Charles There was massive stimulus last year. The tax cut and the spending plan are additive to GDP right off the top. It appears that these stimulative efforts are not sustainable due to a maldistribution of spending and the saving of the tax cuts by the wealthy.
It was like giving the wealthy extra gas in their already full gas guzzlers and leaving the rest of use with empty tanks.
4
@Charles
Trump actually predicted 4%, 5%, and even 6% sustained growth. Now, after a massive military budget increase and decrease in taxes, we are at a non-sustainable 3%. And Trumpians claim that was what he predicted. I suppose that when we hit 1.5%, Trumpians will claim that too was predicted. And, if we go into a recession, they will blame the Democrats for sabotaging his economic agenda and causing that recession. All of this is a style of reasoning reminiscent of Goebbels when he claimed the destruction of the German 6th army at Stalingrad was really a victory. Well, plus ce change, plus c'est la meme chose.
6
Of course Trump has an infrastructure plan: a few miles of useless wall in the Sonoran Desert!
24
Yes we know the answer. The two presidents who did more for civil rights, human rights and the downtrodden than the rest of the presidents combined were Lincoln and LBJ. Lincoln ended slavery and was the springboard to the reconstruction amendments--13, 14 and 15. LBJ championed and signed the civil rights act, the voting rights act, the fair housing act, Medicare, Medicaid, Foodstamps and Headstart. They were born into modest homes in modest places, the woods of Kentucky and a small town near the Texas/Mexico border. Lincoln was self-educated. LBJ graduated from a Texas state teachers' college. Lincoln's first job was in a general store. LBJ's first job was teaching the children of Mexican immigrants in a one room schoolhouse. We know why rich Republicans continue ad infintum to promote tax cuts for the wealthy as boons for the overall economy. Yes, we do.
40
You raise the question, "why do people on the right keep insisting that cutting taxes on rich people and corporations will have magical positive effects on the economy?" The answer is very simple - GREED. They are getting very rich under this plan.
32
@Voter
"...GREED..."
Is it greed to want jobs for the:
1. 13 million discouraged and unemployed workers sitting at home degenerating into drug addicts;
2. 75 million dissatisfied and unproductive workers who want a better job and a better life;
3. 4.5 million released jail and prison inmates on parole and probation;
4. 10 million college students who are drifting;
5. 5 million part-time workers who want full-time jobs?
6. the 200 million illegal aliens organizing their trip to the U.S?
The TCJA was clearly unfair to most Americans but there was not anything that "most Americans" could do about it EXCEPT vote for change, and their votes in November 2018 restored an important structural principle of the U.S. Constitution, the Separation of Powers, and created a CHECK on a one-party majority in the Congress. Importantly, the power of the purse, to tax and spend, established by the Constitution was restored by the voters to the House to the Democrats.
This expression of our Republic, thus far, has had a positive effect and seems to be encouraging better public policy discussion of what we need to do to collectively address the priority challenges that confront our society: developing a sustainable energy source that is competitive with fossil fuels.
No one knows how we will achieve a sustainable resource and also achieve economic and jobs stability while adapting the global economy to a non-fossil energy source -- on a global basis -- to continue to improve the quality of living for a projected 10 Billion people by the end of the century.
I believe we need to mobilize the international community similar to the actions taken at Bretton Woods that created the current economic system to fund the research, development and test and evaluation of energy based technologies to assure that we can provide the food, water, healthcare, shelter, mobility, trade, communications, and awareness of economic opportunities. Clearly, we must reduce despair and inspire hope.
4
We're watching a re-run of a really bad 1980's movie for the 486th time. Only 6 people like this movie, but they own the theater, the projector, and all the theater employees, so they get to play it over and over as much as they want. And, of course, they've shut down all the other movie theaters in town. Mookie Betts just turned down a $200 million contract extension. I'm a lifelong baseball fan, but, sorry, when I think of the best players ever, but I don't think of Mookie Betts. I don't dislike him, but he's just an extra in the movie and a symptom of the problem. We need to start talking about solutions, not about how bad this movie is. Maybe time to boycott the theater?
10
Folks on the right believe in Voodoo economics because of faith in their ideology. There is no evidence and evidence won't persuade them, just like having no evidence to prove the existence of God won't persuade them toward agnosticism.
They're a bunch of folks who believe in fairy tales over science.
10
@PJ
I think it is more likely that it is because it makes them richer, even if they hide that truth from themselves.
@PJ
There is no evidence.
That's not our perception.
Trump reduced tax rates in 2017, in 2018 we had real economic growth of $680 billion, up from $290 billion in 2016.
Reagan reduced tax rates from 70% to 50% in 1983, economic growth was 7.3% in 1984. The highest growth in the last 65 years.
Reagan reduced tax rates from 50% to 28% in 1986, economic growth was 4.9% and 3.6% in 1987 and 1988.
Reagan tax cuts combined created the highest six year period of growth, 31% since the Kennedy tax cuts in the 1960s (37%).
Congress overrode Truman’s veto and cut taxes in 1948, we had the highest six quarters of growth in the history of the U.S. 16.4%, 12.7%,16.3%, 8%, 5.6%, and 7.1%
Calvin Coolidge and Warren Harding reduced income tax rates from 75% to 25%, economic growth in the 1920's was 37% as compared to Obama at 13%.
Kennedy reduced tax rates from 91% to 70%, economic growth was 6.5% and 6.6% in 1965 and 1966.
Clinton reduced capital gains taxes by 29%, economic growth in 1998 and 1999 was 4.5% and 4.7%.
Bush2 reduced tax rates in 2001 and had economic growth of 18% compared to Obama’s 13%
Czech Republic reduced their personal income taxes to 13% and corporate income taxes to 19%, their civilian employment rate has climbed from 63.6% to 74.6% and their average growth has been 4% from 2013 to 2017.
Nigeria reduced personal income tax rates to 24%, growing at 7% per year for over 10 years to the largest economy in Africa.
Why is that? Somehow, I suspect we know the answer.
While I appreciate caution, I don't think we need to couch the answer to that question in a "somehow". We know full well the answer, and we shouldn't shy away from it as depressing and daunting as it is.
5
Just remember the old adage credited to Albert Einstein: “The definition of insanity is doing the same thing over and over again, but expecting different results.”
Can we please stop now with the idea that tax cuts for the wealthy have any positive effect on the economy?
32
@Lib in Utah
"...tax cuts for the wealthy have any positive effect on the economy..."
But, were they even tax cuts?
In 1980, the top 1%, those with an AGI of $80,000 or more paid $47 billion in personal income taxes.
Adjusted for inflation, $80,000 is $237,000 today.
In 2018, taxpayers with an AGI of $237,000 or more paid $900 billion in personal income taxes, more than 55% of all income taxes paid.
Didn't happen in high tax Europe. Despite have higher tax rates, taxpayers above $237,000 paid less than $400 billion in Europe.
Maybe lower tax rates can yield higher revenues from the "rich"
Full employment at lousy wages means no increase in demand.
No increase in demand means there is no reason for employers to increase production of goods and services.
No increase in production means no demand for labor.
No demand for labor means wages stay stagnant.
The money that should be going to higher wages is being pocketed by the 1%.
The tax cut went to the wrong people.
The money lost to the tax cut is what should have been spent of infrastructure.
43
@Jerseytime
"Full employment at lousy wages..."
In 2018, real wages went up at their fastest pace since 2007.
Real disposable personal income went up even faster, $597 billion, up from $244 billion in 2016.
Who implanted the fictional characters into the "Economic Report of the President"? Mixing the universes of DC and Lucas together could cause a rip in the fabric of space-time or something worse, a Presidential Twitter storm inspired investigation to ferret out the individual(s) responsible.
The tax cut's effects on various aspects of the economy can be argued about and graphs made. There can be no doubt that the amount of money on the move after the cuts were implemented flowed mostly upward into dividends, capitalization, estates and other places to stash wealth. Don't want to trust that kind of cash with the average person. They might spend it on frivolous things like necessities.
15
"The first thing to say, then, is that there is no Trump infrastructure plan."
Perhaps Mr Trump views The Big Beautiful Wall as a big beautiful infrastructure project, to be set up as some form of public-private-partnership(s) and funded by suitable public-private flows of money.
However, time is running out to get this all underway while he is still in office and able to claim the profit. No wonder it is an emergency.
7
I wish any of this was new or different from what we've been getting since Reagan, from the budget asterisks of the now-departed Speaker Ryan.
They've gotten away with this absurdity for decades. They will again.
65
@Mark Thomason
Rich people don't spend their money. And very rich people spend even less. They invest instead - thus tax cuts then and now produce bloated stock markets that rise 'irrationally' and crash insanely. The same will happen now - hopefully while Trump is still in office.
9
@Rick Morris - And companies with billions in their bank accounts don't spend money because of a tax cut. Supply and Demand.
Apparently the only demand is for corporations buy back stock.
6
@Mark Thomason
Only if the establishment centrists remain in control of the Democratic Party.
If the Democrats offer policies that are actually in people's interests, they might actually vote for their interests.
3
I wish the contenders for the Democratic nomination would focus on issues like this and explaining them CLEARLY so people would completely understand that the tax cuts are only for the rich and wealthy corporations that use the money to enrich themselves and their shareholders.
Yes, there are other important issues like the environment and healthcare that must be discussed. I am afraid that Democrats will get sidetracked into taking stands to outdo each other on relatively fringe issues, and manage to achieve defeat again. The tax cuts are really Trump's only legislative victory, and he would be vulnerable if all the candidates made fair taxes for the rich, and a living minimum wage very high priority.
38
@Jerry S
"...tax cuts are only for the rich..."
In 2017, Congress cut personal income taxes for all families of four making $53,000 or less to zero.
We live a largely tax-free existence in the U.S. thanks to having grown a tax-paying class which pays the bulk of our taxes here.
Doesn't happen in Europe. Their family of four earning $53,000 pays over ten thousand more in taxes than our family.
Good to see they got help from a Federation Starship Captain. They know everything!
13
Hogwash Paul!
With a net worth of over 45mm, I promise you the tax cuts will have very immediate and beneficial effects for the masses.
Trickle down WORKS.
