Poll Of Economists - Trump Tax Plan Won't Work

[Horatio Parker]

Well, Loren, I think your Economics 101 has its own set of problems.

I tend to lean with these two economists, Michael Hudson and Steve Keen. So far, they've pretty good track records.

These are economists I think you should heed.

I consider my outlook to be 'post-Keynesian'. I tend to think that Keynesian economics was mugged and raped and left for dead. Proof was Nixon being attributed with Milton Friedman's assurance that, "we are all Keynesians now". For me, that was a sure sign of its probable permanent incarceration, having been educated in the shadow of Uncle Milty and his Chicago thugs.

Nice to hear these names from someone else.

To which I'd add Warren Mosler, Bill Mitchell, Stephanie Kelton, and Randy Wray.

There's plenty of money for investment. What there is not is money for consumers to buy additional product.

Mosler regularly posts the credit charts and they've been low and flatlining for some time.

 

[whollygoats]

I rather think that if I knew that a firm I'd invested in was borrowing money to pay dividends, I'd unload the shares tout suite, suspecting that they were involved in poor business practices or engaged in illicit tax avoidance.

A shareholder has sufficient power to float a loan for a publicly held corporation to pay dividends so that they can pay the mortgage on their private home? Seems tenuous.

It's not a publicly held corporation.

ETA Although publicly held corporations routinely take on debt in order to maintain a dividend

I am aware of that...it's just that doing so is, in my view, bad news for a typical investor. Corporations routinely file for bankruptcy, too. I don't see that as a particularly positive outcome for investors.

 

[jonatha]

I rather think that if I knew that a firm I'd invested in was borrowing money to pay dividends, I'd unload the shares tout suite, suspecting that they were involved in poor business practices or engaged in illicit tax avoidance.

A shareholder has sufficient power to float a loan for a publicly held corporation to pay dividends so that they can pay the mortgage on their private home? Seems tenuous.

It's not a publicly held corporation.

ETA Although publicly held corporations routinely take on debt in order to maintain a dividend

Banks don't like to finance distributions. In fact, excess distributions are one of the largest reasons for bank denials of credit. To distribute more than a company generates in net income is a big warning sign for banks.

I didn't say banks, I said debt. (See REITs...)

In my particular case, the bank has not yet made any discouraging noises.

 

[Loren Pechtel]

Serious question:

Is there an economic problem in the last 3 or 4 decades that the GOP hasn't proposed to fix with a tax cut?

Because the GOP doesn't actually care if it works, they just want the tax cut.

- - - Updated - - -

Ford is right, and I disagree with Loren. There is absolutely no reason to think that trickle-down nonsense has become a better idea than it was last time the 'thugs tried it.
But whether this tax-shifting proposal would "work" is completely dependent upon how you define "work".
I am certain that it would accomplish the goals of its proponents, i.e. placate the right wing donor class with some nice 10-11 digit numbers of windfall dollars for each of them...

You'll have more capital chasing returns, that drives down the cost of capital and causes more investment. Economics 101.

The problem is the GOP thinks the effect is a mountain when in today's economy it's a molehill.

The problem with this thinking is that even if it's true, it only benefits the investing class and the investment part of the economy, which is moderate in terms of dollars, but tiny in the number of people it actually benefits.

That investment often translates to jobs.

The GOP's problem is their ideas are utterly out of scale--they predict far bigger benefits and far smaller costs than reality.

 

[Jason Harvestdancer]

Serious question:

Is there an economic problem in the last 3 or 4 decades that the GOP hasn't proposed to fix with a tax cut?


Recession? Tax cut.

Recovery not going well? Tax cut.

Economy humming along fine? Tax cut.

Republicans are as likely to not find a reason for a tax cut as Democrats are to not find a reason for a tax hike.

Too bad the scale at which they are working really makes no difference. The top rate is either 36% or 39% depending on which party is in power.

 

[Worldtraveller]

Because the GOP doesn't actually care if it works, they just want the tax cut.

- - - Updated - - -

Ford is right, and I disagree with Loren. There is absolutely no reason to think that trickle-down nonsense has become a better idea than it was last time the 'thugs tried it.
But whether this tax-shifting proposal would "work" is completely dependent upon how you define "work".
I am certain that it would accomplish the goals of its proponents, i.e. placate the right wing donor class with some nice 10-11 digit numbers of windfall dollars for each of them...

You'll have more capital chasing returns, that drives down the cost of capital and causes more investment. Economics 101.

The problem is the GOP thinks the effect is a mountain when in today's economy it's a molehill.

The problem with this thinking is that even if it's true, it only benefits the investing class and the investment part of the economy, which is moderate in terms of dollars, but tiny in the number of people it actually benefits.

That investment often rarely translates to jobs.

The GOP's problem is their ideas are utterly out of scale--they predict far bigger benefits and far smaller costs than reality.

