...and who in its right mind believes that all tax cuts will pay by itself during one administration?????
Yeah, unemployment hit a five-decade low but what about the salaries, they are lower than before, so who is getting the benefits?????
"Members of Congress had all sorts of evidence suggesting it would accelerate America’s growing budget deficits" . Sure for only for themselves...
They don't really care about anyone else but themselves
3
Oh and Republicans are already wanting to cut Medicare and Social Security to make up the shortfall...
ahem - told you so...
3
GW Bush cut taxes then funded two (2) undeclared wars using borrowed money. He's a hero according to some. Obama ran up deficits in order to bail out the country from the worst economic collapse since the 1930's and he's a bum. Trump and his stooges in Congress passed a huge tax cut for individuals (mostly the richest ones) and businesses but did nothing to plug the loopholes that let people like Trump and his "mini-me" Jared Kushner generate huge profits for themselves and yet pay nothing in taxes. The judgement is in on Bush and it's forming on Obama. When it finally comes for Trump's turn, it's not going to be pretty. Bush is looking like a saint in comparison.
4
One aspect that gets overlooked is that for a large increase in economic activity, there has to be people available to do the work. Domestic birth rates from 20 years ago were inadequate to supply workers today. That means for growth to occur, more immigration is needed, but the Trump Administeation is working hard to reduce immigration, both legal and illegal. Oooops.
2
Voodoo economics should be renamed Zombie economics, as it keeps shambling about bringing fear and destruction long after it should be dead.
1
Next words of wisdom will be make cuts in Social security and Medicare; dream of Republicans. Go for it, maybe Trump voters will love you guys even more than ever. Vote Nov 6 to end corruption in our nation.
2
Now Trump is telling his Cabinet Secretaries that they have to cut their budgets by 5 per cent. You don't suppose they will cut their own salaries by 5 per cent, do you?
The baker example is ludicrous. If he can sell everything at 4 he would but can’t as too much supply quashed demand at 4. The $375 is better and more realistic. Otherwise why not make 1000 and sell at 4 or a million.
Though my question is not directly related to the tax bill, do you know whether the conditions regarding some of the ACA services that Senator Collins specified be implemented in order to ensure her vote for the tax bill were actually put into effect. For example, I think Collins set as one condition that additional funds be appropriated to help low-income people pay for their ACA coverage. I believe there were three conditions she set, but I don’t recall the other two.
Some observations on the Monthly Treasury Statements (MTS) for FY2018: Total Revenue was up by $15 B (0.4%) but would have been flat had it not been for tariffs imposed in September. Total Revenues compared to FY2017 have fallen every month since April (which always includes large Income Tax receipts from the previous year). Total Revenues fell by $25 B during Q4 (July-Sep) compared with Q4/2017 and are trending below 16% of GDP. They may fall to 15% of GDP for FY2019 (see bar graph in the article for historical comparison), which would be astonishing for a non-recession year.
1
Whether the baker would have sold 100 or more loaves the next day is unknowable, which also describes the premise upon which this entire article is based. And looking at tax revenue as a percent of GDP tells us nothing. Tax revenue is a lagging indicator of economic health (or lack of), so I would expect that ratio to go down as the economy goes though a growth spurt.
Have you looked at the bar graph in the article? It clearly shows Federal Revenues rising as % of GDP during times of economic expansion and quickly falling back during recessions. The graph shows Federal Revenues as a % of GDP peaking in FY2015 (when the US economy experienced two consecutive quarters of 3 % growth), then falling in response to slower growth in FY2016. The abnormality is that it continued to fall thru FY2018, despite accelerating economic growth. Looking at the individual Monthly Treasury Statements for Q4/2018, revenue decline appears to be accelerating (down $25 B vs Q4/2017), despite a boost from the imposition of tariffs in September.
3
“Republicans dismissed those warnings. Treasury Secretary Steven Mnuchin said he expected the new law to more than pay for itself — it would help to reduce future deficits.”
Or you could assume that the Republicans actually do not care about deficits and do not really believe that their policies will reduce them, but instead they only pretend that they do in order to conceal that they only really care about increasing the amount of money in their pockets and their donors.
4
The increase in employment gets people paying into FICA rather than pulling from welfare and food stamps, good for the employed, good for families, and good for the deficits going forward. Trump may be a boor, but he is delivering on his promises as no President in memory.
4
@OldEngineer
Sure. As long as every man, woman, child in this country pays another $46K that additional $1.5T of debt will be a wash. No problem.
1
By any rational measure, the Trump tax cut is a disaster. Barely higher revenues. A deficit ballooning to record levels. No money for infrastructure. Reduced savings. Fewer real dollars in the hands of consumers. Less for healthcare, less for the environment, less for science and the arts. Regulatory regimes decimated. A more dangerous world. Any way you slice it, only billionaires and big business may be better off. But only in the short term. Even they will pay a heavy price for mortgaging our future. That is the Trump tax cut legacy.
7
@Jeffrey Zuckerman:
Yes, we have a spending problem. I want budget appropriators to cross the aisle and cut, cut, cut: wast, fraud, and abuse first, redundant and ineffective programs next. It is very wrong for flyover workers to be taxed to make DC the highest-paid area of the country.
2
Republicans are still planning tax cuts 2.0 which will add even more to the deficit so they can cut Medicare, Medicaid and Social Security and set up tent cities for the elderly until they expire.
5
All Trump supporters care about is themselves. Collective celebrations are not their strong suit.
1
Its all about spending, not tax cuts, with more people working, more payroll taxes and the tax cuts for individuals means more spending, better economy. All the political ads for NY and NJ democrats blame the Trump tax cuts but the ordinary citizen will see lower taxes. The real issue is the state income and property taxes that never go down. Why should the middle class subsidize the millionaires 50-100k real estate taxes? The Democrats are the party of the rich in NY and NJ.
4
The only truth for Republicans is that the end justifies the means and if it means lying than lying is simply a means to the end - more wealth for me, less for you.
Kansas was the cautionary tale. The evidence was there.
But it is nice to know (sarcasm here) that the extra $4000 that Trump and the GOP charges me this year on my federal income tax will fund their largess. I will pay far more this year than last AND the deficit goes up!
28
The cut will "pay for itself" only when phase-2 of the planned cuts are implemented. What are those cuts? Easy, cuts in benefits to Americans who aren't wealthy or own corporations. That has always been part of the plan - cut taxes on the wealthy and corporations, drive up the deficit, wring your hands, scream and shout about the "Democrat caused deficit" then slash benefits. That was also predicted but nobody listened. Those phase-2 cuts are coming, but we have to agonize a bit first.
26
@George N. Wells. Not to mention that cutting other spending, while it will indeed reduce the tax-cut-induced deficits, cannot in any rational way be deemed the cuts "paying for themselves".
Rather, those who would otherwise benefit from the things that are cut "pay for" the cuts.
1
The only problem is that Democrats lack the charisma to criticize and highlight this Republican failed tax cut as a giveaway to the rich and takeaway from the rest of us. Anyone who believes in tax cuts as a way to stimulate the economy could have said, maybe we target tax cuts to the middle class and the poor who drive the economic engine but they didn’t, it was a measure designed to give steak to the rich and then crumbs of bread to all of us. So how did the rich spend their money? Not in investing into new factories and better paying jobs or pay increases but gambled back into stock market buy back and puting the rest in their pockets. So who will now pay into our ever increasing national debt? You guessed right, me and you not Kushner and company because our fellow citizens who empowered a slogan of MAGA have no clue they are dancing in a party with the rich and being laughed at for not understanding that they are looked upon as clowns.
26
The deficit generally follows major trends in the economy. Last year’s increase was moderate and the numbers for the tax bill have only partly kicked in. The present economy looks pretty good, but it could turn pretty bad pretty fast. This is a transition period. And anyone who gives a definitive analysis of taxes and growth and future trends thinks they know a lot more than do.
1
@michjas That is silly. To be running near $1 billion budget deficits when unemployment is 3.5% and growth is around 2.5%-3.0% annually is reckless and dangerous. The only true statement in your post is "This is a transition period." We are transitioning to financial collapse.
4
Not as bad as I would have guessed. Lower rates have helped the economy. However, they went too far. They should have kept the same individual rates for high earners, not cut them.
1
@Robert
They have not gone far enough to curb spending, our real problem.
1
Nice articles, but a question for the editor: What do you mean “not yet”? No tax cut has ever paid for itself. The data is very clear on this point.
That headline on a pretty clear piece does the reporter a disservice. It almost has the feel of the Washing Post which recently infamously invented no less than eleven euphemisms for the word “lie” to apparently save the delicate feelings of certain parties.
I thought we’d already learned the lessons of delicate reporting with the whole “enhanced interrogation” debacle?
The data are clear. The answer isn’t “not yet;” the answer is “no.” To suggest otherwise would be to “sidestep the truth.”
1
@Doug K
No tax has ever paid for itself is not quite true. However it is based on what taxes were before and after the cut(e.g. Checking the Kennedy Tax cuts, which took effect between 62-64 with a corresponding increase in federal tax revenue).
1
The Donald J. Trump tax shell game will begin to reap benefits for the federal government as the incremental tax increases for those earning less than 75K per year begin around 2021. By then, Trump will be enjoying his second term as occupant of the Oval Office, should he choose to stay, and the working class among his 95% (ers) will begin to feel the realities of Trump's ineptitude and fraudulent ways.
It will be too late to go back but Trump will manage to blame Obama, the Democrats and the next president, why not, and his 95% (ers) will cheer him on and thank him for sticking it to them. Regretfully, the majority of Americans will hurt, as well.
26
@Jacob K Yes! I wish I could say you are wrong - but I cannot.
1
Never let a crisis go to waste.
The Republican strategy is to keep cutting taxes until the government, threatened by bankruptcy, has to cut social security, medicare and other safety net programs that are essential to the well-being of our nation.
The crisis the Republicans are bringing on must be turned against their oligarch ways and used to restore a fair, progress tax structure. The US has one of the least progressive personal tax structure in the developed world and we need to raises taxes on the wealthiest who have benefited the most and have the greatest capacity to pay.
76
@afriedman ... yes, that's right. Some want to bankrupt the government in order to force cuts in social spending.
But not all.
So it's like a bunch of people fighting over the steering wheel, and the result is that the car is driving straight into a mountain of debt that will be as bad as Greece.
1
Another good reason to ensure the GOP’s congressional domination ends. Oust the racketeering conmen posing as Republican congressmen during the election in November.
5
Tax cuts should be used (carefully) to stimulate economic activity in bad times. As a corollary, good times are when tax rates can and should be higher and used in part to pay down the debt. See, e.g., Clinton's economic policies ultimately producing a surplus rather than a deficit.
This is Econ 101. Further, the more unequal income distribution is (and it is now highly unequal), the less positive effect tax cuts will have. That's compounded by the fact that Trump's tax cuts as enacted heavily favored the richest (except, purposefully, in blue states). Rich people don't spend much new discretionary income (low multiplier), and are not much influenced (e.g., to increase or reduce productivity) by changes in income. You will act in essentially the same degree of productivity making $3 million per year as you would making $5 million.
So, naturally, the Republicans passed the exactly wrong tax cuts at the exactly wrong time for all the completely wrong reasons.
I would call it "bad governing" if it wasn't even worse: it's evil, greedy, self-serving, and cynical governing.
176
@AM
All true, except tax cuts don't help much even in a recession.
Tax cut only help people with jobs and businesses with profits.
Tax cuts do nothing for businesses operating at a loss because demand is down, or laid off employees.
As Keynes pointed out, with much evidence, mathematics, and logic, governments need to actually increase spending in a recession, to make up for falling consumer and business spending.
Those that disagree with Keynes, have no evidence, mathematics, or logic, They only have controlling shares in mass corporate media (which only tells you they are liberal to confuse you) which they use to sell neoclassical economics, which basically threw out what all of the original economists said based on evidence, math and logic, to replace it with Supply Side Economics, based on no evidence, mathematics, or logic, because it is fake excuse for tax cuts for the rich, no matter what the circumstances.
They will tell you about the Hayek and the Austrian school. I read Hayek. He spends half of his time arguing that economics is a fake science that can't predict anything and the other half claiming that he is an economist and making predictions that shrinking government grows the economy.
In the real world, the most competitive and comfortable countries in the world (for all citizens) are the Northern European socialist/market economies, with high taxes, and many free services for the people, like universal healthcare, long lunches, and six week vacations.