Instead of buying 2 cars, I will now buy 900.
Instead of buying 4 pairs of pants, I will now buy 20,000.
Groceries? You guessed it, exponential increase in my weekly shopping...think thousands upon thousands of dollars into my local foodmart...every week.
And that's just the beginning. With my unexpected surplus, you're looking at...
thousands of lattes a week that I'll buy.
hundreds of haircuts a month...
and of course millions of happy meals for my kids every year.
Trickle down is the way of the future...just look to Reaganomics and the huge booming economy, low deficit, and excellent corporate behavior spawned by that seminal move toward deregulation.
Why don't you like to win Paul?
31
@Jack While you're at it don't forget to buy a few thousand Chevy Cruzes so GM can keep those factories open. You can give the cars to your poor relatives for Christmas.
5
@Jack
"TRICKLE DOWN WORKS..."
Real gdp growth in 2018? $680 billion
Real gdp growth in Eurozone countries? $210 billion for their 540 million people.
Maybe supply side economics does work by creating confidence in an economic future where people have more of an incentive to work and start businesses.
How insightful of Francois Marie Arouet! Pity he never got around to determining the cause of witchcraft. Modern investigation and analysis has yielded the conclusion that some witches and others were scapegoats for malaises which burdened some of the medieval village dwellers. These were found to be caused by a fungus, Secale Cornutum, which attached to the rye plant, and which then became Claviceps Purpurium, or, the ergot alkaloid. The poor storage conditions in the granaries situated on the periphery of medieval and early modern towns were also to blame. The disease, Ergotism, brought about boils, head pain, intestinal obstructions, hallucinations, etc. and was generally considered a scourge, which was blamed on unfortunate women and others. Until 1947 there was a similar disease in the Soviet Union which was called Alimentary Toxic Aleikia. Those who rightly perceive that reason will brook no quarter to the faith evidenced by Trumpists (pictured) that the tax policies of the administration will stimulate a burgeoning economy, might find solace in the fact that this is another in a long series of bungles by dismal science advocates, and crass opportunists, not to mention outright liars, regarding how to structure a more equitable society. The bridge to the future is fraught with harrying possibilities, among them the thought that I.T. might continue the mendacious trend followed, not set, by her father. it is definitely a case of "vous and tu".
4
Consider the following as a contrast to our raw capitalism and trickle-down economics:
All 25,000 Porsche employees in Germany will receive a $10,000 bonus because their company did so well in 2018. (https://newsroom.porsche.com/en/2019/company/porsche-employees-bonus-reward-highly-successful-2018-17280.html).
Management and factory workers alike.
This is why powerful unions do not stand in the way of Germany's economic success... Our company is doing well, we benefit.
And when the economy turns, those same unions will be ready to negotiate sacrifices. It works both ways.
May we find our way back to that kind of spirit in the US!
34
@Liz
Hey Liz...Forget Porsche. Imagine if you were working for Maserati or even Bentley. With all that disposable cash in the .1%, you'd be awash in money.
@Liz
Porsche sales were up 3% in the U.S.
down 4% in Europe.
High taxes aren't too good for Porsche sales
In the end the act of buying a porsche makes the rich person a slave to the mechanic and manufacturing worker
"Which then raises the question, why do people on the right keep insisting that cutting taxes on rich people and corporations will have magical positive effects on the economy?"
As you mention at the end of the article, we do likely know the answer.
It is a toxic cocktail of politicians who are influenced by industry and media who want to maintain the status quo and build their wealth mixed with voters who are either largely ignorant on economics, prioritize conservative social issues, or deeply hold the idea of American rugged individualism (regardless of if it is beneficial to them)
Voters should know that trickle down does not work, but
10
@TR
"Trickle down does not work"
Maybe if it gushers?
GDP growth
Ethiopia Increase 10.8
Macau Increase 9.0
Ghana Increase 8.4
Guinea Increase 8.2
Nepal Increase 7.9
Ivory Coast Increase 7.8
Armenia Increase 7.4
Turkey Increase 7.4
Bangladesh Increase 7.3
Ireland Increase 7.2
Senegal Increase 7.1
Tajikistan Increase 7.1
Romania Increase 6.9
Laos Increase 6.8
The world is coming to understand that lower taxes result in higher growth, much higher growth. We are already seeing the theoretical work lead to experiments in lower rates. These countries growth paths are taking off.
The Laffer curve as we know it is a static curve. It morphs as time goes by with the peak continuing to drop from 50% being the peak to below 20% as the lower tax rate is in place for decades.
Is the NY times the intellectual gulag?
Take Laos, Income 24%, sales 10%, Social Security 11%
Can't get more supply side than that.
How do you explain that almost without exception most business leaders credit the new tax laws as stimulation business expansion? I suspect it is because it is easier to sit on the sidelines and observe the game than it is to actually play it. Ever since your prediction of a collapse in the market following Mr. Trump’s election I have been somewhat wary of your views.
2
@Thomas Smith That's an easy question to answer; Most business leaders loved the tax cut because it meant more money the business leaders' pockets, but it didn't benefit the rest of us unless we were smart enough to jump out of the market last summer. Most us experienced a significant contraction of the market in the second half 2018 and stagnant growth in 2019. It delays my retirement another year or two unless things turn around in a big way.
5
The politicians on the right KNOW that tax gifts to the wealthy are of little or no benefit to the overall economy, but they cannot sell tax gifts by stating what they are. So they have to sell them as job stimulus and investment bills, even though there's no requirement for the shifted income to be used that way. They tell the non-wealthy that they'll benefit... in hard-to-quantify ways... just wait. The voters on the right BELIEVE this story.
16
For most of the people tax cut eliminated person deduction of about $4000 for tax payer and dependent. This has harmed everyone no wonder middle to low income people see taxes going up.
For middle class, it limited and effectively eliminated local, state and property tax.
It’s a disaster for everyone except a selected few
15
I for one am grateful and relieved that the Minister for Funny Walks (the right honorable J. Cleese) was called on to contribute to this report.
24
No one should be shocked that tax cuts for the wealthy don’t pay for themselves or give the economy a boost. That’s not their purpose. The purpose is outright theft: line the pockets of the wealthy by taking away from much needed programs that mainly benefit the middle and working classes.
38
@Jackson
No one IS shocked Jackson. You've heard of plausible deniability haven't you?
It doesn't have to be rigidly defendable, it just can't be indefensible.
The Republicans are masters at lying...they do it callously. And they do it without concern for impact.
If you believe in the hammer and nail way of life, you think everyone is out to destroy you...so if you get them first, you are blameless...they'd do the same to you.
See how easy it is to justify greed and abuse?
3
About "there is no Trump infrastructure plan". Couldn't you generalize and say that there are no plans for the country's long term problems, i.e. no plans for education, climate change, public health, etc, etc?
70
Paul does not go into details about deregulation. One of the proposals is to lower the cost of child care by deregulating the industry. I can see it now 50 infants with dirty diapers for every one child care provider. Of course that would only happened to the poor. The rich will always have the resources to provide high quality childcare for their children. Maybe the goal is to kill off as many poor children as possible from lack of care and unsanitary conditions to lower competition for college now that it may become harder to buy a placement in a prestigious college for your child.
27
How come there is a Tax Cut Week and an Invading Caravan Week, but there is no Infrastructure Week? Because every week is Infrastructure Week!
7
That's quite a list of interns. A few others that stand out: John Cleese, Kathryn Janeway, and John Snow.
8
Trump is going to do something that just craters the world economy.
Just wait for it.
10
@Joe
“Trump is going to do something that just craters the world economy.
Just wait for it.”
Do we really need to wait?
Does the trade war with China qualify?
In this interrelated world, weakening China also weakens the US (they buy less from us).
Weakening China and the US (the world's two economic locomotives) weakens the rest of the world, thereby further weakening both of us.
If not, how about the TCJA?
Our budget deficit raises interest rates all over the world, which results in lower investment and consumption, weakening us all.
"why do people on the right keep insisting that cutting taxes on rich people and corporations will have magical positive effects on the economy?"
Because they are either a working stiff who believes that government is evil no matter the evidence, or because they are oligarchs who prey on the working stiffs who believe government is evil.
25
“Trump wants to pretend that he can kill sheep with magic while actually using arsenic, but without actually administering any arsenic, or even asking where he might get some.”
Wonderful quote Paul. An instant classic.
17
Can we trust our government?
Apparently, when it comes to the Trump Administration, the answer is somewhat complicated. The two answers:
Yes. We can trust the Administration to lie.
No. We can trust the Adminstration to not tell the truth.
To me, a believer in the power and necessity of good government, the destruction this band of grifters is devoid of conscience, moral or ethical code and is doing potentially irreparable damage to the country. Not funny, just shameful
23
Yet Trump’s support among Republicans is still sky high. The ultra-rich only get one vote each. No matter how much they donate to PACs supporting Republicans, there still need to be some warm bodies going to the polls. So who are those people?
Perhaps they are fanatical consumers of Fox News and live in that alternate reality, or they are committed bigots. Bigotry is one area where Trump has delivered in style. And of course the two categories are not mutually exclusive. But the 2016 narrative of “draining the swamp” or innocent “economic anxiety” looks more and more like wishful thinking to justify hanging out with your MAGA hat-wearing Uncle Bob.
15
@citybumpkin It appears to me, from somewhat limited observation/discussion in social media, that the support comes from people who only see/believe reports from certain sources. The NYT is not one of them. In fact, they have now been convinced/seduced/conned into believing that no MSM is truthful. The biggest problem we have with voters is propaganda and willingness to believe and hear only that which they want to hear and disregard anything else. It isn't exactly stupidity. It's cognitive dissonance and tribalism/cultism that supports it.
9
The irony is glaring, especially after reading Peter Navarro's fiction in this section yesterday.
When one talks about Trump and GOP "economics" since 1970, I remember a line in Ingmar Bergman's film, "Cries and Whispers" (1972),where the character played by Ingrid Thulin complains, "This is all a tissue of lies."
It is.
10
It remains true that it is difficult to bring a man to understanding if his income depends on not understanding.