We've seen a couple instances of the 'republican experiment' in full scale with almost no limits. Kansas was one. Look how they're doing, economically. What was the other state that went almost as bad until recently, Michigan, I think?

 

[Playball40]

I guess it depends on how you define "work."

Will the GOP tax plan "work" to spur growth in the economy? Probably not, because the economy has already recovered. We're at or near full employment, the housing market has recovered, corporate profits are doing fine, and the stock market is at record highs. Cost of living is low, inflation is low, basically the economy is firing on all cylinders.

The GOP plan is based on a false premise - that the economy is weak. We can argue all day long whether tax cuts can spur a weak economy or lead us out of a recession, but the fact is that the economy isn't weak at all, and the recession is (relatively) a distant memory. We need tax cuts like a person who has recovered from an infection years ago needs another round of antibiotics.

I hear what you're saying, but why does it feel like the cost of everything has increased but salaries have not?

 

[Playball40]

Would you agree their opinions on economics should carry more weight than say, someone who is NOT an economist *Trump, Congress.......et al*

Opinion polls measure opinion not facts.

Would you say that 41 out of 42 economists might have something important to say regarding economics?

They have important opinions.

 

[Playball40]

Why is the obvious never stated? There are TIMES when Keynesian economics are warranted. There are even times when a certain amount of supply side economics is warranted. There is no single answer to every scenario.

However, I do not think the economic cycle as we stand today warrants the proposals made in the current proposed tax plan.

Well, Loren, I think your Economics 101 has its own set of problems.

I tend to lean with these two economists, Michael Hudson and Steve Keen. So far, they've pretty good track records.

These are economists I think you should heed.

I consider my outlook to be 'post-Keynesian'. I tend to think that Keynesian economics was mugged and raped and left for dead. Proof was Nixon being attributed with Milton Friedman's assurance that, "we are all Keynesians now". For me, that was a sure sign of its probable permanent incarceration, having been educated in the shadow of Uncle Milty and his Chicago thugs.

 

[Harry Bosch]

Serious question:

Is there an economic problem in the last 3 or 4 decades that the GOP hasn't proposed to fix with a tax cut?


Recession? Tax cut.

Recovery not going well? Tax cut.

Economy humming along fine? Tax cut.

Republicans are as likely to not find a reason for a tax cut as Democrats are to not find a reason for a tax hike.

Too bad the scale at which they are working really makes no difference. The top rate is either 36% or 39% depending on which party is in power.

There some truth there. However, there are many democrats in the middle who would advocate targeted and smart tax cuts to stimulate an economy in decline.

 

[Harry Bosch]

It's not a publicly held corporation.

ETA Although publicly held corporations routinely take on debt in order to maintain a dividend

Banks don't like to finance distributions. In fact, excess distributions are one of the largest reasons for bank denials of credit. To distribute more than a company generates in net income is a big warning sign for banks.

I didn't say banks, I said debt. (See REITs...)

In my particular case, the bank has not yet made any discouraging noises.

Yea, but I can promise you that the bank is concerned behind the scenes. Most banks have a covenant on companies requiring them to generate positive cash flow. Excess distributions are sometimes allowed when a company has a great balance sheet (ie reserves). But think about it, no company can survive long if their distributions are greater than their net income.

 

[jonatha]

But think about it, no company can survive long if their distributions are greater than their net income.

Change "net income" to "cash flow" and I'll agree with you.

Although that cash flow needn't come from operations (see REITs again, and IBM for the past few years)

 

[bilby]

I guess it depends on how you define "work."

Will the GOP tax plan "work" to spur growth in the economy? Probably not, because the economy has already recovered. We're at or near full employment, the housing market has recovered, corporate profits are doing fine, and the stock market is at record highs. Cost of living is low, inflation is low, basically the economy is firing on all cylinders.

The GOP plan is based on a false premise - that the economy is weak. We can argue all day long whether tax cuts can spur a weak economy or lead us out of a recession, but the fact is that the economy isn't weak at all, and the recession is (relatively) a distant memory. We need tax cuts like a person who has recovered from an infection years ago needs another round of antibiotics.

I hear what you're saying, but why does it feel like the cost of everything has increased but salaries have not?

I expect that the main cause for that feeling is that the cost of everything has increased, but salaries have not.

 

[whollygoats]

I guess it depends on how you define "work."

Will the GOP tax plan "work" to spur growth in the economy? Probably not, because the economy has already recovered. We're at or near full employment, the housing market has recovered, corporate profits are doing fine, and the stock market is at record highs. Cost of living is low, inflation is low, basically the economy is firing on all cylinders.

The GOP plan is based on a false premise - that the economy is weak. We can argue all day long whether tax cuts can spur a weak economy or lead us out of a recession, but the fact is that the economy isn't weak at all, and the recession is (relatively) a distant memory. We need tax cuts like a person who has recovered from an infection years ago needs another round of antibiotics.