1
@McGloin, Good comment.
I agree with you, except in two very minor respects. (A) In a recession where drop-offs in consumer demand caused or play a significant part in that recession, and tax relief (structured correctly) can actually serve to increase demand in meaningful ways, tax relief can be of temporary but effective help. Think tax relief serving low and middle class folks, where a dollar spent reverberates for 9 or 10 dollars' worth in the relevant communities, providing a needed and reliable basis for increases in employment, capital investment, and inventory. (B) Just like A, except where the expectation of some temporary tax relief effectively enhances consumer confidence, in a way that increases demand, etc.
Otherwise, I generally agree with you. In fact, "Supply Side Economics" itself is an oxymoron!
The democrats filibuster any bill that cuts spending because of their obsession with being the Santa Claus party with hand outs for all. The arcane Senate rule that requires 60 votes to pass a bill is not in the constitution and for good reason. The people can votes every two years if they reject one party rule. Until McConnell blows up the filibuster, there will never be reform. Trump must shut down the government and pay the interest on the debt only after the midterm, forcing the democrats into voting no on his budget. There would be no default then. Then blame the democrats for the government shut down. Problem solved.
2
@Steve
And yet somehow, the Billionaire Enrichment bill passed with 51 votes, so where do you place the blame for that? That's how we got the $200 billion deficit increase, which will be $275 next year when the last vestige of fiscal sanity disappears. Reagan &Bush cut taxes and ran deficits, but it takes a real bankruptcy pro to run a $trillion deficit in a boom. Not only do billionaire's apparently pay no taxes, they don't spend enough to fuel other people businesses--hence no increased tax revenues coming in from the rest of us. Obama cut the deficit he inherited in half, and Clinton ran a SURPLUS of $240 billion. You need to try Econ 101 and get out of the Reddit chat rooms...
216
Ok,
Lets have that Blue Wave your all hoping for.
Then don't complain when your 401K is 40% lower in a few weeks.
And your neighbor looses his job.
And your college grad kids have no future.
Or you home value looses 30%.
And consumer confidence goes back to Obama Doom and Gloom.
No problem as long as we stick it Trump, right.
Folks don't know when they have it good.
Best its been in 50 years.
5
How about you tell us when the markers dropped 40% under a Democratic administration? 1929? Nah. 1987? Nah. 2008? Nah. All under Republican administrations.
The market has been up since Trump was elected. True. It was up from 2009 until 2016 under Obama. While investors may hope that tax cuts will help the economy—though there is no historical evidence that tax cuts have done in the last—it is the accommodating policy by the Federal Reserve Bank (low interest rates) started in 2008 and continued until 2016 or so that primed the pump.
If i were you I’d been much more concerned about your Medicare under Trump than I’d be concerned with my 401k under a Democratic administration...
4
@Joe Paper Did you read the article? Nothing you said references how the tax cut has increased the deficit.
1
Meanwhile Treasury bond yields are going up, which raises the prime interest rate, which makes corporate debt more expensive, which slows economic expansion, which reduces tax revenues, which increases the deficit, which increases Treasury bond yields, which . . . At least six times in his business career Trump resorted to the bankruptcy laws to avoid crushing debt. He intimidated his creditors into accepting 50 cents or less on the dollar as opposed to zero cents on the dollar. Nations deal with crushing debt by printing money or by imposing austerity -- cutting government spending. One causes inflation; the other directly and immediately reduces economic activity, thus reducing revenues. Both impose suffering on those most vulnerable. The GOP dream of Barry Goldwater (which he eventually saw as a nightmare) and embraced by Ronald Reagan (which he quickly saw was a disaster and raised government revenues -- taxes -- multiple times) is coming to fruition under Donald Trump, and putting the US on the path to becoming Argentina or Brazil -- a nation of great wealth which with a high-living entrenched elite and an impoverished population. The Republican Party should rename itself the Banana Republic Party.
5
I retired earlier than I had expected as it was easy to see that debt was going to continue to be a problem that will eventually cause a deep recession or possibly a depression. I fear that eventually will be within a few years.
Two trillion in deficits on the horizon...here we go...
4
An easy to understand explanation of the topic, which walks us through the data. Thanks, I wish more economic analyses would dive in this way!
3
Sure its paying for itself. With cuts to Social Security, Medicare and Medicaid. That was the whole idea.
8
We all know that the GOP favors tax cuts because it is politically popular. All the talk about growth and deficit reduction is just eyewash. The Republican base knows it and just don't care. Half of this country is apathetic and a substantial number of the rest are willfully ignorant. I won't be around to see how it all turns out but it won't be good.
Good fake news headline. Tax revenue was up due to a booming economy but it should have been more if taxes were higher.
You Also left out the part about payments on Obummer debt which make up most of the national debt.
For our liberal and progressive friends, you will never con most working Americans that taxes should be higher.
2
The Obama debt was paying for the car and tax cuts Bush put on the credit card. Stop blaming Obama for something that the Republicans created.
6
@obummer
Bush Jr. took a balanced budget and reasonable economy and turned it into a near depression with huge deficits—the last one being over one trillion dollars. The stock market was tumbling and jobs were being lost at a rate between 500,000 to 800,000 per month when Obama took office. That was the Bush administration’s fault--undeniably. Essentially every major bank was on the brink of default with the investment banks almost completely wiped out. Government revenue dropped 4 to 5 % of GDP shortly after Obama took office. Simple math shows how that revenue drop added 600 to 700 billion dollars to the yearly deficit.
Obama turned around the economy. Reduced the deficit spending from the Bush 8 percent of GDP to less than 3 percent and turned over an economy with low unemployment and steady gains.
Bush has the ignominy of causing the first trillion dollar deficit. Trump is going to be the best with the biggest deficits soon.
1
When you cut revenue, you must also cut expenses accordingly. This the Congress and Senate have not done in any meaningful way. Simnple as that.
3
Or, in layman's terms, saying the cuts paid for themselves is akin to raising the price of one package of sausage considerably just prior to the offer of buy one, get one free.
In other words, most people are not that stupid.
Ah, the deep irony. Only “fiscally conservative” Republicans voted for this 1 trillion dollar deficit trajectory. I am sure they and the MSM will find a way to blame democrats
4
Pay for itself? Where have we heard this before?
Remember the Iraq war and the predictions that it would more than "pay for itself"?
How'd that work for ya?
7
If you want to solve this problem by cutting Social Security, Medicare, and Medicaid, vote Republican.
3
To run these kind of deficits in a boom economy requires a breathtaking level of incompetence or deliberate sabotage. These people are not stupid, so I am opting for the latter.
4
The Republicans don't believe in science-global warming--so why would they believe in math?
8
If you want to solve this problem by cutting Social Security, Medicare, and Medicaid, vote Republican. (Nobody you care about will ever be old, or sick, or poor, right?)
7
@Richard Schumacher
Only a partisan Democrat would trot out that perennial scare canard, when NO Republican is proposing "cuts" to SS and Medicare. Democrats however are proposing to plunder Medicare with the nonstarter "Medicare for all".
There you go with those pesky little facts again.
6
Paraphrasing GOPer Grover Norquist:
Save the country. End the deficits. Drown Social Security, Medicare and Medicaid in the bathtub
VOTE!
2
November 6, 2018. Vote.
10
Whatever Trump is hiding from the American people in his personal and family income tax returns and business records is all that Trump is interested in preserving, protecting and defending from any tax "cut" consequences.
Russia if you are listening please disclose this all to us. We can loan Melania out as Vladimir Putin's First Lady on Trump golf weekends.
3
Oh come on! The Republicans, the Easter Bunny and the Tooth Fairy all say the tax cuts will pay for themselves.
Maybe we need everyone to sign a Sanity Clause.
7
Get ready. Guess there are going to be mass protests by angry white geriatrics on the Mall. Oh, that’s right. The Prez is white now. Nevermind.
2
Not yet?
The Reagan tax cuts for the rich have still not paid for themselves, so when may we expect the current tax cuts for the rich to do so, when hell freezes over?
7
Go ahead GOP...I dare you to cut social security!
2
@SteveNYC
Yep -- touching the third rail comes to mind.
I wish Dems could explain to voters in a way that would not sink their chances for victory that tax cuts are not always a good thing. I've watched as Iowa candidates dance around answering directly on questions of raising taxes. We really got screwed on these cuts. It's political suicide to say you are going to raise them. All what Paul Ryan was hoping for, now they get to cut so-called entitlement programs and people are too stupid to understand this stuff or realize how much it effects them.
3
Revenue graph shows increases. Percentage of GDP graph shows a decrease because GDP up more than revenue relatively. Basic
manipulation of statistics.
Such is the bizarre commitment to King Narcissus the Egregious on the part of his 'base', that were he to abolish Social Security, Medicare, and Medicaid, they would cheer him to the echo for it. What on earth is up with them?
2
The tax cuts are designed to be debt...
The Republican two-part approach to cuts:
--Cut taxes for corporations and the rich.
--Cut Social Security, Medicare, and Medicaid for everyone else.
26
When the Republicans are in control, they always run a deficit. The only time we have had balanced budgets has been during Democratic administrations. Counter intuitive is it not for the Republican party that claims to be fiscally responsible. This explains the Republican strategy. The Republican hope is that the deficit will get so large that even the Democrats will cut social services. The problem is that in a democracy, it is easy to cut taxes and increase social services. Each party has their favorite policy. I see a lot of inflation in the future.
16
@Pschlage, it's called Starve the Beast and has long been discredited. Nevertheless, nouveaux republicans always think it will work and feel compelled to try it.
Maybe if the tax cut had stopped up some of the egregious loopholes then that would have helped pay for it. But, that would have lead to Trump and his family and the families of just about every other powerful Washington politician paying more taxes. So, they just gave themselves a nice fat tax cut instead.
Every felt like you pay too much in taxes? The solution is easy; just become president and give yourself a break. Isn't America great?
11
"By the Treasury’s numbers, total revenues grew 0.4 percent from the 2017 fiscal year to the 2018 fiscal year. That’s weak, historically speaking, for an economy growing as fast as it is."
The logic behind this article and this statement is linear--it always leads in a straight line to one conclusion--Trump is wrong again. The problem with the above statement, upon which the entire article is based, is that it presumes that Trump's tax policies, trade renegotiations, and capital repatriation had nothing to do with today's booming economy and employment. It assumes that growth would have been the same without those policies, and that is a very, very shaky proposition, not accepted by most economists.
Put another way, why exactly would Americans want more revenue to go to the federal government in a financial expansion? That money is generally more effectively used by the general population than by the government. Unless a compelling argument can be made for expanding the federal government, then Americans should be happy that additional money is not flowing into federal coffers when the economy grows.
And as far as increasing the national debt is concerned, Federal debt as a percentage fo GDP doubled under the Obama administration, and is projected to increase hardly at all in the eight years of a Trump administration under current estimates. So the ability of the economy to sustain budget deficits has been unaffected by Trump's policies.
2
@Chuck French
I'm glad you can see that. When they first started criticizing the plan they projected 2% growth and said it would cost us 1.5T. And the republicans said that growth would make up for the gap. Now that we smashed 2% all they can say is that if we had the old rates at the new growth we'd have higher tax revenues...And its like, well yeah. But the whole point of the cuts was to increase growth...which happened.
2
@Chuck French
Sophistry doesn't always hue to history. Seems to me some few years back, there was a huge wildfire in the economy ravaging assets. I reckon that if there were a huge wildfire, you'd agree that we should draw down lots of water; in effect a deficit in water supply. But, you want to chastise President Obama and the US Congress at the time.
5
@Brent Jeffcoat
I think the reason the OP measured deficit spending (water) vs. GDP (fire) in the first place wasnt to critique the amount of water used, but to measure the efficiency of its use.
Really? At least not yet? Tax cuts have never paid for themselves. Stop pretending there's a magic elf who's going to finally make voo-doo economics 'true'.
8
It wouldn’t be surprising if it raised revenue because as the Republicans say correctly that lower cap gains taxes lead to people cashing them in and lower corporate taxes have them pay in this country. However it is very short lived and partly because of that goes into pockets and doesn’t generate investment.
We need to point out that jobs go away because the tax breaks go out of the country.
1
The Trumpublican Party's insistence that massive tax cuts for corporations and the rich will ‘pay for themselves’ is on par with the Party’s similar forays into Wonderland, like the ‘climate change is a hoax’ theory.