So it has always been true of tax cuts for the upper 1%--the rich always see the effects of their wealth as being a blessing to the poor and the middle class.
How else can they see it?
The rich are correct to conclude as long as the bottom 99% persists in agreement, why should they give up any wealth at all?
8
Neck deep in the big muddy, the big fool said to push on.
5
Sadly, trumpsters will simply believe what fox news tells them about the report.
13
@Craig Scott Yes but also there are many who have no idea that their "other sources" (podcasters, e-sites) do the same conning and send the same messages so they are well able to say they don't get their news from Fox. They have been conned into distrusting all MSM and are in constant denial of anything other than what their "true sources" tell them.
2
Whichever intern did this likely was the one doing it on a smaller scale in the 2018 report, which included the two known captains of the Enterprise, Kirk and Picard.
Next year might have been a real doozie, but we can expect someone to review it now. And perhaps shoot the intern.
1
Never mind, the Bikers for Trump disagree with Prof. Krugman...
8
The president must have had an extremely busy day. We all know how he pours over every report until the wee hours of the morning with a fine tooth comb to make sure it is an accurate summary of his policies. He does have policies, doesn't he?
4
Also Captain Janeway of the Starship Voyager.
2
I thought Jabba the Hutt was in the Ovl Office -- what's he doing on the intern list.
29
Kathryn Janeway, from Star Trek: Voyager!
2
C'mon Paul, everyone knows that it is the baby boomers with their entitlements of Social Security and Medicare that is dragging us down. We need to feed the arsenic to the boomers.
Oh wait, I'm a boomer. Dang, it is always something! I knew Paul Ryan wasn't straight with me.
8
Continuing this theme, in Voltaire’s Candide, Dr. Pangloss farcically repeated “all is for the best” in the face of disaster. That reminds me of the Republican Party who are blindly following the machinations of a man who is clearly unstable.
9
If cutting taxes actually reduced the deficit, as proponents always claim, then it‘s really just a matter of 8th grade arithmetic to calculate the economic growth required in order to maintain the same level of revenue at the lower tax rate. If growth falls short, the tax cut is detrimental to fiscal order and discipline and should be exposed as such; a giveaway to political clientele. But I never heard anyone from either party or in the media making this simple argument, not to discredit anyone, but to just talk about the raw numbers and what they will mean for our future economic well-being and that of our children and grandchildren. The bill is already coming due, and we‘ll be seeing higher tax rates, fewer government service and increased economic insecurity.
6
RE: "includes Peter Parker, Aunt May, Bruce Wayne, and Jabba the Hutt:"
Add Kathryn Janeway (ST: Voyager)
RE: "Why do people on the right keep insisting that cutting taxes on rich people and corporations will have magical positive effects on the economy?"
So the rich and corporations can get richer of course. Why else would they lie? Remember the end justifies the means, thus lying on the right isn't even a thing. It's just business.
5
"Why is that? Somehow, I suspect we know the answer."
It all really boils down to the phenomenon summed up by Jon Ronson about 9 years ago - "Psychopaths rule the world"
3
Let's hope when the tax returns of average Americans start to roll in the scales will be lifted from some trump besotted eyes. We can't hope for all but I'll be happy with a good percentage.
6
When the SNC Lavalin scandal broke open and gave the Trudeau government its first scandal I understood how out of touch we all are to today's realities. Faced with a fair resolution to Lavalin's misdeeds or serving the needs of chronically High unemployment he chose jobs over ethics and attempted to influence our Justice Department to serve the perceived needs of his electorate.
In his ethical dilemma he has failed to understand that his perception of a problem was not born out in today's Quebec where our economists tell us our problem is perpetual worker shortages. Our Chambers of Commerce, our mayors and our business leaders know the jobs provided by a large multinational corporation are not needed in a province where we need many more workers for the jobs needing workers in what was until now an underperforming economy.
I am sitting here wondering whether someone who is perceived as a young dynamic leader is in fact too old for a world where the facts of most of his life are ancient history.
4
The real worry of Trumpnomics is that we're the sheep. With trade wars, tax cuts for the wealthy to buy stock, bank deregulation and now the packaging and sale of high-risk corporate debt, it may be, that we're about to hit the economic iceberg or, as the Yogi said, "It's deja vu 2008 all over again." And this time there's no Barack Obama and Ben Bernanke to keep us all from going down with the Trump Titanic.
26
"So we are very probably looking at a global recession, with no end in sight. I suppose we could get lucky somehow. But on economics, as on everything else, a terrible thing has just happened." Paul Krugman, November 2016.
How did we get lucky, Professor K?
2
@PaleMale
We should not consider ourselves lucky, yet.
4
@PaleMale
At that time he also wrote..."Frankly, I find it hard to care much, even though this is my specialty. The disaster for America and the world has so many aspects that the economic ramifications are way down my list of things to fear." ..Well he certainly got that part right!
6
@PBB Trump is a disaster in so many ways that we should not consider ourselves lucky at all. But when a renowned economist makes a statement like that, he should give some accounting for why the opposite seems to have happened--low inflation, extra-low unemployment, and respectable economic growth.
2
The tax "cut for the middle class" gave a few pennies to the Red flyover states, but brought a major tax INCREASE to those in the Blue States.
The Blues tend to have strong social welfare programs, efforts to improve public schools, and other benefits and these cost money. It doesn't come from the Federal Government (most Blues send more than they get, virtually all the Reds get more than they send). It comes from state and local taxes: Income taxes and property taxes, that the Reds have far less of--and it shows! Also, since housing costs far more in the Blues (3 rules of Real estate pricing: Location, location, location), property valuations are much higher...and with them property tax RATES!
So the Reds in control of the House, Senate and WH in 2017 added yet ANOTHER way to bleed Blue states: We can no longer deduct from our Federal taxes, more than $10,000 of state and local income and property taxes. I'll bet in my town you cannot find ONE home-owner whose combined income and property tax bill that does NOT exceed $10K!
So...most people in Blue states know the tax "cut" wasn't--for them. And people in Red states are learning the hard way that they are NOT getting a refund this year, and may even owe money for a change. They paid for the meal on credit and a year and a half later are getting the indigestion from it!
Trump, the GOP, Kudlow, and Navarro haven't tanked the economy yet, but lord knows they're trying!
60
@Dadof2
"...efforts to improve public schools..." in New Jersey
The National Assessment of Educational Progress, the National Educational Association's Rankings and Ratings and the Bureau of Labor Statistics, might inform us as to what that school improvement effort purchased for you:
_________________Arizona_________New Jersey
Charter
School
Students________185,000____________51,000
Spending
per
Student__________$7,932_____________$22,032
Student
Enrollment________958,000__________1,350,000
Spending_________$8 billion__________$28 billion
That extra $14 billion or 170% extra spending purchased:
Percent
Job
Expansion
since
2000______________31%_______________6%
8th Grade Math Scores for Hispanics
Mother's
Education
High School________265______________269
Some
College____________281_______________280
College____________279_______________279
8th Grade Math Scores for Whites
Mother's
Education
High School________283______________282
Some
College____________292_______________298
College____________304_______________307
8th Grade Math Scores for Blacks
Mother's
Education
College____________278_______________271
NJ's 3 pt edge over Arizona on a zero to 500 scale would likely vanish if the NAEP sample sizes were large enough to cross tabulate for income.
Maybe the elimination of SALT will revolutionize education accountability and results.
Dr. Krugman, how do we get this message across to GOP voters? I suspect that an overwhelming number of them don’t understand the phrase “voodoo economics,” and they probably haven’t heard of a guy named John Maynard Keynes, let alone understand differences in his thinking when compared to, say, Milton Friedman.
We need a slogan . . .
12
It was a foregone conclusion that there would be no infrastructure plan. Republicans hate spending for public infrastructure, especially if it touches on public transportation. The Border Wall is an exception, because it has no public usefulness.
57
@FreeDem
It's been said, and I tend to believe, that Trump doesn't really want a border wall; he wants his base riled up over the lack of a border wall.
15
Maybe all those authors in the report are real. After all, this economic report is a fantasy, based on assumptions that aren't true (TCJA will produce 3% growth) and programs like infrastructure that aren't even designed or proposed. This report is really a political document for the 2020 elections. Trump can carry around this weighty document and claim credit for goosing the economy. Just wait until the 2020 recession comes.
9
Thanks for the analysis. As for the right's faith in tax cuts for the rich as a prompter for general prosperity: in the short term they make money with it. And now they have Trump/FoxNews to convince the base that prosperity for them is "just around the corner," to quote Herbert hoover. And this duo will convince the base no to accept the truth if purveyed by the mainstream media.
12
I'm shocked, shocked, I say, to learn that the Trump administration is lying about the supposed beneficial effects of Trump's tax cuts for the super rich.
68
@Dave: lying is the wrong word. To lie means you know the truth but prevaricate to deceive. Trump (especially) and his minions have not a clue. They create rosy predictions to convince themselves that the know what they are doing. They have followed the “word salad” diet for so long their metabolism depends on it.
7
@Fred Frahm
Sorry, Fred. I must disagree in this context. They knew/know exactly what they were doing with the Redistribution of Wealth to the Wealthy Act of 2017. In order to sell it to their mindless supporters, they had to lie and continue to do so. Unfortunately, those supporters continue to buy it.
5
Well, we know the part that isn't voodoo. That's where the middle class tax bill goes up while for the top 1%, their tax bill is down.
45
"Which then raises the question, why do people on the right keep insisting that cutting taxes on rich people and corporations will have magical positive effects on the economy?"
Insanity: doing something over and over again and expecting a different result.
Conservative economic insanity: doing something over and over again and confidently predicting a different result.
22
@Ray Zielinski
Don't think is conservative insanity at all.
They want tax cuts for their super-rich donors, and that is what they got. The public explanation is just for show. Nothing more. So while they are liars, they are totally sane.
6
@Ray Zielinski - ...except they're getting the result they want. And that's what should worry us.
4
I have found a way to improve my digestion. I never listen to nor read Mr. T's speeches, read articles in which his name appears in the headline, or read any reports that he supposedly authored.
I highly recommend this as a health measure.