I hear what you're saying, but why does it feel like the cost of everything has increased but salaries have not?

I expect that the main cause for that feeling is that the cost of everything has increased, but salaries have not.

Yep. That's what I'd say.

 

[whollygoats]

Why is the obvious never stated? There are TIMES when Keynesian economics are warranted. There are even times when a certain amount of supply side economics is warranted. There is no single answer to every scenario.

However, I do not think the economic cycle as we stand today warrants the proposals made in the current proposed tax plan.

Keynesian economics were always 'warranted'. The problem was that only part of it was ever tried. When it came time to pay off the deficit spending that was made to revivify the economy (aka 'war spending') by taxing the strong revenue streams of the now robust economic activity, there was a lot of resistance and claims that the deficit spending needed to continue....there was a 'missile gap', a 'cold war', the Vietnam War, the War on Poverty, the unweaned Israel problem....you fill it the rest. Keynesian economic policy was never fully put in to practice; only the state deficit spending to counter business cycle downturns part. It seems capitalists found out how lucrative fulfilling public contracts, particularly Defense contracts, really is. Pillaging the public till continues to be an American tradition.

'Supply-side economics' is an oxymoron.

 

[Horatio Parker]

Why is the obvious never stated? There are TIMES when Keynesian economics are warranted. There are even times when a certain amount of supply side economics is warranted. There is no single answer to every scenario.

However, I do not think the economic cycle as we stand today warrants the proposals made in the current proposed tax plan.

Keynesian economics were always 'warranted'. The problem was that only part of it was ever tried. When it came time to pay off the deficit spending that was made to revivify the economy (aka 'war spending') by taxing the strong revenue streams of the now robust economic activity, there was a lot of resistance and claims that the deficit spending needed to continue....there was a 'missile gap', a 'cold war', the Vietnam War, the War on Poverty, the unweaned Israel problem....you fill it the rest. Keynesian economic policy was never fully put in to practice; only the state deficit spending to counter business cycle downturns part. It seems capitalists found out how lucrative fulfilling public contracts, particularly Defense contracts, really is. Pillaging the public till continues to be an American tradition.

'Supply-side economics' is an oxymoron.

In the world of commodity currencies, national debts have to be repaid. But not in a fiat world. The national debt consists of private savings plus what we’ve paid in imports.


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[SimpleDon]

Serious question:

Is there an economic problem in the last 3 or 4 decades that the GOP hasn't proposed to fix with a tax cut?


Recession? Tax cut.

Recovery not going well? Tax cut.

Economy humming along fine? Tax cut.

Republicans are as likely to not find a reason for a tax cut as Democrats are to not find a reason for a tax hike.

Too bad the scale at which they are working really makes no difference. The top rate is either 36% or 39% depending on which party is in power.

There some truth there. However, there are many democrats in the middle who would advocate targeted and smart tax cuts to stimulate an economy in decline.

I always said that the Democrats believe in soaking the rich while all that the Republicans work for is giving tax cuts to the rich. My problem is the Democrats believe that I am rich but the Republicans don't.

 

[Philos]

Folks,

The GOP must have wanted those tax cuts soooo... bad to take the daily ass f****** from Trump.

Debt ceiling???

A.

 

[Axulus]

Well, Loren, I think your Economics 101 has its own set of problems.

I tend to lean with these two economists, Michael Hudson and Steve Keen. So far, they've pretty good track records.

These are economists I think you should heed.

I consider my outlook to be 'post-Keynesian'. I tend to think that Keynesian economics was mugged and raped and left for dead. Proof was Nixon being attributed with Milton Friedman's assurance that, "we are all Keynesians now". For me, that was a sure sign of its probable permanent incarceration, having been educated in the shadow of Uncle Milty and his Chicago thugs.

Nice to hear these names from someone else.

To which I'd add Warren Mosler, Bill Mitchell, Stephanie Kelton, and Randy Wray.

There's plenty of money for investment. What there is not is money for consumers to buy additional product.

Mosler regularly posts the credit charts and they've been low and flatlining for some time.

Actually this is false. The reason the US has such a large trade deficit is because it receives alot money for investment from foreigners. There is not enough national savings to provide all the funds needed/desired for domestic investment, to the tune of $500 billion per year, because of excess consumption and government spending. Foreign investors make up the short fall, which is what causes the trade deficit.

The tax cut will make the trade deficit worse. It will allow for even more consumption, meaning foreign investors will have to make up the difference to prevent domestic investment from falling. While some of the tax cut will be saved by domestic firms and individuals, which can be used for domestic investment, no where near 100% of it will be.

 

[Elixir]

There some truth there. However, there are many democrats in the middle who would advocate targeted and smart tax cuts to stimulate an economy in decline.

I always said that the Democrats believe in soaking the rich while all that the Republicans work for is giving tax cuts to the rich. My problem is the Democrats believe that I am rich but the Republicans don't.

Ha! My feeling exactly.