A number of ‘red states,’ like Jindal’s Louisiana and Brownback’s Kansas, have tried the ‘tax cuts pay for thenselves’ science project - and they ended up on the brink of bankruptcy. Reagan’s ‘supply side economics/trickle down’ experiment did exactly what one would expect: it resulted in the accelerated concentration of massive wealth in the hands of those already holding a disproportionate share of the country’s economic resources.
This is pretty simple arithmetic. Lower corporate taxes by about one-third; and behold, corporate tax revenues decline by about one-third. Notably, at the same time, corporate after-tax profits, dividends and stock buybacks have soared; while wages continue to crawl along at the pace of inflation.
The only thing ‘trickling down’ is, well, you know what it is.
And right on cue, Mitch McConnell says the rest of us now have to tighten our belts. Forgive me, but having paid the maximum annual Medicare and Social Security tax assessments over the course of 35 years of 60 to 70 hour work weeks, on the promise that I would receive back what I paid in, with at least a modest return, I do not want to hear ‘sorry, we spent that money bombing Bagdhad, paying farmers not to grow crops, shuttling Trump to his golf resorts...’
21
The bread analogy is laughably bad. I love how he is guaranteeing a "busier day" before it arrives, without acknowledging the pre-conditions that would make it a busier day. Record low unemployment and wage growth were not a guarantee. These changes do not occur in a vacuum outside of market forces.
1
@Nick
Agreed. If you slash the price of bread every Thursday for 5 years, it stops being reasonable to think of Thursday as being a naturally "busier day". Prior to the cuts no one expected the "busier days" of 2018.
The first problem is in semantics, the Republican tax cut is really a debt funded tax refund. It is the same thing as using credit card to support an unaffordable life style, eventually reality sets in. As far as the Republican economy is concerned, it is failing as we speak, the stimulus is running out the bills are due and we’re one trillion dollars in the whole, what else do we need to know the situation speaks for itself.
9
Ah the Fake economy roars on. In my business all
my cost have exploded. If you ask why, the question is delivery costs, middlemen costs, higher production
cost, higher energy cost, loop-sided borrowing cost., The suddenly scarce customer-base reflects stagnant labor wages and less substantial cash in the pockets of hourly and salary workers then there should be in a healthy and serious economy. It was recently announced that 30% of retail and mom and pop businesses in my city of New York/ Manhattan have gone out of business, and I, like thousands of other small business owners, pay myself nearly nothing just to keep the doors open.
And what happened to the cost of gas in america? Economist across the board were saying that if the cost of gas went to $3 a gallon that would wipe out the effects of the tax cut altogether.
Well its here and we feel it! Wiped out! Is that making America great again? Hardly. I would laugh out loud if it weren’t so painfully true. PS. Hey Mr. Trump how much for a gallon of milk, a dozen eggs,
and a loaf of bread these days? What is the average rent or mortgage cost to Americans per month. What is the average savings rate? Im sure you have no idea and could care a less. P
21
There is no mystery here. The terrorist Republicans are determined to destroy the social safety net. They did the tax cut knowing exactly what would happen and will use the higher debt to justify cutting social spending. America is for the rich at the expense of the less fortunate. In that sense, nothing has changed.
15
@Mark I think that was one of the collateral "benefits" that Paul Ryan saw resulting from the bill.
10
Tax cuts have never increased revenue. All they have done in the past is increase deficits. Massively. So it is with this one, only the deficits are so massive that interest payments alone will strangle our economy.
No problem say the Republicans! All we have to do, they say, is reduce spending. We know what that means. Massive cuts to Social Security, Medicaid and Medicare for sure. But even that won’t be enough. As happened when the states tried this gambit, the promised growth never materialized. Instead, schools were closed, roads and infrastructure were left to rot, business fled to states that were fiscally responsible and tens of thousands of jobs were lost.
Get ready folks. Our little sugar high boomlet is going to come crashing down on our heads. Not the heads of the wealthy — OUR heads.
14
We have to remember the new tax cuts were only in effect for the last 9 months of FY 18, so the tax revenue losses have not yer been experienced for a full FY, but in FY 19 they will be. It seem likely the FY 19 deficit will be close to one trillion. That is obviously unsustainable. As interest rates rise and t-bills are issued and refinanced the annual interest on the debt will become larger than the defense budget. Simply put, we have mortgaged the future that our children and grandchildren will live in. There were some positive aspects of the tax cut, but the giveaways to the very wealthy are indefensible in view of the ever increasing deficit.
14
The tax cut is a zombie from the raygun era: the laffer curve supposedly depicted tax cuts that payed for themselves by setting tax rates at an 'optimal' level that maximized tax revenues. every serious economist laughed at the the laffer curve.
yet, here it is again, a reincarnation of 'supply side economics'. it didn't work as advertised under reagan, it did the same recently. it is merely a means of lying to the electorate and creating a tax avoidance vehicle for corporations and the ultrarich. further, it is a means of reestablishing the socioeconomic structure of the 1880s, i.e., robber barons and a working class, that's right, an assault on the educated middle class.
it is a continuation of the 80-year assault on FDR programs, public education, and every filament of the social safety net. if you approve of this attempt to steal your present and your children's future, by all means vote red.
12
Tax cuts, mathematically, will not likely pay for themselves through economic growth. I say not likely, but there is almost no chance. Consider: start w/ 25% tax rate, cut to 20%. If the tax base is $100, you start w/ $25 in revenue. At 20%, what's the tax base you need to get to $25 in revenue? That would be $125, a 25% year over year increase. When was the last time we've had 25% growth in the US? Not in the lifetime of anyone reading this...
8
The real issue: why did anyone believe it would pay for itself? And the people who really did believe that, what are they telling themselves now?
8
@Ann Hardy My guess is that the folks who said that the cuts would pay for themselves were individuals who stood to benefit greatly by the cuts in the short-term. Afterwards, they would count on the short memory of the American electorate, together with the likely possibility of being able to blame the results disingenuously, of course, on the party then in office.
6
folks who wanted to believe it have done so since Reagan
The 5% budget cuts Trump has just requested from Cabinet Secretaries to counter the soaring deficits he created will impact the states like McConnell's Kentucky most severely, as they take in far more than they contribute to the Federal budget.
In the Wallet Hub ranking of 2018’s Most & Least Federally Dependent States, virtually all of the most dependent states are Red States (KY is #2), while the Blue States are least dependent.
https://wallethub.com/edu/states-most-least-dependent-on-the-federal-gov...
Conservatives may think of budget cuts as reducing dependency, but Federal transfers are also part of state GDP, which will shrink economic activity in these states and reduce disaster relief.
Infrastructure repair backlogs are also greatest in these most Federally dependent states, who name their highways after the Senator who got them the Federal cash.
Combine this with the tariff driven economic slowdown that is already underway in Midwestern and farm states and 2019 might be a year of reckoning for those states who supported the Trump GOP agenda.
15
And it never will. plus Trump's tax cut will increase borrowing costs for all as the deficit explodes under it and people have to pay more in interest.
2
The tax cuts were designed to give the biggest tax cuts to the wealthiest people, perpetuating the trickle down lie.
Low to middlin tax cuts were afforded the poor and middle class in poorer states, which are typically red states and who see any relief as a boon.
And then, the plan is designed to sock the heck out of the middle class in wealthier states, which are typically blue, but also happen to be economic engines for the country.
Few companies invested their windfalls and chose buybacks instead.
Some Wall St. naysayers are predicting a downturn due to the personal debt bubble, the staggering national debt and large deficits for the foreseeable future.
The surge of the bond market is the beginning of the end.
Prepare yourselves for trouble ahead when the next tax season rolls around and the reality of this tax cut debacle ship hits the sand.
11
personally, I find this kind of arithmetic argument almost impossible to follow, especially considering the vast and constantly-changing number of variables.
but there is no question that the government's tax income was reduced by the huge cuts. and in only 9 1/2 months, it seems unlikely the whole impact, either positive or negative, would be apparent.
so, what is the takeaway from a story like this?
Republican tax cutters believe reducing the government's income would produce an instant, nearly magical benefit? Republican tax cutters don't care about stimulating a positive increase in revenue, thy care about reducing the government's ability to finance its activities, especially regulating the way they pursue their own interests?
is this tax cut dodge really about a boost to the bathtub business?
4
And today, Mitch McConnell has said the poor are creating the deficit.
Mr. Tankersley knows these types of tax cut will not reduce the deficit. He knows because this has happened twice before with the same result.
14
Such a bold tax break has never been attempted before. We need several years to know whether lower corporate taxes result in overall higher tax revenues.
@Tiger shark "Trickle down" and deregulation didn't work under Reagan or Bush. Under Bush the failure was dramatic. The current solution of "it needed to be a larger cut" is a con - higher taxes ensure the stability of this country and provided the strong infrastructure we have enjoyed. Now, the wealthy, through massive campaign contributions to a certain political party, are stripping the government while taking the benefits of stability that the rest of us pay for. The GOP whined about "transfers of wealth" by Obama - this is the most blatant transfer ever and, as expected, the wealthy did not reinvest, but rather increased their own wealth - imagine that.
12
@Tiger shark
Something similar has been tried before in the early days of the Reagan administration when top rates were slashed. Reagan, much like Trump now, advocated for a defense build up and no realistic plan for controlling spending and the national debt nearly tripled by 1989. This religious belief that reducing taxes will pay for itself without having to make difficult choices on budget priorities is foolish.
TS - can you show me where/ when Trickledown Econ has ever worked? Ever?
If Mr. McConnell is correct & government spending on health care programs such as Medicare & Medicaid is responsible for the skyrocketing deficit, why not focus on reducing & controlling health care costs? Fix the source of the problem rather than gut programs that are essential for tens of millions of Americans. Actually, almost everyone in this country would benefit from lower health care costs, not only those who require Medicare or Medicaid. Why not start there, Mr. McConnell, and tackle the difficult part, since you currently have the power to improve the system without hurting a huge number of Americans?
12
The problem with McConnell's reasoning, not withstanding his disdain for the essential healthcare and retirement needs of the nation, is that by gutting Medicare, Medicaid and Social Security to help pay for the Republican tax cuts solves nothing. Shifting the cost of Medical care and retirement onto individuals does not make the cost of retirement and medical care for the nation go away.
5
@Jane McConnell's strategy is to set up a transfer of the United State's money to the rich through tax cuts and to strip that money from programs for the poor.
7
Jane- I assume you are promoting Single Payer health plan- by far the best way to lower societal health costs.
3
In the analogy is fine but misses many important points. With 3.7 percent economic growth will likely not come from more hiring. That leaves "profits" as the driver of growth. We are seeing corporate profits rise but not employee profits. Labor is being left behind.
In the Great Recession productivity spiked. Labor fearing for its job went the extra mile and [importantly] received little to no compensation.
The rump tax cuts led to stock buy backs and other financial moves to profit owners. No one goes into business to create more jobs, they go to make a profit. Jobs are only one function of that. You hire more workers if it increases your profit. But if you identify another more cost effective way to increase profits you will choose that first.
Yesterday's stock market had a strong day on earnings from a large financial institution and a pharmaceutical business.. Big Pharma is predatory so those profits do not bode well for the poor and sick. The same is true with Finances, considering most people don't won stock.
So even if they conjure up some magic growth numbers its an aggregate and does not apply to the majority of Americans who are struggling.
Oh and don't forget you tax cuts run out in 8 years. Then what? Another sitting president will have to take the heat and try to fix this problem. In all likely hood it will be a Democrat. Republicans will blame him/her for the state of affairs.
14
Wow big surprise, massive tax cuts to business and the rich, resulted in, a reduction of Federal Revenue! Trump the magic man, found out he can't just print money as needed and wow the budget deficit has increased! Revenue reduction isn't paying for the tax cut, who would of guessed it?
15
In January 2017, CBO forecast that the budget deficit in 2018 would be $487 billion if Obama policies were continued by Trump. However, due to Trump’s tax cuts and additional spending, the budget deficit in 2018 was $782 billion, an increase of $295 billion or 60% relative to the Obama baseline.
In January 2017, CBO also forecast the sum of budget deficits (national debt additions) for 2018-2027 at $9.4 trillion. In April 2018, CBO updated that forecast assuming Trump’s tax cuts and spending laws (current policies at that date) were extended throughout that period, revising their forecast debt addition upward to $13.7 trillion, a $4.3 trillion or 46% increase.