35
I'm glad to see that the list of interns includes John Cleese. What would an economic plan be without silly walks? But how can we trust any plan that hasn't been vetted by the Doctor? Though I fear that Davros may have had some input.
10
HE is the Joker, on Methamphetamines. And tragically, the
“ joke “ is on all of us.
2020: Vote, or surrender.
11
That republican voters still buy inti trickle down as they get stagnant wages if they even keep their jobs is astoundingly ignorant or stupid.
I agree that you should be on AM radio in the Midwest if only to recite your column. It is doubtful those rightest voters are reading the NYT. It is shocking but true that many people that can, don’t read much beyond a bumper sticker. I suspect many that have jobs that do not require a lot of reading are functionally illiterate. It seems hat people who do not express joy in reading as a child give it up altogether after school.
16
Why is that? It's the Benjamins, baby.
8
The Report is 711 pages long, do you think anyone in the White House read it? There are 81 pages of references but, still, you couldn't fit this report into a tweet so that the Twitter-in-Chief could read it.
And since when is that gang known for its sense of humor?
12
Great title, maybe I'll read it.
But if I get a hint of your "Rhythmic Gymnastics" journalism I'm out.
2
Superb, as always, from Mr. Krugman. One can write nothing else.
9
I wish it weren't true, but facts don't matter to many voters. If they wish it were true, if they believe it's true, then by golly it IS true.
And our drunk uncle in the White House just keeps preaching that his magic is working, and his true believers see nothing but what he tells them is happening. Facts don't matter. Ughh!
37
It’s tough explaining things to stupid people. My ex girlfriend’s dad whose daughter was a flight attendant was dropping her a I, a aircraft mechanic, off at the airport years ago. He said he couldn’t understand how a airplane as big as a B-747 could get off the ground, there was one sitting at the gate before us.
I explained to him the fundamentals of lift as I would to a 5 year old child. He still found it magical. Some people just don’t have the capacity to get it on many subjects when the proof is right before their eyes.
FOr them it is easier to buy into a often repeated sound bite or a bumper sticker. If you notice the right politicians seize upon a common sound bite and in unison repeat it over and over again. They understand how to drill it into a ignorant populace’s thick heads.
15
"This puts me in mind of what Voltaire said about witchcraft: “It is unquestionable that certain words and ceremonies will effectually destroy a flock of sheep, if administered with a sufficient portion of arsenic.”
But beyond that, even the claimed positive effects of the tax cut itself are things we can already see aren’t happening."
Voltaire also sad "Those who can make you believe absurdities can make you commit atrocities"
Oh and then there's H.L.Mencken"
“As democracy is perfected, the office represents, more and more closely, the inner soul of the people. We move toward a lofty ideal. On some great and glorious day the plain folks of the land will reach their heart’s desire at last and the White House will be adorned by a downright moron.”
43
On the intern list: it's Jon Snow, no h.
Looks like the joker could have used a fact checker too.
7
The reason why John Cleese (of Monty Python) is on the intern listis because of this,
"Yet the tax-cut zombie shambles on. Somehow, despite decades of practical failure, there’s a phalanx of billionaire-funded think tanks promoting trickle-down economics, and a loyal army of right-wing politicians supported by wealthy donors who keep insisting that they have faith that the next tax cut will do everything it promises. Really.
Why is that? Somehow, I suspect we know the answer."
Anybody remember the Dennis Moore sketch from Monty Python? "Steal from the poor and give to the rich." Look it up, its on Youtube...
15
The tax cut zombie indeed shambles on, totally through the enabling of deficits.
Luckily though, the Pied Piper of Tax Cut Mania - Paul Ryan - has found work (only missing his Feb. paycheck) on the most richly paid Board of Directors in all of Corporate America:
https://www.huffpost.com/entry/paul-ryan-new-job-fox-news-board_n_5c90f439e4b04ed2c1aeeb71
5
I am being fairly candid when I state I can barely balance my paper check book, but even a simpleton like me knows how to read a graph, as in “Figure 10-16. Forecast for Growth Rate of Real GDP, 2018-29”. When all of the lines demonstrated show a consistent DOWNWARD fall rather than any kind of UPWARD climb, I am perplexed at how the White House can be so adamant about “predicting such big growth”. I think it’s a tossup between a lot of folks being either blind, naïve, or delusional, none of which offers a shred of confidence.
This “voodoo” economic shame didn’t work with the Reagan Administration. I am insulted and angered that the GOP is assuming and attempting to think the American tax payer is stupid and uninformed by thinking they can carry off this illusion a second time. WOW – talk about chutzpah on steroids.
But what I find the most troubling and alarming is that “there is no Trump infrastructure plan.” That simple act and fact is unconscionable not to mention reckless and dangerous.
I think the entire 2019 Economic Report of the President was conceived and penned by Mickey Mouse and Donald Duck for even Bruce Wayne was a lot smarter than that.
13
@Marge Keller: Trump once outlined a framework for an infrastructure plan. If I recall correctly, it recommended selling off infrastructure to private businesses and giving the businesses a tax break.
5
No infrastructure plan in our future because there are not enough construction able or qualified US workers to fill the construction jobs available now in the continental US. There are not enough new entrants to the labor force to support the housing or commercial real estate construction projects. The Whitehouse knows this. Mr. Trump has shut the door to able bodied hard working immigrants. No worries immigrants no infrastructure and no farms.
6
@Sailorgirl
Well, I don't know about Florida, but in Chicago, there is more construction projects taking place than ever. But new construction is different than infrastructure. It never seems to fail that a tragedy with loss of life must occur before anything is done to correct the problem. Being proactive doesn't even seem to be on anyone's radar.
1
Thank you, Professor, for revealing what the brilliant John Cleese is up to now -- interning at the White House!
6
Nice to know that John Cleese also contributed to the report.
Actually, Trump wants us to believe that the sheep are already dead. Not dead, really, but pining for the fjords... (Monty Python's John Cleese was also attributed).
5
Also included Kathryn Janeway (Star Trek Voyager) and Steve Rogers (Captain America). I'm pretty there were other fakes too. Actually kind of wondering if any of these were real.
5
I would have accepted the report if Chuck Norris had been listed as one of the interns!
Even if it were a deliberate joke, official government reports should NOT contain jokes. Government reports area NOT high school papers or social media memes. So, either way, deliberate or not, this White House is beyond inappropriate and incompetent. This administration is a joke and has made America a joke in the eyes of the rest of the world.
11
@Misplaced Modifier - This is America now, though. I have a friend who is a technical editor and she has edited more than one municipal emergency operations plan that included a section on responding to zombie apocalypse. We have almost no adults left who don't care about seeming young forever--and it is costing us.
6
"Why is that? Somehow, I suspect we know the answer."
In general, the White House has the best people that can be bought. Their hiring phone number is 1-800-Career-Suicide.
4
The country would be in better shape if Peter Parker were running it!
1
Victims of Mid West flooding will be delighted with
trump's infrastructure funding.
8
Live and learn. The quote from Voltaire--priceless!
Reminds me too of the old story about "stone soup." Remember? Hungry soldiers approach a small village. Fearful villagers hide every foodstuff in sight.
"No matter!" declare the soldiers. "We propose to make--stone soup!" A pot is produced. Filled with water. Parked over a slow fire. Then--plop! A large stone.
Astonished villagers stand around, gaping.
"Oh," says one soldiers. "Anyone got some carrots?" Carrots are produced.
Ditto potatoes--garlic--onions--even a bit of beef. And finally--voila!
STONE SOUP! The villagers sample it. Marvelous!
"Such men," declares one, "do not grow on every bush!"
WE are the villagers, Mr. Krugman. Supplying carrots--potatoes--onions--beef tidbits of our own.
And we don't even get any soup. That goes to the fabled one percent.
Other people have said this better. But the GOP is not into CREATING things. Or PRODUCING things. I think (deep down) they must be aware of this.
Or maybe I should say rather: yes, they DO produce things.
They produce snake oil. Slogans. Mantras.
Stuff that feeds--nobody.
My kids saw a Spiderman movie a while back.. They laughed loudly at a scene where young Peter Parker sits in a diner somewhere. Asked how he liked his pie, he looks up with a suddenly beatific smile.
"DELICIOUS!" he burbles.
Well--he was a superhero.
The rest of us, Mr. Krugman--
--we don't GET no pie.
Sigh.
11
Once got invited to a meeting of top-tier economists by mistake...
Am dead serious...
After asking why we had to export global stability in the form of buying fossil-fuel we had in spades in-house, got onto the point about where the gov’t was trying to stick the needle into the collective citizen cow, to draw the most blood without starting a riot...
One economist looked at me over the rim of his glasses and intoned:
“You do realize that we’re going to have to raise taxes significantly on the middle class?”
Same sort of soul-less deadpan as the former Speaker...
At that moment – realized how viral junk science had gone in this country...
And that it had infected – everyone...
That was over a decade ago...
> War is Peace
> Freedom is Slavery
> Tax Hikes are Tax Cuts
See, the GOP quite willing to bleed the middle class while lying about it – it’s that farm/ranch-state mentality...
And how they talk to their other sheep...
The Dems want to slaughter it outright – if not hunt it down with confiscated assault weapons...
2
@W in the Middle Absolute nonsense. What exactly are you in the middle of? We Democrats want to raise taxes on the rich. Will we, at some point in the future, want to raise middle class taxes? It's possible, if there's a good reason.
Social Security taxes most certainly fall on the middle class, and the working class. And Social Security is most certainly quite popular, i.e., it's seen as a good deal to know you won't be destitute after you can't really keep working anymore, and worth the taxes paid.
Do you consider the payroll taxes which support Social Security and Medicare to be a form of slaughter of the middle class?
2
Voltaire would be appropriate were Trump and his lying henchmen trying to pull off a Voodoo trick. What they've been pulling off, with the assistance of the previous session of Congress and Mitch McConnell's majority in the Senate, is a heist. There's a big difference.
March 1st headline from Reuters: U.S. personal income falls; spending weakest since 2009
February 26 headline from Reuters: U.S. housing starts fall to more than two-year low
February 16 headline: From The Hill: U.S. retail sales in December suffered their worst decline in nine years, according to Commerce Department data released Thursday, a potential red flag for economic growth.