Therefore, Trump added 60% to the 2018 deficit, and 46% to the 10-year forecast debt addition, mainly with his tax cuts.
Republicans lie and say income tax cuts pay for themselves to convince people to support a tax cuts for the rich economic strategy, rather than a raise taxes on the rich and pay for college and healthcare strategy.
22
If all the tax cuts are gone to middle or lower middle class groups, may be we would have seen some better results.
11
(at least not yet)!!!! At least not never. What a terrible title addition. Trickle down has not worked and will not work. And to use the Clinton tax cuts is disingenuous at best,
And wait for a slow down. Then the deficit will be even worse.
10
One of the main reasons the Donkeys need control of the House is to reorder our tax situation as designed by the GOP. The GOP plan is ruinous.
10
Obviously, it was only propaganda. We have seen this disaster unfold on the middle class and poor at least two times in the last 40 years. Each time, the dishonest and wealthiest cashed out and then when the economy tanked, they got the tax payers to bail them and essentially make the companies they buried whole again. The only hope is that when we crash the next time, the Dems do not bail out the 1%ers. In fact, they should create a claw back tax that makes them pay middle class Americans back. The 1%ers pay so little tax as it is, it is criminal. You need look no further than Kushner to see the inequity of our tax system. No taxes in 6 years when he made 400 million dollars. Owning property adds no value to our economy. It is simply a thing. It does not create jobs, it only enriches the wealthiest at the expense of the less fortunate. It should be taxes at a much higher rate than real job producing businesses.
13
“Tax cuts pay for themselves” is and has long been a Republican fantasy.
The purposes of these tax cuts were:
Serve the GOP’s wealthy donor class
Benefit Trump’s personal finances
Create deficits that can be used as an excuse to obliterate the social safety net
Treating this whole idea as if it were serious policy does the NYT and its readers a disservice.
11
For the baker; let's consider percentage changes in the Price (P) and Quantity (Q) of the loaves of bread sold. The P per loaf fell by -25% day-over-day; where: [(($3.00 - $4.00)/$4.00) x 100] = (-$1.00/$4.00) x 100) = -25.00%. Similarly, the percentage change in the Q of the loaves sold increased by ((125 - 90)/90 x 100) = +38.89%. To compute the change in Revenue, simply work with these percentage changes from Day 1:
For P: (100% - 25%) = 75%; and for Q:
(100% + 38.89%) = 138.89%. Now, for Day 2's Revenue: simply combine these two into their product, after returning to decimal form:
(0.75)(1.3889) = 1.042; and 1.042 x $360 = $375.12, with a small rounding error.
On a P versus Q plot, the closer the demand curve approaches a vertical line, the greater pricing power the baker has. This is termed inelastic demand. If the demand curve is flat or horizontal, then the demand curve is said to be elastic, leaving the business with little pricing power.
Expenses must also be considered by the baker. The corporate statutory tax rate was cut from 35% to 21%; or by 14% points. And, by percentage, this 14% tax cut represents a 40% cut from 35% down to 21%.
[((21% - 35%)/35%) x 100 = -40%]. Also, the growth in the size of the annual deficit would act to raise (by crowding out) any interest expense incurred by the baker. So, the tax cut would be at least partially offset by any increased interest paid by the baker. (Profit = Revenue - Expenses).
[10/17 W 11:20a Greenville NC]
if the baker's overhead (taxes) were reduced by 25%, it would be a perfect opportunity for her landlord, the Kirshner Companies, to raise her rent by 30%.
3
Trees cause pollution - Ronald Reagan.
^ This is what you’re up againt.
24
Since when have Democrats cared about fiscal responsibility? Just one more example of political positions changing entirely when power changes hands.
This is why everyone is so sick of politics!
@Colin Apparently you haven't been paying attention over the last decades. Reagan/Bush spent us into a recession. Bill Clinton and a Republican congress worked together to pay off the national debt and create a surplus. Bush/Cheney spent us into two economic crisis, one of which was a recession. Obama put the economy back onto solid ground. Trump looks likely to run us into recession. The GOP may have earned a reputation for economic discipline in the last century, but they have surely squandered that by now.
24
@Colin
Pointing out, correctly, that the policies of your political opponent ae based on either a massive deception or gross stupidity, is not a change in political position, it is responsible opposition.
And since you raised the issue of fiscal responsibility and the Democrats, a little history lesson might not be inappropriate. The last administration to balance a budget was Democrat, Clinton. The last administration to halve a predessesor’s budget deficit, Bush Jr’s, was Democrat, Obama. The Democrats have been cleaning up Republican fiscal disasters for decades. You do reap what you sow, and once again, the Republicans have sown massive fields of financial land mines.
2
Tax cuts never pay for themselves. Never have, never will. In the past 50% return is about the best seen. Always a failure if what you claim is to cut taxes to get more revenue. Only a moron would think that would work. Or a very corrupt person who just wants to give money to rich people without regard for the good of the country. IOW, a Republican.
The fact is that tax rates now are the lowest in over 50 years. And Repubs are spending like crazy while cutting taxes thereby increasing the deficit. Of course they'll use that to cut what they really hate - programs that actually help people, like SS and Medicare. Typical corruption.
20
And the first thing out of Mitch McConnell's mouth after this data was released? Of course the budget has to be cut (and look for cuts to Medicare/Medicaid/Social Security). While all this was quite predictable (after all, shortly after the tax cut was passed Paul Ryan was already calling for budget cuts- but of course not for military spending) it was quite amazing how the Republicans duped their supporters into thinking this was a good outcome for them. Had they not rammed it down people's throats without having a robust discussion what the public now knows, and the Republicans up for reelection are careful not to discuss, is the tax cuts did not benefit the average Joe. Constituents need to actually research the issues before they vote!
10
It seems much of that tax cut money went straight "out the door" and over to China. Our trade deficit for September was an all time record. We should have been producing jobs building infrastructure instead.
8
It was reported that McConnell, if the G OP keeps Congress, will push to "reform" Medicare, Medicaid and Medicare, as they are the reason for the ever increasing budget deficit. "Entitlements" need to be cut to bring deficits under control.
It is no surprise that Trump, and the GOP, created the deficit situation will the ill advised tax cuts. Almost all of these tax cuts going to people like Trump and McConnell. And, to fix it, the GOP wants to hist the vulnerable, but cutting Social Security, Medicare and Medicaid.
For many people, blindly following Trump, and the GOP, tax cut agenda, they are in for a rude awakening when they file their taxes next spring. Especially, if they live in a state where they tax their state income tax to the Federal Adjusted Gross Income. The tax cut from the federal government will be erased by their state. And, this is in addition to those living in states where state, local and property taxes exceed $10,000/year.
The tax cuts will never pay for themselves. And, the House was willing at add another $500 billion more to the tax cuts and the deficit.
By the way, some of the "deficit" is from IOUs Congress "borrowed" from the Medicare and Social Security Trust funds to fund government. Now, they don't want to pay it back. But, they want to push people who worked their whole lives for Medicare and Social Security.
Congress gets their life time retirement and health care. People who toiled, their whole lives, are "entitled" t o the same right.
10
Here's an idea: What if people actually paid the taxes they owe? If people like our president and his family actually paid their taxes, we would likely do away with that deficit, even without changing the current tax rate or reducing spending. I've got to believe if Donald Trump is getting away with murder on his taxes, a whole lot of other people are too...
22
The GOP clings to the myth (publicly) of supply side economics because it serves their real interests. By larding the debt and cutting the taxes of the rich that fund the party, they starve the government of money to fund the kinds of programs Democrats like (and Republicans hate) and enrich their donors.
It seems counter intuitive, but I hope the GOP retains control of the House and Senate until the next election cycle. When the market corrects- and sharply- I want Republicans all around to take the blame.
4
The unluckiest guy in the country right now? Jared Kushner. His father-in-law gives the country a $1.5t tax cut - and he won't benefit.
3
While federal finance is a complicated subject, it is criminal to increase the federal budget deficit in the years when the economy is doing well and the surplus revenues - sans a tax cut could have started making a modest dent in the accumulated deficits.
It is one thing if the deficits were used to meaningfully improve the lives of all Americans. It is entirely something else when it is solely a giveaway for rich.
15
I bet that if the the cost of paying for wildfires and hurricanes is added in, then in 2019 gthe deficit will increase dramatically.
8
Hurricane and Wildfire Relief is small potatoes in the context of total outlays. But the deficit for FY2019 is almost guaranteed to rise due to falling revenue. FY2019 only includes months after the tax cut took full effect, whereas FY2018 includes some months when pre-tax cut revenue was received. Based on current trends, it would not be surprising to see total revenue shrink to 15% of GDP (see graph in the article).
4
One piece is missing from the bakery analogy: the cost of one loaf of bread. Now that our canny baker has decided to sell more loaves at a lower price, she'll need to cut costs to keep her profits up. Maybe shorter hours, or fewer employees. And isn't that the next step in the Republican strategy? "Oh no, our deficits are rising! Who saw that coming? But we're stuck with these tax cuts. Guess we'll have to cut expenses. Social Security, Medicare education, safety net, all that unnecessary stuff."
24
Trump's "Tax Reform" wealthy giveaway can't be considered as a 'stand alone, pays for itself?' question. Remember that at the same time Trump was cutting incoming revenue, while vague promises of "less taxes will mean more money coming in" -- which doesn't pass any kind of common-sense test -- the Republicans in Congress and Trump were boosting spending on the military and their reckless 'non-whites repression' agenda. So, while raising spending, Trump's "Tax Reform" cut revenues. We see the result in fast-growing deficits while the economy is booming, which should be bringing in *more* revenue and reducing the deficit. The last time this kind of economic boom happened, in the last few years of the 1990's, that was the last time the federal budget was actually in balance. Trump squandered any possible chance of balancing the federal budget when his "Tax Reform" giveaway to the wealthy was pushed through. We see the results now, but it is our children and grandchildren who will pay the price for this Trumpian folly.
7
And at least not ever, because they’ve done this before and it never works. Simply providing fodder to cut programs for people they don’t care about later.
9
The fact that tax revenue rose from year to year in spite of the tax cuts is relatively good news. The fact that it didn't rise as much as it could have if taxes were not reduced seems somewhat sour grapes, it also didn't rise as much as it could have if we raised taxes assuming that didn't tank economic expansion.
On the individual tax side "Personal tax receipts are up on their own". This is likely due to the fact that most of the working wealthy as opposed to the investing wealthy actually saw a tax increase. Since most high earners live in high tax states the cap on state deductions increased taxes for many wealthy workers. So many think the tax cuts were a giveaway to the rich, not so if you're wealth comes from wages (including stock grants, options etc all taxed as ordinary income). It's time we consider taxing all income at the same rate, if we did we might be able to lower individual rates a bit more and remain revenue neutral.
1
It would be good if you read the part where the article says that revenues have fallen by $10 billionnsince thebtax cuts for the wealthiest kicked in.
9
The only reason that revenue grew at all is the tariffs that were imposed during the past few months. The miniscule growth in the total $ figure obscures the fact that total revenues were significantly down as a % of GDP. If you look at figures for the past few months (which do not include any revenues from 2017), it is apparent that every category of revenue is falling...except for tariffs.
7
If more money had gone to the working class households they would have spent it on goods and services. More store clerks would be hired, to restock the shelves, new orders would be submitted and factory workers, shippers, and freight workers employed. That is how you stimulate an economy.
What happened is too much of the tax cuts went to the top, they have used it to artificially inflate the stock market with buybacks and most of the economy still is losing ground as rents, fuel, and everything else has a higher inflation rate than the average wage increase. If it weren't for the Democratic states increasing minimum wage it would be even more of a disaster. Trump is driving the country into bankruptcy, just like he did his casino and other businesses.
21
It's hard to pull in more tax revenue when the rich don't pay taxes. And even harder when the American taxpayer pays them not to as your Jared article showed.
14
Congressional Republicans cut taxes to such an extent that they never had the ability to cover the loss of revenue to the gov't. This is the bed rock starve the gov't strategy of Republicans. Now the other shoe is going to drop Rs are going to claim that Social Security, Medicare and Medicaid are too expensive.
21
@c harris
I think they already claim that.
I know ryan was ready to reduce Medicare and Medicaid.
He is not running for re-election and I guess he will become a Lobbyist, who really run this country, so anything is possible and i agree with you.
8
@c harris
I agree. Starving the Beast is the real GOP agenda. Increasing the deficit is only the first step.
They’re not going to pay for themselves, with the birthdate falling and the population aging.
5
Works well for Trump and the Republicans. Wealthy individuals and corporations who got the bulk of the tax cuts, now fund the politicians with the money they got from the tax cuts.
Now, at least according to Mitch McConnell and the Chairman of the Republican Congressional Campaign Committee, the deficit will be solved by cutting entitlements, ie, social security and medicare.
Surprise, surprise!! What can one expect from the GOP. This is not
new behavior on their part, but historical behavior. Ronald Reagan once denounced social security as a tilt toward socialism.
15
Clinton showed that tax cuts that target the middle class and promote business hiring and spending, increase economic activity and tax revenues. W reversed them as have all republicans before and since to benefit the rich and stock buy backs or to simply lower corporate taxes and the money flows to the top and tax coffers always never keep up. Talk about economics 101. The economy is doing well, now is the time to show some common sense and long term thinking and adjust things to increase revenues, but we won't.
9
The problem is that a lot of Trump supporters will not read this article or worse, even understand it. So the con man will continue to lie and his supporters will continue to believe him.
53
@W. Andre
And continue NOT paying taxes......loophole anyone?..
2
Weren't the results exactly as intended: shift the tax burden to middle class Americans from the wealthy and corporations? After all, we are the ones using all these darn services.
6
Traitor Mitch calls for Social Security and Medicare cuts to make up for deficit expansion created by tax cuts he championed.
Exactly what one expects from someone who represents one of the poorest states in the union that has been neglected throughout his time in office.
Another example of an electorate that consistently votes against its own economic welfare in support of single issues like abortion rights. The GOP war on public education has paid handsomely.
27
To assess the effects of the tax cut correctly, its impact on State and local revenue needs to be included. It is NOT - even though the data are readily available
As this is the NYT , I looked up the data for NY State
NY State Funds Receipts FY 2018 (in $ Millions)
Taxes $79,266 Annual Growth 6.6%
Miscellaneous Receipts $27,262 Annual Growth 2.5%
Federal Receipts $58,942 Annual Growth 6.4%
Data
https://www.budget.ny.gov/pubs/archive/fy19/enac/ais/AISUpdate-sep2018.pdf
3
@Woof For federal deficit's calculation, NYT is right to not include NY state's revenue growth. Which means, the tax cuts are good for NY but not for federal government.
1
NYS doesn't pay down federal debt.
@Woof Dats in comment is from 2018. FY 2018, the data you cite ended in April 2018
"1 The State fiscal year is identified by the calendar year in which it ends. For example, fiscal year 2019 is the fiscal year that began on April 1, 2018 and will end on March 31, 2019." page 1 footnote
FY 2019 revenues are running a slight deficit similar to the federal dsta reported in the article.
1
It is all proceeding as planned. McConnell has announced the need to cut Social Security, Medicare. You can fool most of the people most of the time. Kleptocrats win.
19
There is overwhelming evidence that tax cuts, especially cuts directed at the rich, never pay for themselves. So why the "at least not yet" junk.
18
Trump, the Kochs, the Murdochs and the Walmarts and the new kings in an age where kingship means taxing ordinary folks so the very rich can accumulate massive inter-generational wealth for themselves. And like kings of old, these despots keep people in check with a mix of fear, predjudice and cheap entertainment.
11
As the author admits, there is a paucity of solid data regarding the tax bill. Government statistics are often revised. Tax return data for 2018 will not even be known until next May/June. As much as I despise tax cuts to the rich I usually don’t call the winner in the initial innings. I do know who the loser is. No appreciable wage growth, less left to put in our retirement account, higher health care costs, the cost of kid’s degrees, gas at the pump and groceries in the cart, these are all rapidly going in the wrong direction in my household.
14
Admittedly, the headline figures in their various news reports quote the yearly totals for FY2018 (Oct 2017 to Sep 2018). But Monthly Treasury Statements are provided on the 8th business day of each month. These are never revised as they reflect actual outlays and revenues in the preceding month. There are variations due to the number of business days in each month and some months include quarterly payments. Eliminating this "noise", it is possible to see a clear trend, with Corporate Tax revenues falling most. Income Tax and even Payroll Tax revenue (somewhat inexplicably) are also falling. This trend is even more pronounced from May 2018 onwards, as the influence of pre-tax cut receipts fall away. So, no it is not too early to raise red flags on falling tax revenues.
First, "Personal tax receipts are up on their own, but corporate tax receipts are down by about a third from a year ago." This is evidence that people that work for a living are paying more taxes to subsidize tax cuts for the owners of corporate shares (75% of whom are in the richest 1%).
Second, Supply Side Economics has NEVER WORKED, EVER. The only reason that the Reagan tax cuts seemed to grow the economy in the early eighties was that Volker's Fed cut interest rates by about 10% at the same time. It still wasn't enough to make up for lost revenue and Reagan had to raise taxes, GHW Bush had to raise them more. The more common result of Supply Side Tax cuts is the experience of Kansas, which was decimated by its tax cuts.
And the most important argument against Supply Side Economics is that over the long run, the cuts to taxes and regulation over forty years have reduced average growth in the economy.
When the top rate was 70% and the corporate rate was 50% average growth was 3.5% and peak growth was 8% Now that they have cut these rates by more than half, average growth is below 2% and peak growth 5.1%.
Why don't Democrats or mass news outlets ever mention that?
Supply Side Voodoo has even been derided as a scam even by David Stockman who's job it was to sell it under Reagan.
Corporations don't invest unless there is an increase in demand. Taxes have no effect on investment.
More money in the pockets of workers, who are the consumers, grows demand and the economy.
20
This is all part of the Republican's long term plan to gut entitlements! The strategy is to destroy the Government by bankrupting it! Think about? What is Trump really good at? 1. Defaulting on debt; 2. Filing for bankruptcy. Trump is the perfect stooge for them to use to get away with this diabolical plan!!
9
I don't care if it pays for itself. CUT YOUR SPENDING. I know people with Stage 4 cancers who can still work. I work with a guy who has had a urine bag strapped to his leg for over a year. This endless welfare needs to stop. Stop researching how snakes interact with robot squirrels. Stop wasting money!!!
1
@Jay Cutting spending cannot improve government deficits. That's an easy mistake to make, if you look at a government like a household. Y'know, if you're spending more than you make, and there's any excess in your budget, just spend less.
But that's not how government debt works. Government debt is valued as a fraction of GDP, because that's what determines how easily a government can pay back debt, and that determines how secure your government's bonds are, and that's what investors care about. And as she in the chart above, government revenue (and thus spending) accounts for a whopping sixth of our GDP! Good God that's enormous! So what happens if you cut that spending? Well, your GDP shrinks too. This *increases* your total debt as a function of GDP, which is what investors (and the government) care about. (This happens because denominators have more leverage than numerators).
So cutting spending, paradoxically, actually makes government deficits *worse*. This is in part what happened to Greece. They cut spending and in doing so increased the value of their debt more than they reduced the growth of their debt, while also reducing the growth of their evening and reducing their ability to pull themselves out of the hole.
The only way to climb out of a debt spiral is to heavily tax static assets and assets which taxes won't keep out of the economy. i.e. tax stored capital of the rich directly, and heavily tax the rich's assets and income. Austerity is a fool's game.
17
Thanks, Paul Ryan!
1
Unfortunately those of us who care about facts and believe in math and science already understood this. That the massive tax cuts for the wealthy and corporations were not going to increase revenue. Like others have said this is simply an excuse to turn around and say "oh the poor are sucking us dry via these programs that must be cut". That it's a spending issue not a revenue issue. Ignoring of course all the extra defense spending. What a bunch of liars.
Also unfortunately those who support Trump are not listening or paying attention to any facts, math or science that runs counter to their belief that Trump is "doing great things". I've seen this within my own family. The dissonance between what they bashed Obama for and what they allow Trump to do and say with out a single word against him is beyond my comprehension.
25
@Cheryl. It's really pretty easy to comprehend. Starts with "rac" and ends with "ism".
The GOP tax cut was another reason, though not the only one, for voting for democrats across the board in the mid terms. They obstructed spending on the much needed economic stimulus by democrats in 2009 when the economy was in free fall, citing 'excessive spending', and crying crocodile tears for our kids and grandkids. In 2017, with unemployment falling towards a below 4 percent mark, the GOP enacted a huge tax cut that exposed their lies and hypocrisy, and the fact that they don't care about anything other than grabbing and staying in power and serving themselves. They also raised taxes on high tax states-the blue states, by limiting the salt deduction. The SALT limit was nasty, vicious and vengeful.Trump and the GOP hate democrats, and blue states and swing states, because most in these states voted for Hillary in 2016. The SALT limit was authored and supported by blue and swing state republicans running for elections right now. They should be defeated because they don't care for us, are Trump enablers, and needlessly worsened the deficit by 2 trillion, exposing us to ever bigger deficits when a recession strikes and millions of jobs are lost. With uncontrolled deficits and spending, investors, including foreign investors will flee the US and we will all be left much poorer.
9
I don't mind not having the tax cuts pay for themselves. However, I do mind the budget isn't balanced. The debt is ballooning and nothing is being done.
1
Trump's isn't 'voodoo economics'-- his policy is crystal clear: give all of America's wealth to the elite and let Joe Blow pay the piper.
20
Any government fiscal stimulus, whether it is in the form of increased government spending or in the form of increased private spending stimulated by reduced taxes, will cost money and will have an effect. The question is, what was the cost and was it worth it? Was it a good thing to do? Both increased government spending and increased private sector spending stimulated by tax cuts can increase tax collections compared to what they would have been without the spending, but the calculation is different of course, because with direct government spending and no change in tax rates tax collections should simply increase, whereas with increased private sector spending stimulated by tax cuts there is a decrease in taxes collected due to the cuts and an increase due to the higher level of economic activity. Plus the big unknown is always what the situation would have been if no action had been taken, or if different action had been taken, which is a question that can never be answered of course.
1
In our Senate debate, the candidates were asked about the deficit and the tax bill. The question was designed to address tax and budget policy. The answers simply stated that our budget priorities are right and yours are wrong. So the most important economic questions were reduced to a mindless partisan debate. When the economy is discussed, at least in Arizona, it is addressed with meaningless buzz words.
3
There was a recurring bit on the old Rocky and Bullwinkle show where going into a commercial break, Bullwinkle the moose, complete with a cape and top hat would ask if Rocky the squirrel wanted to see him pull a rabbit out of a hat. But, it never worked...
Steven Mnuchin's prediction is reminiscent of the return of the Laffer curve, famously showing how lower taxes meant more revenue, a feature of the Reagan tax reduction scheme. It didn't work out for Reagan or more recently Gov. Brownback in Kansas, but as the Bullwinkle would each time exclaim, "this time for sure!"
23
@John Archer
The Laffer curve just says that if taxes are 100%, then most people will not bother to work (since they get no money) so taxes would be zero.
So if taxes are zero the is no revenue, if taxes are 100%, there is no revenue, and in between there is revenue.
However, there is nothing about the curve that says how high taxes would have to be to lower revenue. The actual shape can only be determined by analyzing data. The studies I have have seen showed that the cutoff was quite high, above 70%.
The real life experiment we have, is that we have been cutting tax rates for decades, and as we do, average growth in the GDP has dropped also. So the idea that cutting taxes increases growth (which is necessary to raise revenue) is disprove by the actual history.
These relationships are easy to see if you just Google graphs of GDP by year since WWII and tax rates by year since WWII. It is blatantly obvious that cutting tax rates has coincided with cuts to both average and peak GDP growth.
For example when the top tax rate was 70% and the corporate rate was 50%, in the 60s and 70s, growth averaged 3.5%, even under stagflation!
Cutting these rates by more than half has cut GDP growth to an average of less than 2%. Trump's peak growth did not compare to the peak of 8% under those rates.
And productivity has grown exponentially. It is worker pay and benefits that has stagnated, while worker productivity has been diverted to corporate profits, shrinking consumer demand.
3
Tax cuts should be for the middle to lower class. It will definitely lead to a trickle-up situation because those people will spend it! Then we will get our sustained boom.
9
Would the velocity of money and the taxable GDP increase if the tax cuts were done at the bottom for people who spend to cover their basic needs? As I understand it tax cuts for people at the top adds to their savings and may not increase the taxable GDP.