February 13 headline from Reuters: The U.S. federal government ran a $14 billion budget deficit in December as revenues sagged following last year’s tax cuts even as the economy appeared strong, Treasury Department data showed on Wednesday
These headlines point to a recession in progress and the rosy reports are meant to obfuscate for as long as possible. By all accounts elsewhere in the press, growth is widely expected to slow.
Nothing that comes out of this administration should be taken at its face, nor should it be believed without a thorough fact-check.
Trump lied about his intentions when he ran for office. His promise to "grab, grab, grab" was a veiled announcement of his and his class' intent to take over government and legally shirk their responsibility as citizens.
-
Things Trump Did...
https://wp.me/p2KJ3H-3h2
26
@Rima Regas Trump and Humpty Dumpty have something in common. One sat on a wall, fell down and couldn't be put back together again. The other one wants to build a wall and can't get anything together at all.
13
"The 2019 Economic Report of the President is out, and everyone is having fun with the bit at the end that acknowledges the help of student interns – a list that includes Peter Parker, Aunt May, Bruce Wayne, and Jabba the Hutt:"
Hey! Don't forget Steve Rogers and John Cleese. They made the list, too!
4
If what the Republicans say about tax cuts is true why do the middle class tax cuts expire while the corporate tax cuts remain permanent? They're not fooling anybody and they haven't for a long time now as this old quote from John Kenneth Galbraith points out. "The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is the search for a moral justification for selfishness.". I believe they have given up the search and have settled on another famous quote. "You can fool some of the people all of the time.".
20
The problem is that the facts mean absolutely nothing to Trump supporters. And as to those on the fence, the desire for a world wherein one is free to voice racial resentment under the guise of a heroic challenge to political correctness lures them into Trump's camp. It's very discouraging.
9
Here is the political ad that the Democrats must run repeatedly. A distinguished looking man in a well-tailored suit stands next to a large wheelbarrow overflowing with $100 bills. With a big smile he says "This was my tax cut!" Another person dressed in work clothes (maybe a hard hat) holds out his or her hand showing a few coins. "This was my tax cut. I can't afford to vote Republican again."
20
@MEM
Better yet, have the working people filling the wheelbarrow from their pockets.
1
@MEM
I guess you need to add someone, in a blue suit, who empties his pockets into the wheelbarrow, while holding on to a dollar, saying "This was my tax "cut", while looking at the distinguished looking man in a well-tailored suit he adds, "your welcome" while the distinguished looking man in a well-tailored suit sniffs "but of course".
Need someone to represent the millions who are paying more, a lot more, under this plan.
5
Wait a minute! The red line projected growth in 2023 is 2.5%. That is the predicted benefit of the cut. 2.5% growth is Obama era GDP growth! Trump and the Republicans pounded Obama for years for the weak, anemic GDP growth under his administration. Now, Trump and the Republicans are touting the same level of growth as a victory for their policies!
The flat blue line projection is meaningless, based on nothing. It's a line that just so happens to be about 0.3% below the magic red line. But if these people expect us to believe their rosey red line of stupendous 2.5% growth, I'm sure they expect us to believe their flat pre-Trump line.
So ever happened to the $4000 average raise everyone was supposed to get? Where are the numbers to backup that claim?
The entire tax cut was nothing but a payoff, a bribe, to get corporate America to look away as Trump trashed everything he touches. The profits boost from the tax cut is what has pushed stocks higher, not a gigantic boost in GDP.
Think about this. If the economic reports coming out of the White House are totally bogus as this one is, how do we know that they are not fiddling with the raw data? Why wouldn't they? They lie about everything. Why would they lie about economic data?
28
"Why would they lie about economic data"? I can answer your quote with another: "I don't see why they would/wouldn't".
2
@Bruce Rozenblit
We can probably trust the raw data because of the "deep state", otherwise known as career civil servants who are not political. Government bureaucracy is full of many people who are honest, hardworking and middle class. They see the numbers and don't appreciate the lies.
Just think of all the push back Trump has had from the very Republican FBI, CIA, and Justice Dept. people.
4
@Bruce Rozenblit
"Now, Trump and the Republicans are touting the same level of growth as a victory for their policies! "
Of course -- just as Trump now touts the unemployment rate as a success, when he blasted President Obama for the same number and called it a deception.
6
Trump like Bush will lead us to an economic meltdown that is starting now with financial players offering bundled debt products just like the toxic mortgage scam that brought on 2008 crash. Trump will be comfortable in Mar-A-Lago with all the middle east money he and Kushner want. The country will be left with massive debt and locked in tax cuts for the rich and powerful who will move to overseas villas to avoid protests. Trump will take to twitter and blame Obama and a conspiracy of leftist and electing Ivanka as our only way send as much money as you can to TRump Kushner fund which is tax free.
10
A conservative culture of ideological extremism and greed. What else could explain the phenomenon of Donald Trump and the country's self-inflicted, precipitous decline?
7
Professor,
double voodoo is only the same as voodoo squared when voodoo is equal to two
4
@John Finnegan It really is voodoo times voodoo when you think about it.
1
To me the key phrase here is "...politicians supported by wealthy donors..."
The root of all evil.
5
Poor, misguided Paul Krugman thinks that actual facts, figures, real-time numbers and historical analysis will somehow dissuade the Trump cultists and hangers-on from believing in the fairy tale narrative put forth by this report.
And not one of those superheroes in the report is an economist, which is par for the course for Trump seeking information that he agrees with.
5
What a cagey group those Republicans are and you don’t need Superman’s vision to see the small and very deep pockets they serve. They get money up front via a big tax break and then as the market cools and bargains are to be had in real estate and stocks they make out like bandits. How they manage to pull this with Rural America backing this is beyond me, but somehow they have got it in their heads that what the GOP and FOX says is golden, like deer in a headlight.
8
@Ted Siebert
Monopolizing big media and transmitting 100% RWNJ propaganda, 24/7 has a lot to do with it.
The Democrats need to pound this message home. And the history of the GOP "worrying" about deficits during a recession, but not during good times. Make the economic case. Don't let the GOP off the hook for the billionaire tax cut.
I fear that the Dem's are going to get tripped up again on various cultural issues that will split the party and we'll be stuck with the same clowns (apologies to any clowns out there) running the country.
4
I listened to Kevin Hassett, chairman of the Council of Economic Advisers, spew his supply-side voodoo on NPR yesterday, and all I can think was, "Where is Krugman's rebuttal?" Thanks, Paul.
8
Frankly, I admire the chart's restraint. I would fully expect the Trumpians to put out a chart that shows the tax cuts have created 25% annual growth into the far distant future. I mean, why not? Trump's voters would believe it and Trump will yell "Fake news!" when Prof. Krugman and others justifiably do spit takes when seeing the chart for the first time. And everything will stay exactly the same until Trump is in jail or out of office, hopefully the former.
6
To quote a "real" genius, "The definition of insanity is doing the same thing over and over again but expecting different results".
Republicans are geniuses at gaslighting their base into believe anything including magic.
5
Professor Krugman:
Thank you for another great visit to the GOP Reimagining of the Truth. Ronald Reagan delivered this mythology back in the early 80's and I am certain that as long as there is a republican party we will continue to hear the same song and dance. Ronald Reagan aka "The Great Communicator", the president that was going to wipe away the budget deficit and eventually the national debt. Unfortunately after eight years of Mr. Reagan he managed to quintuple the national debt from less than a trillion to over four trillion dollars. Thank you Rupert Murdoch and all of the liars at Fox that continue to misinform their moronic viewers of this fallacy. You would think that eventually they would wake up.
7
I personally love J.T. Hutt. Priceless!
4
@Mark F
Super heroes are out of place in this White House but Jabba would fit right in. The next cabinet pick? Those jobs are always opening up :-)
11
It's somewhat reassuring to learn that there's at least one humorous subversive lurking in that chamber of horrors.
The tacit message in the report is that Trump is a joke, his economic advisers are jokes, and that we should probably use this presidential report as kitty pan liner.
I notice that John Cleese is also listed as an intern, further evidence that as terrible as Trump and his cronies may be, there's a lot of Pythonesque fun to be had at their expense. The latter-day Knights Who Say Ni! may insist they're in on the joke, but the Trumpies playing these medieval characters are not a bit funny. They're just plain medieval.
Maybe we can offer them a shrubbery for their toxic swill to trickle down upon.
15
Fake numbers are fine until the real numbers come in. If
you can fool the public with trickle down economics before,
why not keep using them?
3
Showing again that Capt Janeway has even more talents than previously known in this quadrant.
4
Back in 2004 during Dubya's administration, Karl Rove once famously derided author Ron Suskind for "living in the reality-based community". Thus Mr. Suskind was unable to see the splendor of the GOP's "faith-based" visions (aka "delusions").
And let's also recall Trump's spokesperson Kellyanne Conway declaring to an astounded Chuck Todd (two days after Trump's inauguration) that his "facts" were irrelevant in the face of Kellyanne's "alternative facts".
So yes, the GOP believes in magic. Or at least they proudly proclaim to.
It's the only way for them to publicly "square the circle" while laughing all the way to the bank with the trillions in wealth which they've stolen from the middle class for the last four decades and stuffed into the pockets of their "donor class".
The GOP (on behalf of the Oligarchy) has been conning the American People out of their fair share of national wealth for two generations now. And their con has gotten so enormous that they finally had to install a world-class con man in the Oval Office to keep it going.
8
I also noticed in the list of interns Steve Rogers (Captain America) and John Snow (GOT). I'm sure there are a few more there that I missed.
This would be humorous if it wasn't so sad.
3
I only took one year of economics in college, and that was a while back, but part of what was taught even back then was that tax cuts were less efficient in stimulating the economy than spending because a percentage of tax cuts get saved--or used to buy back stock. If you design your tax cuts so none of the money goes to people who are likely to spend it, you have planned a non-stimulus. We've seen three of those since 1980, and all we have to show for it is a trillion dollar structural deficit. Will voters ever catch on?