5
So corporations and their super-wealthy owners are paying less taxes, and the middle class are paying more taxes, but not enough to make up for the giveaway to the rich. Yeah, that is exactly what we expected.
16
The Trump taxes have been a boon for my spouse and I. We are finally paying off student loan debt from the tax savings as well as doing some upgrades around the house. Our peers have also commented on their savings and inclination to pay off debt or spend more on appreciative assets. None of us were Trump supporters but whole heartedly support this new tax structure and continuation thereof.
1
@Indie Voter - I understand that you individually may have more money to spend, but the point of this article is the decreasing federal revenues that are falling short in supporting federal budget spending. The deficit, rising inflation rates, and the doubling of health care premiums (like my daughter got this year) will cripple our country and each middle class family will see less wealth and fewer federal safety net programs to assist them. The SS and medicare programs will be a target for reductions in benefits next. So I hope you're putting that "boon" into retirement savings because "you will be on your own" just like the GOP has wanted for years. Of course, those who are wealthier will be in a much better position to be "on their own". For the rest of us...well, I am sure the President and his friends will send their thoughts and prayers to us.
6
@Indie Voter Fantastic because when you are in middle age, your country's economy will collapse from the debt it is taking on to fund your good fortune now. As for me, I'll be dead so good luck!
1
@Indie Voter, it's cool that you personally have more money in your pocket and it's got to be nice to get that room redecorated; however, if all of this comes at the expense of others then that's not cool at all.
8
i don't imagine tariffs improve this picture.
@rkh It may increase inflation? I don't know... I guess we will find out.
" Republicans dismissed those warnings."
So , just like Climate Change, Republicans dismiss the evidence , findings and reports of experts on the subject
at hand versus their own subjective opinions based on nothing but their desires and wishes of the outcome they are promoting?
Great way to govern , lead and determine in Lala Land, but in no way acceptable or advised when concerning the World's largest economy and Richest Nation.
2
We have an excess savings problem- tax cuts for the rich is money saved, not spent, leading to slower growth. Income inequality is another result of too low of taxes on higher incomes. Higher estate taxes and higher taxes on high wage earners should go to reducing the deficit, infrastructure, health care, and defense. There is no reason that Warren Buffett’s secretary should pay a higher tax rate than Mr. Buffett.
8
@ThePB Earned income versus passive income. The elusive secretary and tax argument is bogus. If she is or was a member of the small Berkshire office staff than she owns stock in the company either under Class A or Class B shares and therefore would receive capital gains income at a rate lower than personal income taxes.
@ThePB
Higher taxes actually lead to more investment, because investment is tax deductible, while taking profits its not.
Supply Side Economics is a scam invented to do the opposite of what it claims to do.
Google a graph of tax rates by year since WWII, then Google a graph of GDP growth by year since WWII. It is painfully obvious that both have come down together, the opposite of what was promised.
Why don't Democrats or "liberal media" ever point this out?
@Indie Voter
Why should capital gains be lower than personal income taxes.
If we value work, and want to stay employed, why would we subsidize our replacement by machinery.
If I am replaced by machinery because it is actually more efficient, that is one thing, but if I am replaced by machinery because machinery gets a tax break, that is manipulating markets, not creating efficiency.
All income should be taxed on the same sliding scale, and if business gets to deduct expenses, so should workers.
If you are a worker stop believing the lies sold by "businessmen" like Trump.
There are two kinds of macroeconomic policy, monetary and fiscal. Monetary is controlled by the Federal Reserve, which uses small and precise measures. There is generally a right and a wrong.
Fiscal policy is mostly about the budget. Huge tax and spending decisions are involved. And economists disagree about what works. They’re still debating stuff done 150 years ago.
Nobody even knows whether deficits matter. This whole debate is academic. What really matters is that Trump’s tax law shouldn’t have helped the wealthy as much as it did.
1
@michjas People do know whether deficits matter. History is littered with economies and governments that collapsed because they could no longer support debt payments. The USA will be there in two or three recessions. So, maybe 30-50 years.
2
@michjas. Overall deficits matter. Increasing deficit as a percent of Gross Domestic Product matters. There are consequences. As interest rate increases, the money paid out to bond holders will take a larger fraction of Federal spending. This Administration and Congress are likely to increase military spending, regardless. With less of the pie, social programs will be increasing pressure. This is by intent for Conservatives - a feature not a bug - according to Newt Gingrich in 2001: "I don't want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub". Reduce revenue --> increase deficits --> increase military spend --> say we must reduce social program outlays in order to get our fiscal house back in order. So, yes deficits matter, because they have consequences.
5
@Elan Rubinstein
Yes and the whole idea that governments should borrow is a scam.
If I am the King and I have the power to tax, why would I borrow? Instead of taxing global banks, we are letting them tax us (with massive interest payments), and then on top of that printing free money for them at the federal Reserve. Global banks have actually received over $3 trillion in NET income from the Federal Reserve since 2008, which comes to $9,000 per cortisone, or $36,000 for a family of four. What could you have done with your $9,000?
We the People are king. We are the sovereigns and through our representatives have the power to tax banks to invest in ourselves and our families.
Instead they have us slashing their taxes, raising our own taxes, paying them interest, and printing free money for them.
Again, We the People are sovereign. Start thinking like a king, and then you will stop believing that you need rich people to run the economy, which really means they are stealing from you.
I'm still waiting for my share of the trickle down from Reagan.
25
Why does the New York Times even deign to discuss whether or not massive tax breaks at the top of the food chain pay for themselves in increased economic activity? We have several decades of evidence that show clearly, convincingly and consistently that this argument is a total red herring.
It doesn't work that way. Gutting tax revenue, um, does nothing more than to gut tax revenue. The argument is merely a smokescreen to justify spending cuts on critical social programs in order to finance the care and feeding of the supremely privileged, comfortable, and wealthy.
15
Tax cuts always increase deficits; revenues would be much higher without them. We can compare the CBO baselines before and after tax cuts to measure the impact.
Further, revenues in dollar terms rise nearly every year as the economy grows; they have only fallen in 7 years since 1968, mainly due to recessions and the Reagan and Bush tax cuts. With the Obama Boom continuing despite Trump's meddling, revenues should have grown strongly.
The ten year debt increase trajectory for 2018-2027 has increased from $9.4 trillion (CBO January 2017 baseline based on Obama policies) to $13.7 trillion (CBO April 2018 baseline based on Trump's current policies), an increase of $4.3 trillion or 46%. That is the figure that the media should be covering. That is mainly due to the tax cuts, if they are extended past their current scheduled expiration.
4
The republican theory employed here " we will lose a little on every taxpayer but we will make it up in volume" was destined to failure. You can't add by subtraction. This was always a self-serving reward to the republican elite for winning the White House and Congress in 2016 and a gut punch to the middle class. Surprisingly some of the middle class may still be sticking with these crooks. Let's hope some sanity is restored in 3 weeks. Vote for democrats so we can have a check on this nonsense.
7
Take away from the middle class, elderly, the poor and increasing the budget deficit to support the rich and corporations is the GOP mantra. I am waiting for the day when the GOP once again blames the Democrats and the entitlement programs for the tremendous deficit resulting from the income tax give away. I am sure the same anger I feel against this current administration, the mockery and the butchery of government policy / authority which has manifested before my very eyes is being felt by millions of Americans. It’s only a matter of time before the tipping point is reached; the division and tension in government and country is already transparent. It’s already happening but I can envision massive demonstrations and disobedience against an administration and GOP totally fixated on destroying the American way of life for millions to appease their constituents at whatever the cost.
Put away your cell phones, sports shows, reality TV shows and your differences; any and all diversions that detract from what is happening in our government and country today. Do your homework, do your research and vote your conscience November 6th for the sake, future and civility of the country.
8
@A.A.F. blaming Democrats and entitlements happened yesterday when McConnell was giving an interview
I think you are missing only. Hff trade war is part of his plan to collect mney from poor and middle income consumers to pay tariffs a and pay down the debt, and collect money to play for the WALL! Of course real estate is excluded so Jared can make money!It is a win-win. Trump wins, Trupm wins. The "losers" lose.
2
We are being duped! That’s all the math you need to know.
5
Isnt there some saying like "fool me once , etc" As "ol Ronnie" used to say "where's the beef?". How many times does that "trickle down" story have to fail before folks finally wise up that those tax cuts flood up to the top earners? Wish I had a bridge to sell!
3
This reminded me of when Wolfowitz assured the US that the Iraq oil will pay for the war in Iraq.
Wolfowitz didn’t profit but Chaney’s Halliburton and its subsidiaries made a killing in more than one way.
6
This is what the Republicans planned. Now they have "justification" for cutting Medicare andSSI. It is their plan: to further enrich the wealthy and reduce as many safety nets and "entitlements" as possible, even those that were paid for by the beneficiaries, i.e. SSI.
9
I try hard to maintain a balanced perspective and read from multiple reliable sources (starting with no social media as “news” sources). So, after reading this article, I went over to the Fox News app on my iPad just to see what their commentary on the Treasury Department’s Monday report might be.
Answer: Crickets. Nothing. Nada. In fact, the Fox News app doesn’t even have a “business/finance” tab on their menu of ten tabs; lots of other things like “Lifestyle” and “Entertainment” and (of course) “Sports,” but nothing about this. Perhaps that’s because Murdoch also owns the Wall Street Journal and you’re supposed to read about it there, but what % of Fox watchers regularly read WSJ? I bet it’s no more than 10%.
Now I understand why there are studies showing that regular Fox News watchers are actually less informed, overall, than people who don’t watch TV at all ...um, like me.
6
More great reporting from the Times. Its comical that Republicans keep spouting the same nonsense year after year that tax cuts are going to pay for themselves and some continue to believe it. Make America Gullible Again...
5
And, of course, McConnell has said that the deficit is due to "entitlements" so you know where this is going, right?
The thing that is so amazing is look at the revenue as a percent of GDP in the late 1990s when we were generating surpluses. Yes, there is no way you can run a modern industrial economy on under 15% of GDP. But that is exactly what the Republicans want to do - essentially eliminate everything except internal security and national defense.
All so we can continue to build the next Guilded Age for the wealthy while everyone else literally drowns in debt and climate change.
5
The wholly unnecessary tax cuts could not have been instituted at a worse time. A freshman economics major could tell you that they are not needed during an economic expansion. When the economy inevitably does turn south, the magic bullet of a tax cut will not be available to combat it.
5
"Starve the beast" is not a slogan, but is actually working. If Republicans continue to do that, our social safety net will be reduced and eventually gone with a blink on our eyes. Republicans treat Americans like a stupid kids with promises and a moment of glory or happiness. They bet most people will soon forget their words, and move on to other pressing matters. We just don't have the courage to stand up and challenge their ideology. Maybe we are really stupid by not voting. Maybe in our wishful thinking that we will get lucky so unfortunate thing won't happen to us. We need to wake up to this "frog in a slow cooking path."
1
"If you buy me a hamburger today I'll gladly pay you Tuesday." Trump's minions have sold us the old line from Wimpy of the Popeye cartoons as the basis for tax policy.
The corporatist class has (and is) enjoying their "taxburger" today. But Tuesday will never come for the rest of us. Rather, the GOP will suddenly "discover" that there is a deficit, and that the only way to solve it is to gut social security, Medicare, and Medicaid.
9
"Trickle-up" tax policy is to the (R)egressives's as the pick-and-roll is to Curry-Green. And the (R)'s will keep running it until their ill-informed voter base figures out what's happening and how to stop it. Psst, dearest (R) voters. Here's a hint. Vote (D).
This is the real news. The real news isn't Putin or Kavanaugh, nor what he said on Twitter last July ... it is this.
When the nation is really suffering, five or ten years from now, more will agree with me.
3
We let the Republicans do this to us every time. We're like Charlie Brown with Lucy and the football. Will we ever learn?
6
These numbers would be even worse but for the return of some of the trillion dollars in pent up foreign earnings. This is a case of financial fraud by republicans.
7
What baffles me is why do the working class and farmers and even poor ppl keep voting republican when it’s as plain as the nose on their face the republicans could care less about them! I’ll just never get that why some ppl vote against their own interests.
8
Starve the beast by reducing the tax burden on the wealthy and removing safety net programs that ensure that middle- and lower-tier workers need their incomes because there is not government alternative to exploitive work.