17
Paul the Obama budgets were no better, or no worse for that matter. Any budget put out by President Trump is doomed, we know and have come to expect that so budget items will be fought on an item by item basis. I am disappointed that the Trump budget doesn't properly fund infrastructure projects across the nation. The failing of levees and bridges in the upper Midwest attests to the need. Anytime the government puts money in play via infrastructure improvement it's a good thing. It serves our country and creates jobs. The reason these improvements don't start is that Congress can't agree on who gets to go first and the amount of money they'll get. Thanks to bipartisan politics, huh?
3
@Kurt Pickard Let's see, after getting past the worst of the financial meltdown he inherited from W, Obama's actual enacted budgets featured a declining deficit even while providing health insurance to many millions of people.
How is that not better? You're just part of the utterly dreary false equivalence crowd. Wake up!
The next Democratic president will raise taxes on the rich and fund, among other things, a major infrastructure plan. Will you applaud or find some silly reason to complain?
6
Say "tax cut" to a lot of middle Americans and they assume it's good for them, even when it's shown repeatedly that it is not. GOP keeps saying it and trying it because it sells to their base who are too blind to see the truth and because it gives more money to their already superrich supporters, who will in turn give more money to the GOP. Why wouldn't the GOP keep using it?
6
Democrats can be so obtuse.
Draft a tax cut for the middle class, and place the projections such that the increase in tax revenue will decrease the national debt. But, add a clause that in the event that tax revenue from the middle class fails to reduce national debt, the marginal tax rate on the 1% goes up 1 percent every quarter, until there is no annual deficit.
If tax cuts pay for themselves, the 1% have nothing to worry about.
21
I love this idea!
2
@Revoltingallday
The most simple, sane and equitable tax policy proposal I've ever heard. It has no chance of passage.
1
Looks like Americans may have to emulate the French common people to set this country's finances and politics back to upright. And it's not likely to happen overnight, more likely in a number of decades from now.
3
@Garlic Toast No, we don't have to go all Gilet Jaune. What is that actually going to accomplish?
Just elect a Democrat president, a Democratic majority in the Senate, abolish the filibuster, raise taxes on the rich and enact programs to actually help the non-rich.
1
Because it cut taxes for the 1%, leaving us to pay the tab. A reallocation of funds, is taking existing money that you’ve already allocated to be spent on one thing, then suddenly changing course and spending it on something else. A tax cut, means that there is less net income to be taxed, at a lower rate. I suppose you could split hairs, still, you’re misusing the word reallocation.
5
Yes, and we could have scones with jam if only we had some jam... and some scones.
18
"The White House is passing this off as a deliberate joke. More likely, someone slipped superheroes in to see whether anyone in charge was actually paying attention, and proved that they weren’t."
Why would anyone in charge spend time reviewing the intern credits? There's a reason we have secretaries and assistants...
5
@Johnny. Then a lot of the secretaries and assistants were either in on the gag or appreciated it when they saw it. Which tells you what about the loyalty of those who work for the current administration? They're catching wise, that's what. Like slaves sticking it to the owners, they're sticking it to Trump.
4
@Johnny Because organizations that are serious and understand the importance of the reports they are putting out (I hope the US Government would qualify) don't release things that have not been checked and double checked, including the intern credits.
Obviously, this is a small matter, but as the article states, the main information that they are putting out is also a joke. If the leader of the US government cared about the contents of this report, the small and large details would be spot on. Don't we have the right to expect excellence from our elected officials?
6
@Johnny
OK, sure. But the more salient point is that, even with something as funny/stupid as this, the WH just has to pretend it was intentional - like "kovfefe" - instead of saying: "Yeah, some interns had some fun. They got us."
5
Sorry, Dr. Krugman, but the tax bill accomplished exactly its intention; the extraction of wealth from our middle class to further enrich those Americans least in need, the same goal achieved by undermining affordable health insurance and higher education and refusing to fund infrastructure.
409
Yes, that’s exactly what Krugman is saying.
18
No, the tax cuts from Reagan forward have not achieved there purpose, yet. The Beast yet survives, albeit in an increasingly impotent state.
3
@Eric Carey I for one would like to know more about the "+ new dereg and labor policies" that are supposed to produce the highest and most consistent rate of growth of "Real GDP" according to the ERP fig. 10-16 graph reproduced in the column. Because I'm thinking that those policies are going to be real bad news for working people (i.e., wage earners) and great news for trust fund babies and other capitalists (i.e., anyone who lives off of the return on "their" (or their advisors') investments rather than their own real, productive work). Where does the ROI of the 1% fit into this amazing. magical "real" GDP? And how much of it will the people who really make it see, this time?
6
Progressives constantly, unconsciously and foolishly adopt the labels Conservatives put on ideas and legislation. For instance, there was no “tax” cut (as mentioned in this article). It was a reallocation of taxpayer dollars from 99% of Americans to the 1% and corporations. So why do we continue to call it a tax cut?
This is happening once again as Democrats allow Republicans to label them as socialists instead of explaining what social democracy is, which is quite different and a successful model for other healthy democracies.
The next iteration will be “social welfare reform”. “Reform” is again a false description as Republicans intend to shrink social programs, including social security, which taxpayers put their own money into. And to Republicans, the social security and Medicare (not Medicaid) programs are “welfare” programs.
This will be sold as necessary to reduce the ballooning deficit they created with trillion dollar “tax cuts”. It’s also necessary to fund the next round of corporate welfare under the fantasy of “stimulating the economy”, which is how we got to this article.
82
@TheUglyTruth
Upon its passage I dubbed the supposed tax cut and jobs act the "Redistribution of Wealth to the Wealthy Act of 2017," a moniker so apt that I believe I should copyright it. Your post is spot-on. Yet we will remain powerless to do anything about it so long as the wealthy keep their party in power in any of the houses of government.
This is yet another way in which democracy dies. Maybe climate change can't come soon enough so as to minimize all the self-inflicted damage our supposed "leaders" have wrought on this country.
4
@TheUglyTruth
Maybe we should accept the label "socialist" for any economy that involves any government spending or investment except for the armed forces and the administration of civil justice. Public education, Social Security, Medicare, and so on would be seen as socialist. With modern GPS technology, road repairs could be financed entirely by users and new roads by investors. Police departments could be replaced by private security guards. Fire protection could be privatized.
We already have a lot of socialism, and much of it is popular. We need a bit more, although probably not as much as France or Denmark.
@Bob Loblaw, S Choir
@TheUglyTruth
Yes, the NY Times had an extremely detailed list of most of the changes in the Bill.
I added up all of the cuts for the owners of capital and it came to $5.5 trillion. I added up all of the increases for the rest of us and it came to $4 trillion.
$5.5 trillion minus $4 trillion is $1.5 trillion added to the debt. The number everyone keeps throwing around hides the real cuts for capital.
One more time: $5.5 trillion in butts for the rich paid for by $4 trillion in increases on high-tax-state workers.
1
I am not an economist so the finer points in these arguments make sense to me, but I don't necessarily understand it all. I have witnessed trickle down "voodoo economics" fail repeatedly since the Reagan era. The projected outcomes never materialize for the middle class. Someone may get $20/month back in the paycheck, but they will pay $100 or more somewhere else all hidden in smoke and mirrors. So my question is; How do you get the message in this article (that it won't work) to many Americans who only wants to hear it will work? It's so easy to believe the lie and wait for pennies from heaven.
41
The short answer is you can’t. For some people changing their minds even in the face of empirical evidence showing that the “tax reform” wasn’t really tax reform at all, unless you’re a corporation or a foreign investor, or one of the 1%. What’s even worse is every time a Republican gets into office this happens.
16
@James
Exactly. The truth is out there, but it won't fit into the fantasy world that FOX Nation belongs to. It might as well be written in Klingon.
What a frustration! So close and yet so far away from where we need to be.
Too bad that economics has to be so complex. You have to really ponder it and read many sources for many years to gain access to its valuable messaging.
1
Not to minimize all the other issues with this administration, but the central promise of his campaign was that he could get the economy to perform better than the 2% growth rate he called a disaster. Now his own projections show less than 3% growth, certainly nowhere near his campaign boasts. Give the man credit for branding: 2% growth was "carnage" while 2.9% growth is "an economic miracle".
11
We all know the GOP tax cut was just a big giveaway to the corporations and investors. I supposedly reduced the costs pf production, making American products costs competitive with other countries companies. That we have been told will increase employment.
As we see, those other countries can counteract this, still sell at lower costs as their markets are increasing. There is supply and demand, and many of those products have outperformed American ones. As an example Bosch and Braun are a bit more expensive, but their quality is better and they last longer. Luxury car buyers seem to prefer BMW and Mercedes, no cost cutting will beat that. As for capital investment, with taxes lower, business does not have to acquire more debt. We see the bond market only pays about 3%, and they do not need to issue more stocks, the tax cut is self defeating.
The GOP has approved the appointment of ideologues and incompetents to the presidents cabinets, all to assuage his vanity, it is an economic disaster waiting, We are seeing a high rate of bankruptcies in the agriculture economy, those farmers can not profit from such as Don the Dishonest did from his planned ones, they are not swindlers or con men, but do not have the criminal instinct of the liar in chief.
22
"The first thing to say, then, is that there is no Trump infrastructure plan."
This is probably a good thing - it would be likely that any infrastructure plan would tout "public-private partnerships" which would take the form of public assets being leased to private concerns followed by tolls and drastically hiked "user fees" with little, if any, increased safety or quality.
166
@yeti00
Dear Yeti,
Didn't I hear about a proposed Trump infrastructure plan? It involved allowing private corporations to bid on those projects they felt they could make a profit on--on the tax payer's dollar--and then reap the revenue from them. The projects built would be the ones that would bring revenue (to them) and not the ones most needed by the public.
Tell me if I dreamt this.
19
ey didn't push it. Maybe they realized it wouldn't even have passed in the last Congress.
2
@Robert
Yep. Keep reminding everyone. This administration is all about stripping every last penny from the 99 percent.
10
Historically, economies do not grow that fast unless there is some dramatic technological advance. Normally, it grows at the rate of population growth. Periods of fast growth are offset by periods of low growth and inflation.
Even if businesses ramped up investment to increase efficient production, consumers have limited resources for the output and diminishing marginal utility.