It's a continuation of the GOP policy of killing the ability for most private citizens to save money. Low interest rates, the 3% extra going to Social Security since the Greenspan commission, structural demolition of the savings and loan industry.
The economics of what is happening to our country is depressing, boring to read but vital to learn. David Cay Johnston makes it accessible. Try one of his books.
3
Good job Mr. Tankersley! I hope that these reports continue because the best way to refute Reaganomics is to demonstrate the losses in tax revenue & the concomitantly increasing federal deficit by the numbers.
Reagan told us that huge tax cuts for the wealthy would pay for themselves. Rather the deficit increased 2-3 trillion dollars. Bush II tax cuts dis not pay for themselves. Kansas and Louisiana tax cut did not pay for themselves. Trump tax cuts are, one again, increading the deficit by at least a trillion are not going to pay for themselves.
The pattern is painfully obvious. So Republicans, please stop telling us that tax cuts for the wealthy will pay for themselves.
14
What never fails to amaze me is how American voters fall for this nonsense over, and over, and over. When Republicans are in control, they run massive deficits by cutting taxes or starting wars. Democrats come in at some point and clean up the mess only so the Republicans can do it all over again.
This is not rocket science. Republicans (or Conservatives, as they like to fancy themselves) don't believe a single thing they say about deficits and taxes. They want to reward their donor base with tax cuts and pay for it by reducing benefits to average Americans. That's really all there is to it.
29
Today's U.S. National Debt Clock reports that the debt per taxpayer is: $177,355
With a booming economy, we should be paying down the debt and making investments, but what's really going on today is that the GOP has laid the groundwork for making significant cuts to the Social Security, Medicare and Medicaid programs that the middle class and poor rely on. Too bad the Evangelicals are not energized to prevent that from happening.
10
Stealing funds from the SS and Medicare that we all paid for would be criminal and my so-called red line. These are funds American workers paid for and are separate from the general (income tax) fund. I would immediately look for any lawsuit to join and start demanding an investigation.
6
This supply side jaunt has already been done multiple times, most recently in Kansas 2012 (Kansas Senate Bill Substitute HB 2117). Sam Brownback called it an "experiment". In science, an experiment is something where you learn something.
In this experiment, the results were as predicted by actual economists and subject matter experts. Tax revenues dropped. Infrastructure, education, and citizen services were underfunded. Quality of life was reduced. Those same businesses that benefited from a tax reduction found themselves floundering in the same environment.
Kansas had to reverse itself.
Now they are working towards a replay, as the memory of the prior debacle fades.... I guess it was not one of those experiments where you learn something.
https://www.usatoday.com/story/opinion/2017/06/25/kansas-failed-tax-expe...
6
Does it matter that deficits are higher? The corporations and the uber rich got what they wanted in the form of huge tax cuts and they run "our" government. Sooner or later they will be leaving the U.S. because our infrastructure will collapse and they won't be safe even behind their gilded gates.
6
The tax cuts will NEVER pay for themselves. We've known that since at least Reagan/Laffer. Anyone who says otherwise is simply stupid or consciously lying. But we have many people who fit that description. They are called Republicans.
7
The tax cuts did pay for themselves.
The very wealthy invested a large amount of money buying congress. With the latest tax cut, or raid on the treasury, depending on how you characterize it, they’ve now gotten a huge return on their investment. That’s what really matters.
Everything else is just quibbling by the “little people “ who don’t matter anyway. If they want some other outcome, they’re free to buy their own congress.
30
I'm troubled that the lead of this story is an analytical conclusion (No, Trump's Tax Cuts are Not Paying for Themselves), when a key fact is buried inside the story: federal revenues are DOWN in the nine months following the tax cut - in a booming economy. This is truly alarming - no matter what analytical model is applied.
6
@JCR
Until Trump’s sycophants see the problem it will only get worse.
@JCR
Nobody rational would consider the results of arithmetic an "analytical conclusion."
37 years of looting the US Treasury to provide comfort and caring for suffering millionaires and billionaires and the answer is expansion of the looting to education, infrastructure, wages and elder health care. That even one working American falls for this scamjob is a tragedy.
26
@Eric Carey I suspect that average people who vote for these pirates are victims of "present bias" - near term benefits to Them outweigh long term pain to the majority of our citizens - and then they will run for the hills of Switzerland, Norway, New Zealand and a few other civilized societies.
1
I think of the premier episode of Designated Survivor, where the Capitol, full of Congress and Senate for State of the Union speech was blown up. Yes.
Herbert Hoover anyone, how we forget the lessons of the past. I though republicans care about deficits, I know I do and I would never run my house this way.. This is insane the party stands for nothing it used to. What are they going to cut to fix this.... We need a new political party a moderate party where most Americans political fit.
10
Regan, Bush, and Trump, cut taxes for their friends, family and big donors. The victors and their spoils.
This means more second and third homes, expensive artwork, planes, boats, cars, their lavish lifestyles enhanced by basically paying little or no taxes. What a deal, and the shortfall in revenue, to quote Dick Cheney, “Regan proved deficits don’t matter.”
The Republican narrative is simply a broken record of the same Libertarian mantras that allow the rich to game the system and dramatically increase their wealth.They simply don’t care about infrastructure, the environment or affordable health insurance. The haves have all of the money and power, they control the narrative and the outcomes.
Now in the Trumpian era, you have a continuous circus show providing feel good entertainment to all of the disaffected white people who don’t have a seat on the gravy train. In this new era of Trump and Libertarian dreams come true, the economic good news just keeps arriving. Never mind the endless wars, decaying infrastructure and destabilizing climate, just go buy something, it will make you feel so good.
11
Not surprisingly, Mitch McConnell has just blamed the huge rise in the deficit on “entitlements.” He then defined “entitlement” as Social Security, Medicare and Medicaid. The Republican strategy to roll back the Social Security and Medicare benefits every American pays for out of their earned wages thus becomes clear. It the Republicans continue to control Congress, the Social Security and Medicare benefits you worked for are soon going to be treated like food stamps and welfare and stripped from you. And all so corporations and the already wealthy have even more wealth due to the Republicans’ irresponsible tax cuts.
I hope that the NY Times and other media sources don’t fall for Republican propaganda by calling Social Security and Medicare “entitlements.” They are earned benefits.
64
Be careful what you wish for. Trump got his tax bill through, cutting tax revenues. On his wish list is dismantling all our social welfare and regulatory programs.
Trump would be glad to make draconian benefit cuts. It won’t take much encouragement for him to help the wealthy at the expense of the needy. Encouraging him to cut the deficit is the wrong move.
10
Extending your logic, why wouldn’t the baker just raise the price of a loaf to $10? Wouldn’t he be better off making $1000 instead of just $400? If we were to apply that same logic to taxes, why not just double tax rates and we would immediately double revenues and end the deficit.
1
Let's set the record straight on the Republican mismanagement of the economy, and plans to destroy the American Peoples safety net of Social Security and Medicare, something that has always been part of their agenda.
Bill Clinton came into office with a huge deficit thanks to Reagan/Bush, when he left office the Democrats left the country with a big surplus. George W. Bush spent money on his wars and also gave the wealthy huge tax cuts, which again led to huge deficits and help lead to the Great Recession, with the country precipice of an economic collapse inherited by President Obama.
President Obama righted the economy, set the country back on good financial footing with a continuous growth curve of job growth and a stabile growing economy, and the deficits were starting to come down.
This economic recovery and job growth which was initiated by President Obama, was inherited by Donald Trump who with the help of Mitch McConnell and the rest of the Republican's gave the wealthiest citizens in this country huge tax cuts at the expense of working middle class, elderly and poor; and now that the deficits are going out of sight due to those irresponsible tax cuts, and now Mitch McConnell and the Republican are claiming ignorance to the facts.
The only chance to straighten out this economy again, is to get rid of the Republican Leadership who have been presiding over the destruction of the Middle Class and the countries safety net for their own personal gain.
77
The bakery hypothetical is off. You can’t assume that if the price per loaf were $4, 125 loaves would still have been sold, which is implicit in the rationale for lowering the price in the first place. The real question, in any event, is not whether the baker earned more revenue, but whether she earned more income. In a business with relatively high capital costs (which bakeries are), the extra dollars earned may well have been higher margin, in which case the price cut may very well have paid for itself.
1
@Neutral Observer
In this case, it will be even worse since government budget expenses are going up with republican policies (especially defense budget), not down, so less income. And we are not even considering The Wall..., and the Infrastructure Plan (which is extremely necessary to maintain the economy).
3
Nah, your objection is off. The hypothetical didn’t assume that 125 loaves would be sold at $4, but rather the lower figure of 100.
100 loaves at $4 totals $400; more revenue at less cost (in labor and ingredients) than earning $375 by selling 125 loaves at $3 a pop.
5
Wait a minute. The Democrats and Obama are responsible for the deficit. This fake news and the historic tax reform will be grand and will be remembered in history-as something that can share the shelf with Reagan's voodoo economics.
But, again, only Democrats are responsible for deficits.
9
Wrong. Overall deficits have increased more during years when Republicans ran Congress than under Democratic leadership. This is especially true during GOP presidencies.
5
@Nikko. My comment was tongue in check, sarcasm on an otherwise dreary day in Trumpland.
1
No surprise. The tax cuts were targeted to benefit the wealthy who are expert at dodging taxes (see the recent article about Jared Kushner). Stock buybacks enrich shareholders who have many ways to shield their capital gains from taxes. I'm sure any uptick in federal revenue was on the backs of the middle class.
16
Where are all those Republican deficit hawks now? Quietly enjoying their tax cut, I'll bet.
31
Why doesn’t this article have a deficit graph? That makes it clearer this stuff has consequences. The deficit was almost $1 T in the fiscal year just ended, far worse than the estimates to justify the tax cuts. In good times.
5
The fallacy lies in supposing that the government's job is to bring in as much revenue as possible.
A decrease in taxes is an increase in freedom. Let the people choose how to use their own money. And let the federal government learn how to be a little more lean.
4
@olivia A decrease in taxes might also lead to poor roads, substandard fire departments and loss of a whole host of things most people enjoy. If you are going to cut taxes don't you need to cut spending in some areas? The question is which areas: military, safety net for the poor, Medicare?
5
I could probably make a lot of money on a bet that your income is well above the median.
5
@olivia Actually, part of the "government's job" is to bring in enough revenue to pay for what it believes it must accomplish. Your state receives more from the federal government than it delivers in revenue. Which part of national defense, Social Security or Medicare do you wish to cut in your state to balance the books enough to return more money to the wealthy few? The fact is, the Tax Bill passed by this Congress promised that it would more than pay for itself. As just about everyone warned, it does not and our kids pick up the tab.
14
More of the discredited trickle down theory. And if anyone is shocked about what's described in the article, you were not paying attention. Furthermore, the tax bill was nothing more than a gift to Trump and his billionaire friends. Wait till you see the deficits 10 years from now - they'll be through the roof. Especially with a recession coming in 2-3 years.
36
Your graph shows that revenue comes off its high when Reagan or the 2nd Bush come into office proving that their tax cuts only hurt our revenue. There's no reason to think Trump's will be any different.
It's so obvious that republicans don't want revenue to go up. Then they can't cry poor and cut our social safety net (already lagging all other developed countries.)
This is as old as the hills. Who should control our spending--us through our representatives (if they would only represent us,) or them through their huge corporate wealth allowing them to lobby unendingly because corporations are people (did you forget?)
Enough. We must take back our power of the purse and start spending on medicare and affordable education for all. A government of the people won't privatize and run everything for a profit.
23
“Not paying for itself yet.” You misspelled ever “yet.” Since when have GOP tax cuts ever paid for themselves? Only in the minds of the gullible and the craven.
12
Revenue will come, it just takes time, will see a lot more advancement come Trumps second term
Your opinion is not equal to an entire world of knowledge. Econometric modeling worked to predict what was going to happen, and it did. It has done this for 37 years, and will continue to be correct. Your opinion will continue to be wrong, and it is obvious no amount of reality will cause you to re-evaluate it.
Face up to knowing your tribalism is incompatible with democracy in the American Republic.
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@Crossing Overhead. Presumably if you had any way too back up your assertion you'd have presented it.
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Corporate welfare, plain and simple.
Instead of pushing for a gay, transgendered statue of a famous person to be put on the WH lawn, or obsessing about identity politics, the dems should be putting this fact of sky rocketing corporate welfare budget deficits on the local citizens tab in every purple and red state front and center.
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@Paul The democrats appear to be paid off by exactly the same people who own the republicans. In return for cashing their checks, the Dems agree to never bring up any policy proposal the would bite the hands of the oligarchs that feed them.
It’s a sort of reality tv show political system where the peasants are entertained with the illusion of choice, while being systematically reduced a state of indentured servitude.
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@cjl--thank you for you reply...sort of agree with you. Instead of the dems pushing against what the republican did re corporate welfare and no ACA, which is very popular in purple and red states, since they are getting a piece of the action as you say they rather be obsessed with identity politics and other extreme liberal policies that outside extreme liberal zones, nobody wants.
This is classic Republican fiscal "conservatism". Oxymoronic with the emphasis on "moronic". The same Laffer(able) experiment was tried when Reagan was president with the same result. Ditto for the fiscal fiasco in Kansas "engineered" by Brownback. The real goal of all these policies is to line the pockets of the wealthy donor class and hope to eventually squeeze public benefits for everyone else when the chickens come home to roost.
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Now if only other newspapers and TV stations across America were running this story. But they are not. So the public remains ignorant and continues to vote Republican. Fox News rules the day.
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The Republicans have not only discounted the bread, they’re giving away the bologna.
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There's a reason it's called Voodoo economics, as an old school republican (pre white supremacy) labeled it. Running deficits during boom times is a republican specialty invented by reagan, but as always, Trump wants to do it bigger and better. Since even his crazies won't let him touch their Medicare/SSI, and his inflationary ways are increasing the cost of borrowing, we are about to head into Debtor Donnie's area of expertise, bankruptcy. Maybe the Saudis will bail us out?
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No surprise here. We've been down this road before. I am disgusted by the bad faith and bad governance.
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In the headline it mentions that there was a tax cut and the Federal tax revenue rose. What did I miss.
@RCS But it did not raise as much as it would have if not for the tax cuts. This will happen year after year (perhaps at higher rates) and the end result is a bigger deficit. Do realize that the US will soon be paying $1 BILLION a year to service its debt obligations.
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@RCS apparently the entire rest of the article. Why do we need to do your reading for you?
But the short version is that accounting for inflation, anticipated revenues for that year's growth level, and even nominal revenues specifically in the periods where the tax cuts were in force, tax receipts were well below what they'd have been without this law.
Republicans always say tax cuts pay for themselves but what they really mean is that they pay for the investment the GOP donor class made in its wholly owned politicians, at the expense of everyone else.
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Read the whole article to get the point.
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Mitch McConnell told reporters he was disturbed that giving billionaires and large corporations massive tax cuts didn't pay for themselves .
He says we will need to reform (cut)
Entitlements. We all knew it was coming.
How did such evil vile creatures get into office?
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Thanks for this great explanation that makes understandable the real deal on the tax cut with the analogy of loaves of bread. As a O'Rourke supporter, I watched the debate last night he had w/Cruz and, as usual, Cruz touted the tax cuts as ever important. Not so. We're not making enough revenue now to make up for the cuts. And who got the cuts? Cruz again used the simple over-used rhetoric of no matter how much taken from millionaires (really billionaires), wouldn't pay for, in his example, socialized medicine. Please, more of Tankersley's writing.
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McConnell claimed that deficits are rising because of increased "entitlement" spending. Social Security and Medicare aren't "entitlements," they're a pension fund and old-age insurance respectively, for which I prepaid over decades.
The only entitlements Ryan, McConnell, and Trump recognize are the rights of corporations and the wealthy to become wealthier at the expense of middle class wages and on the backs of the poor.
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@Wilton Traveler
Yes social security and medicare is no more an "entitlement" than the house and car that bought and paid for.
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@Wilton Traveler Well, not *exactly*. these programs pay for current benefits out of current revenue (excepting the Social Security surplus created after the 1980s reforms).
Technically, you paid for your parents social security/medicare and your children will (?) pay for yours. You will likely take out far more than your put in (especially related to Medicare), depending on your age.
These are the challenges.
@Wilton Traveler
We are ENTITLED to Entitlements because we paid into them all of our spending lives. It would not take much new taxes on the rich to fully fund them. Don't run from the word. Explain what it means.
Entitlement programs only become Ponzi pyramid schemes if you end them, so that only those that got in early get paid.
As long as the system is up and running it is retirement insurance. The day you privatize it, it is a pyramid scam that just robbed everyone that is still working.
Old people, don't let Republicans steal your children's retirement by promising to "grandfather" you. You have left the younger generations a big enough mess already. The Constitution demands that We take care of our posterity, and posterity is a lot longer than the next quarterly report.
What is a tax cut and what is a spending cut?
For simpletons like conservatives, a tax cut means the amount of taxes goes down and a budget spending cut means that spending goes down.
This is absolutely wrong as all right thinking readers of the New York Times knows. Spending is cut whenever the increase in spending is less than it would have been absent the cut, even if spending goes up.
And a tax cut which increases tax collections can't be considered as paying for itself if the taxes would have gone up even more absent the tax cut.
This is how we need to look at things so that government can become ever more bloated, entitlements ever greater, until a majority of voters are so dependent on government for their livelihood that they won't dare to ever vote for anyone who is not a Democrat, thus ensuring Democrat control of society.
Power. That's what it is all about.
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The studies have been done. You can hope to recoup at most 30% of your lost revenue from tax cuts. In this case, it seems far short of that.
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In 2016, the deficit was $585 billion. It is now $779 billion. That's an increase of 33%. The Republicans claim that the economy was in tatters in 2016. It wasn't, but that's what they claim. Now, they claim that the economy is booming like it has never before and the deficit increased by 33%. What happened?
Tax revenues are a percentage of GDP. We have cut revenues to the point that as GDP grows, revenues are not keeping up, hence the growing deficit. This spread indicates how irresponsible these cuts were. We are getting a smaller piece out of a bigger and bigger pie.
Increased spending is being driven by the aging baby boomers and the military. We maintain idiotic wars that cannot be won which provides an excuse to spend ever more money on the war machine. We should be spending that money on renewable energy.
Social Security and Medicare are now in the crosshairs of Republican cuts, especially Medicare. They want it gone. Instead of fixing healthcare, they just want to cut out the coverage for seniors.
We have to take care of ourselves. We are aging. We don't have as many babies anymore. Taxes have been cut to such a level that we cannot meet our obligations. We are digging ourselves into a hole.
The markets are responding with higher interest rates. Those will continue to climb as the deficits soar. We are OK now, but there is a point of no return. Do you want to find out where that point is?
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Please, the same pie in the sky promises about tax cuts resulting in economic growth and tax receipts have been made by state and federal administrations since Reagan. About the best that can be said about trickle down economics using real data is a short term bump in revenue and then a budget shortfall in the out years and ever increasing deficits and debt. The policy does not work but Republicans keep trying it anyways by buying votes with tax cuts.
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Did the Bush tax cuts pay for thenselves? They most certainly did not. Why would anyone expect Trump’s to be any different? What logic would drive anyone to believe that? Suggesting that they might as this headline does only gives cover to the merchants of “Vodoo Economics”.
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The actual future deficits and corresponding increase in the public debt will likely be much bigger than any of these forecasts. No Republican president has avoided a recession during their time in office and none of these projections incorporate the effects of a recession on the debt. Does anyone really think we will avoid a recession or worse in the time frame of these projections?
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President Pinocchio and his GOP parrots. Or is it the other way around? Either way, their tax cut is a con game.
They borrowed 1.5 trillion from the American public, gave most of it to the wealthiest corporations and individuals, and tossed a few crumbs at the rest of us. When the bill comes due, it will be presented in various forms to that "rest of us" (largely cuts to SS, Med, non-income taxes, etc.) with the spurious claim that Democrats ran it up.
It's actually the same con game Republicans play every time (Bush tax cuts, Bush unfunded war, Bush recession, Bush big pharma giveaway ... ), and yet 40% of the people buy into it.
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Republicans are only concerned about the size of the budget deficit, when there is a Democrat President in the White House.
They knew their tax cuts, that were heavily skewed to favour the mega rich, were unfunded. They don't care about blowing up the deficit, as long as their mega rich donors get their tax cuts.
It takes a special kind of economic incompetence to increase the budget deficit by $200 billion, when unemployment is historically low, and economic growth is close to 3%.
Of course Trump will ignore the budget deficit and its resulting upward pressure on interest rates.
Reality has never been part of the Trump White House, and like many other problems created by Trump, it will be ignored by his supporters, who still believe he is working for them, instead of the mega rich like Trump.
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@Barry of Nambucca
Republicans are not incompetent. They are experts art milking the government and workers to steal our productivity and give it to the rich.
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Tax cuts were a gross negligence by the Republican controlled Congress.
Repeal all these tax cuts BEFORE pursuing any Social Program cuts.
Vote straight Democrats November 6th to reverse the travesty.
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@Buzz D I am a liberal but used to vote for a few Republicans because I believed that checks and balances help make a better government.
But after the last 10+ years of Republicans showing what I believe to be borderline hatred of America and disdain for its process, I can't imagine what it would take to make me vote Republican again. Ever.
@Buzz D
It is not enough to just vote for Democrats.
The wimpy Democrats will not repeal and replace this horrific tax scam, unless We the People remind then that is what we want everyday.
YES!!!!
No, that tax cut is not paying for itself. It won't until Sen McConnell and President Trump get their wish and Congress cuts Medicare, Medicaid, and Social Security. That is the "trade off" the Republican Party has gifted the people.
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@Patrick Stevens The US budget will not be in the black until congress fixes the completely out of control spending on defense and health care. These are the two areas where the US spends far more than any other rich country. Even with these areas fixed, the costs of paying off existing debt will be a drag on growth unless a very high level of immigration increases the base of young taxpayers.
The repubs will not cut Medicare because the deluded old people that voted repubs into office will vote them out the instant their own benefits get threatened.
Sorry, but you’ve picked the wrong question and then answered it here. The “Question” as a purely economic matter is not whether the baker “would have expected to” make $500 on 125 loaves at $4, as you imply. The question a Business has to answer is whether the $3 price covers more than the additional (marginal) cost of the additional 25 loaves. If it does, the baker profited. If it does not, the baker should not lower the price. Economics 101. You can make a valid argument that government is not a profit making business, but please don’t use faulty economic analogies.
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@Steve, you misunderstood. There was never any expectation of making $500. Before the price cut, the baker expected to make $400 on 100 loaves. Instead he made $375 on 125 loaves. Hence, lowering the price lowered his projected earnings by 25 bucks, and it would be incorrect for him to conclude that his decision was savvy. It's like a certain so-called businessman inheriting hundreds of millions from his dad, and over the course of decades turning that into a few billion dollars. Good going, except it turns out that if instead of playing at being a flashy mogul, he had just quietly left the money in index funds, he'd be far richer.
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The Trump GOP tax cut for the rich and corporations was never intended to pay for itself. It was designed to (1) reduce taxes on Trump, the ultra rich, and corporations, and hike taxes for residents of blue states as punishment for voting Democratic; and (2) to increase the deficit. Once the deficit is out of control, like clockwork, the Trump GOP now seek to gut Social Security, Medicare, and Medicaid to fund the tax cuts for the rich. It’s a simple as that.
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@Demosthenes The rich pay more taxes under Trump because of the limitation on state and local tax deductions. This myth that the rich received a tax cut is completely false and nothing but a democrat lie.
@James Oh James, don't believe a word of Demosthenes' posting, but also don't believe a word of wherever you got your information. What you need to do is look at the bill as passed, yes you will have to read it, and it is somewhat complex, and then determine who got what and who pays how much.
I don't know where you fall in the spectrum of wealth, but I can assure you, losing a bit of a mortgage deduction for a tiny capital gains liability is a trade made in heaven.
@James I'm guessing the Astros loss last night has affected your thinking. Look at the numbers and it'll show you who got the lions share from the tax cuts.
Of course Republicans never believed the tax cut would pay for itself. They aren't concerned about the Treasury Department report? Of course they aren't, they never believed it would pay for itself. It just payed in the right places; their wallets.
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@Richard Mclaughlin
Of course Republicans never believed the tax cut would pay for itself. Their strategy has, since the Regan era, been to cut taxes, then complain about the growing deficit and the need to cut spending such as Social Security, Medicare, etc.
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