This tax cut along with the Bush tax cuts was not about economics. It was and is about the distribution of power.
29
@Mark Smith
Potential dramatic technological advances: a graphene and/or thorium revolution!
"Investors" include nations like China and Russia, that hold huge blocks of American debt and equities, and could care less about our sovereignty.
Most Institutional investors do not have morals, openly supporting pollution, medical profiteering, and advancing chaos in many markets.
1
That right, which is why you only see “bumps” of growth over 3%, you saw 4% during the Clinton administration, and you saw 3.9% during Obama, but that’s due to the economic stimulus used for the Republican caused recessions when both Clinton and Obama were elected. But overall 2.9% YoY GDP isn’t bad, the race doesn’t always go to the quick, slow and steady will usually get you where you want to be.
2
One of the supposed authors, John Cleese, shared a prescient tweet, could be on this same topic, a couple days ago. Just substitute Senate for House of Commons. The real John Cleese said "May I suggest a new debate in the House of Commons. The motion is " This House believes that discussing this motion is a complete waste of time " It has a decent chance of passing, and doctors believe that passing at least one motion a day is beneficial."
32
I agree that Paul Krugman’s column tend to repeat the same idea, but if they get through to just a few of the thick headed people that still believe in the republican lie about trickle down being a effective financial policy they are worth it.
I didn’t believe in trickle down when it was first uttered by St. Ronnie the senile decades ago. Don’t forget who called it Voodoo economics, George Bush Sr. At least he was the first to make it popular, I doubt old George had a original idea in his life.
35
So, this administration and the Republican Party do not believe the actual science behind climate change, but do believe in magic. In this context, voodoo economics and super heroes make perfect sense coming from this crowd. If nothing else, Trump proved that if you tell some people what they want to hear, even if there is no proof to support it, they are inclined to believe it. It doesn't matter if it's about magical tax cuts or the latest evidence-free assertions about immigration. Americans used to be mostly pragmatic and grounded in reality. Not so much now.
98
Very true. Another big problem is the entertainment media people spend so much time immersed within. We have little to no real world practical experiences such as growing crops, building homes and in general interacting in the world outside our small little boxes that keep us inside all day and in our heads.
If we would just listen to each other and have a relentless appetite to narrow in on honest truthful empirical solutions we would be okay.
4
@RN - "Trump proved that if you tell some people what they want to hear,"
Anyone who has attended a public meeting or a planning board meeting will know that developers will tell people what they want to hear in order for them to get what they want. Trump is expert at that. It got him 1600 Pennsylvania Ave.
8
One thing that economists have missed, I believe, is the impact of increased health care spending on GDP growth. Health care expenditures have grown at a level well about GDP growth for decades except for a utilization dip as the result of the Great Recession. It has returned to its historical levels well above GDP.
With health care spending running ahead of GDP and with overall GDP shrinking it will quickly increase to 20% of GDP meaning that any reduction or leveling of increases relative to GDP will put a huge drag on GDP.
If the US ever actually dealt with its health care spending problem - in which the commercial insurance costs are roughly 2-3X Medicare and drives what has really driven our costs to where they are relative to there OECD countries, the impact to overall GDP will be massive.
It would great for some economist the delve into this issue and model the impact of our high health care spending on GDP as well as the impact of proposals to impact increasing and uncontrollable health care spending.
I believe it will be quite ugly.
43
Countries that have a mix of both private insurance and government healthcare, they spend 3% of their GDP for healthcare, with better outcomes. Infant mortality is much lower in Europe for example. By the way, those countries have figured out how to pay for a national healthcare system, and supposedly we are a much richer country. If you believe that, I have a large White House to sell you, the current occupant will be evicted in 2020.
4
Excellent point but how do we convince the voters that a solution that benefits us isn’t a socialist plot?
5
@Mathias
Large majorities want it. The problem is convincing centrist Democrats to run on it.
The tax plan that the GOP passed is the tax plan that Paul Ryan promoted for nearly a decade with a few tweaks. Please. Please. Please stop calling this the Trump plan. The GOP/Paul Ryan tax plan is a continuation of Ronald Reagan's voodoo and Republican job creator worshipers from the G.W. Bush years.
Tariffs were part of Paul Ryan's plan. They were included to Narrow (not close) the deficits that Ryan knew his plan would generate. Ryan's strategy was to blow up the budget to force reductions in entitlements (like social security, Medicare, and Medicaid). Trump's tariff's are not about trade negotiations - they are about revenue. The tariffs represent a consumption tax - a regressive flat tax - on all American consumers. It's time to call the Republicans out for what they have done.
367
@Bill Yes, yes, yes. Thank you. I've been trying to bring this point out into the discussion. The Democrats should be talking about this every day. What the Republicans have done is cut taxes for the wealthy and raised taxes on the poor and working people who must now pay more for goods effected by Trump's tariffs. It's as slick as a carnival shell game.
209
That makes perfect sense! Thank you for posting this information to lookup.
12
@Bill
Its simply the next to last step to bankrupting the Federal government, so that the GOP can "save" the nation by repealing SS, Medicare and Medicaid. Ryan talked about this openly. Norquist originated the plan.
36
It would also be prudent to note that the administration's budget, with its stunning increase in military spending, is a further job-killing exercise. GDP is a function of dollars turning over - a cycle of transactions. Military expenditures result in fewer turnovers that almost any other form of government spending since ships, tanks, planes, missiles, etc. never reenter the marketplace. Deficit spending of this kind only exacerbates the problem.
Why do we never hear about the "job-killing Pentagon budget"?
114
The theory is called, the velocity of money, the faster money moves through an economy the more tax revenue is generated, and more jobs because more of whatever is going to be needed etc.
10
@Ron
I wonder the same - "Why do we never hear about the job-killing Pentagon budget"?
Is it because this giant corporate sector is such a well oiled machine that even media inquiries are off limits? Clearly, asking questions in Congress is.
9
@James - Right on. Let's see if we can understand why tax cuts for the Rich or more generally, income and wealth inequality, is bad for the economy. Economists have a concept called the velocity of money. It is the frequency, how often, that money changes hands in domestic commerce.
Here's an example. Suppose the government gives Scrooge McDuck a Billion for advice on the comic book market, If Scrooge puts the bucks in his basement, and forgets about it, that doesn't help the economy at all. That Billion has a velocity of 0. Also, if Scrooge loses a financial bet to Daddy Warbucks, and the Billion moves from Scrooge's basement to Daddy's, that is a change, but the velocity does not change because it is not a useful change. It doesn't affect commerce.
Money going to the Rich has a lower velocity than money going to the non-rich. The Rich spend a lower percentage of their money. What's a guy or gal who already has so many houses he can't remember how many & an elevator for his horse gonna spend his money on? The answer is he is going to use it to speculate.There is a correlation between inequality & financial speculation. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1661746 Speculation is bad for the economy. That money has a very low velocity. AND it increases risk which we have seen in 2008 ain't a good thing.
Since 2007, the velocity of money has plunged. https://fredblog.stlouisfed.org/2016/04/a-plodding-dollar-the-recent-decrease-in-the-velocity-of-money/
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One thing keeps getting left out in explications of Voodoo economics. It not just claims that tax cuts will stimulate the economy. It claims that the resulting shortfalls in federal tax revenue will be covered by the extra taxes paid - at the new lower rates, remember - that result from the explosion in economic activity generated by the tax cuts. In other words, it's the ultimate something for nothing argument in economics! And it should be described in just that way every time it's discussed.
I use to feel that the only people who'd be foolish enough to buy into VE are those few who continue to pay for extended warranties on consumer electronics or extra rust undercoating for a new car. But, judging from what I've seen lately, there seems to be a lot more than a few people out there who are that credulous.
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I always enjoy Dr. Krugman's columns and find that he explains economic ideas in a way I can grasp but I would love to see him write more of his ideas on what would work well instead of on explaining why this admin.'s policies fail. For example what should tax policy be? And especially how can we halt the growth of inequality and make capitalism work for all not just investors?
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@Duncan
Read more of Krugman and you will find out, among other very reasonable things: the federal government should increase taxes on the wealthy (specifically because of the wealthy's unprecedented accumulation of wealth since the Reagan years and especially when the economy is great for the wealthy) to support: (1) tax relief for the not-wealthy; (2) increased spending for various programs that help everyone, including health care, education, infrastructure; (3) better federal spending, such as more resources to collect taxes (we leave way too much "on the table" every year). We also need a return to international trade agreements rather than Trump's "pick-and-choose" tariffs. These over-simplify what Professor Krugman has talked about for years, but they are a start.
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Did any serious political economic thinker ever claim that Capitalism works for EVERYONE? It is just like religion, in which people on the bottom ladder are told to believe that they can be billionaires if only there were zero taxes and no regulations to impede their climb upwards, but in reality the televangelists (Rich Billionaires) ultimate end up with all the money.
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It’s supposed to work for all of us, you know the high tide floats all boats. Because they wouldn’t be rich without us, one as workers, and two, as consumers. Since it’s our labor, and our rising productivity we should be seeing some of the monetary benefits the corporation is making because of workers labor. But, that’s not how it’s working anymore, there was a time post WWII, where that did happen, corporate America, made the middle class, now they’ve abandon them.
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Prof. Krugman asks, "..why do people on the right keep insisting that cutting taxes on rich people and corporations will have magical positive effects on the economy?"
The answer is rather simple: because those supporting (read: funding) the GOP are rich folk and business folk whose ONLY, if not dominant, aim is to keep their taxes low.
Reminds me of the famous Upton Sinclair saying: "It Is Difficult to Get a Man to Understand Something When His Salary Depends Upon His Not Understanding It."
"It Is Difficult to Get the GOP to Understand that Raising Taxes is Good When their Electability Depends Upon Not Understanding That Reality."
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@chickenlover One good way to lower the taxes of the obscenely wealthy would be for them to have lower salaries. If they made less money, they would owe so much in taxes...
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@chickenlover
NONE of the alleged "economic theories" sold by the GOP have anything to do with improving the economy. they are designed to bankrupt the government so the GOP can sell austerity in the form of eliminating SS, Medicare and Medicaid.
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This column failed to mention one of the fantastical "interns" who gave invaluable assistance to preparing the president's economic report: McKenzie Dickhundt. I am not making this up. The name is there.
Otherwise, we can see that Trump, 2019, is running against Trump, 2016. Facts matter. He promised a trillion dollar infrastructure program but it is blindingly obvious that we can't have a trillion dollars in new spending on top of 1.5 trillion (and up) tax cuts, 80% or more of which go to the wealthy and a permanent, whereas the modest decreases for middle income earners are temp-o-rary.
This is so much winning that we are going to be tired of winning?
Why do Republicans keep promising tax cuts to their mega-bucks rich supporters? They have to promise something, don't they?
The very rich are always very concerned about losing their money by any means. Having piles of money in the bank is what separates them from the rest of us and, if they were to lose that money, let be left renting apartments and eating at I-HOP like the rest of us slobs. The first objective of the wealthy: protect the money. The last objective: protect the money or, toward the sunset years, give some of it away to get a building named after you.
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@Doug Terry Whoops! Mackenzie Dickhudt (not hundt) is actually a graduate student in economics at George Mason University and probably did work on the report. Some of us just have names that encourage schoolyard taunts, I'm afraid.
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@Doug Terry He forgot to mention John Cleese, as well. In fairness, the real John Cleese would produce a much funnier document.
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@Doug Terry
Be careful making fun:
https://www.linkedin.com/in/mackenzie-dickhudt-a4883785/
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"Which then raises the question, why do people on the right keep insisting that cutting taxes on rich people and corporations will have magical positive effects on the economy? There have been no, repeat no, clear success stories for this doctrine – no, not even Reagan, who benefited from a severe Fed-generated recession early on his watch, followed by a Fed-generated recovery."
Yes! The great economic moves of Reagan's first term were FED-GENERATED, independent of his voodoo economics, which was in Budget Director David Stockman's confessional admission, that all the numbers flying around, "... were a just a smoke screen to lower taxes on the wealthy."
While this Fed Factor is obvious to economists who live in the real world, and any one else who has paid sufficient attention, this nugget seems to escape the public at large.
Thank you PK for putting it in unequivocal black and white!
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@Tom
It appears that most economists, particularly those who work in industry or finance or teach at business schools, do not live in the real world.
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Amen! But you're preaching to the choir. I really wish you would also host a talk radio show, preferably on both AM and FM. The source of information for the majority of Trump voters I have talked to are the radio shows.
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@Sheila Murray If Trump voters would listen to a program featuring Dr. Krugman, then they wouldn't be Trump voters. Good luck with that wish!
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@Sheila Murray
Krugman's voice is ... unimpressive. If he hired James Earl Jones' voice coach, he would be truly influential.
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"So this report ... relies on voodoo economics to make big claims for tax cuts, then adds a whole additional layer of magic to get the growth projections the administration wants to hear." Reminds me of Mr. Krugman's May 2016 article: "[Paul Ryan's] budgets were always fraudulent in obvious ways, full of trillion-dollar magic asterisks and spectacular evasions." Pay no attention to the man behind the curtain.
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@Steve Kennedy -- Paul Ryan took his wheelbarrow full of magic asterisks home with him... Trump has double-voodoo magic instead. Fraudulent budgets is a pervasive theme of Republican administrations. Its a modern-day application of the Big Lie theory - "tax cuts will pay for themselves", repeated endlessly, loudly, until the people getting $500 a year tax cuts cheer for the millionaires and billionaires getting $5-million (and much, much more). There's a reason why Republicans keep doing it - they keep fooling people that one more time. Far too many Americans are like Charlie Brown, believing the Republican Lucy when she promises that 'this time it will be different'.
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@Steve Kennedy Thank God ex-Rep. Ryan and his "smartest man in Congress" "intellect" is now in a position to mess up Fox Corp for $300,000 a year in salary and stock options. She does have a sense of humor, and no doubt loves asterisks as much as he does.
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Actually, the Trump administration isn't so far off from the Marvel Universe brand. Marvel relies on superheroes who defy all the laws of physics. It's a made-up fantasy world where we put our trust in individuals, and everything works out, just like the Trump administration attempts to sell its own brand of reality despite hard facts, and President Trump "alone" will fix everything.
The values of "entertainment" (in the broadest sense of the word) have taken over American politics, especially in the current administration - politics as spectacle. Unfortunately, many Americans can no longer distinguish fantasy from fact.
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@jrinsc You’re right. I would add that the superhero theme has a long tradition in America, one fueled by the American propensity to believe in the fantastic.
The founding Puritans were “superheroes” – The Chosen People – whose power source was the divine. They supposedly were carrying out a long-established Biblical precedent (another fantasy) in their mission to claim land promised to them by that same divine power. It was a fantasy within a fantasy. The evil Pequot Indians were no match for their powers.
God is another superhero many put their trust in. God is in control which relieves us of having to make difficult decisions or take charge of our earthly circumstances.
Capitalism is a superhero – a self-regulating force of nature in which Adam Smith’s invisible hand will intervene to correct any problems because the market automatically maximizes well-being.
Actually, according to the American myth of self-reliance, each of us is a superhero able to pull him/herself up by the bootstraps and climb the ladder of success. No power can stop you if you just tap into your rugged individualism – a power mightier than its arch-enemy socialism.
There’s a reason superhero comics like Action, Marvel and DC were born in America – Americans have a rapacious appetite for the fantastic, a willingness to believe almost anything. It just makes life easier if you know that Superman will show up and administer Truth, Justice, and The American Way.
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@Michael, unfortunately, the way the "superhero" myth plays itself out in the U.S. is our fetishist belief in the military, in worshiping Seals, in invading nations that never attacked us, and in spending trillions of dollars on weaponry and senseless wars.
There's nothing that brings us together more than creating an enemy and deploying our troops (who will be greeted as liberators!).
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@Michael
“Free markets contain many buyers and sellers, and all of them are interested primarily in their own well-being. Yet, despite decentralized decision making and self-interested decision makers, the result is not chaos but efficiency.
The virtue of free markets was well understood by the economist Adam Smith. Here is what he wrote in his 1776 classic “An Inquiry into the Nature and Causes of the Wealth of Nations”:
“Every individual...neither intends to promote the public interest, nor knows how much he is promoting it.... He intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.”
Smith is saying that participants in the economy are motivated by self-interest and that the "invisible hand" of the marketplace guides this self-interest into promoting general economic well-being.
Smith's insights remain true today.” (Mankiw, p. 145)
Notice that “Free markets contain many buyers and sellers.”
A market where there are just a few sellers who collude among themselves is quite obviously not the “free market” that Smith wrote about and therefore his “invisible hand” comment would not apply.
Mankiw, N. G. (1998).
Principles of Economics.
Orlando: The Dryden Press.
Dr. Krugman - Well, another column here in the Times by Trump's Peter Navarro makes clear that the way to prosperity is to build more obsolete tanks. You can bet the farm on it!
Trump, who ran on shrinking our military presence, is beefing it up, thus neglecting, and hoping to shrink, an already tattered safety net - a frayed infrastructure, under-funded public schools, healthcare for all, and other pressing domestic needs. We're waiting for "trickle down" - looks like we'll all get a tank.
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@Ellen That particular dissonance of reducing our global military presence while spending more on military is particularly baffling. I believe Trump's supporters love to hear that we're telling our traditional allies to defend themselves, that we are tired of paying for Europe's defense.
At the same time, they love the macho idea of a really big military, as evidenced by how much we spend on it. Congress is just as bad on military spending - they refuse to tell the Pentagon to make hard choices about the defense we actually need, as opposed to what makes us feel secure.
If we are only going to defend US borders from potential invasion by Canada or Mexico, then our military budget would only need to be 1 percent or less of what it is now.
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@Wayne Cunningham
Congress is just as bad on military spending - fewer than ten Democratic senators voted against last year's budget increase for "defense", while fewer than forty Democratic Congressmen/women voted nay. The last time Congress debated guns versus butter was in 1965 (could we afford to expand both the Vietnam War and "Great Society" programs).
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@Ellen
Well said - It is a bizarre combination to put it politely. Especially given the timing, I think the criteria for choosing to promote tanks in a NYT Op-Ed is that they are manufactured in Ohio and parts are made in other pivotal states affected by auto industry layoffs. If the tank production were to slow down also, it might be costly to Trump in swing states. Without the Great Lakes region, Trump cannot win.
There is probably much better use of that money in Ohio and elsewhere, but such investments would likely take too long to reliably boost manufacturing numbers in time for November 2020, so we get bizarre investments in mostly unused tanks instead of the ships, submarines, drones and facilities the navy and special forces need to counter the lost capability from our overseas bases reducing in number and predictability.
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I want to start by saying that I believe with everything in this column. It is well researched and cited. I read Dr. Krugman regularly because of those practices and his ideas have been a big influence on my ideas.
But I wonder, after all the times he has written this same column, if Dr. Krugman considers tax-cuts-don't-improve-the economy to be something like a zombie idea.
The same column keeps shambling on, reappearing every month or so. But it isn't really alive. Those who need convincing do use 'well researched and cited' as a standard for accepting information. Those who do, have seen the zombie-column shuffling along decades ago.
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@Miles
I believe you are mistaken in your assertion in the second paragraph. Krugman, Dr., did not say that tax cuts don't benefit the economy but that this one, under Trump, has had minimal effect. Most economists are Keynesians; they subscribe to the idea that the government should stimulate the economy during down turns to help recovery and tax cuts, plus spending, are a means to that end.
Obama and company allowed the G.W. Bush tax cuts for the wealthy to become permanent during the Great Recession and it is likely that one main reason is that raising taxes during a recession was considered bad economic policy.
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@Doug Terry
Fair enough. I should have said. Under normal economic times, tax cuts for the wealthy have a less than 1$ for 1$ return on GDP growth.
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That right, but they didn’t allow the payroll tax cut to stay alive, which benefits us.
I wonder if John Cleese is also a plant (I'm thinking yes; there could be others though...)
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@ennio galiani, also John Snow...
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@ennio galiani
"Steve Rogers" too.
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@ennio galiani
Not a plant. Shrubbery!
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