Skewering of Leftist Economic "Conventional Wisdom"

[whell]

Hey Finn - here's a double whammy for you. Not only is Chrysler moving truck production back from Mexico bringing back 2500 jobs, they're also giving out bonuses. Why? A more favorable tax climate.

http://www.detroitnews.com/story/bus...ico/109373632/

Fiat Chrysler Automobiles NV will invest $1 billion at its Warren Truck Assembly plant to bring production of its Ram Heavy Duty truck to the U.S. from Mexico. The company said Thursday the move will add 2,500 jobs in Metro Detroit by 2020, when the plant retooling is completed.

The automaker also plans to give its 60,000 hourly and salaried U.S. employees $2,000 bonuses.

“These announcements reflect our ongoing commitment to our U.S. manufacturing footprint and the dedicated employees who have contributed to FCA’s success,” CEO Sergio Marchionne said in a statement. “It is only proper that our employees share in the savings generated by tax reform and that we openly acknowledge the resulting improvement in the U.S. business environment by investing in our industrial footprint accordingly.”

The company said the move solidifies the U.S. as a manufacturing hub for Ram vehicles. Marchionne and the company said both the new investment and the bonuses were “made possible in part by the passage of U.S. tax reform legislation late last year.”

[finnbow]

Originally Posted by whell

Hey Finn - here's a double whammy for you. Not only is Chrysler moving truck production back from Mexico bringing back 2500 jobs, they're also giving out bonuses. Why? A more favorable tax climate...

I don't doubt that $1.5 trillion in tax cuts for corporations and the wealthy will have some positive impacts for corporations or the wealthy and will trickle down somewhat on the less privileged. The issue is whether this tax package was the right thing to do at the time in terms of equity, the deficit and inflation. A couple of anecdotes don't make it so.

It didn't simplify the tax code or close loopholes, nor will it pay for itself (as promised). What it will do is increase interest rates as well as concern from our creditors about the credit-worthiness of US treasuries (just yesterday China expressed grave concern about US treasuries) and bonds are reportedly entering a bear market. Increased interest rates will ultimately have a negative impact upon the economy. Meanwhile, enjoy your sugar high.

[whell]

Originally Posted by finnbow

I don't doubt that $1.5 trillion in tax cuts for corporations and the wealthy will have some positive impacts for corporations or the wealthy and will trickle down somewhat on the less privileged. The issue is whether this tax package was the right thing to do at the time in terms of equity, the deficit and inflation. A couple of anecdotes don't make it so.

It didn't simplify the tax code or close loopholes, nor will it pay for itself (as promised). What it will do is increase interest rates as well as concern from our creditors about the credit-worthiness of US treasuries (just yesterday China expressed grave concern about US treasuries) and bonds are reportedly entering a bear market. Increased interest rates will ultimately have a negative impact upon the economy. Meanwhile, enjoy your sugar high.

We're clearly beyond anecdotes at this stage, my stubborn friend. The China bond story has also been debunked a bit, now classified as a leak aimed at influencing trade policy rather than any serious concerns over China's US bond holdings. And if bonds are entering a "bear market", it's because there are more attractive investments out there...like stocks.

https://www.ft.com/content/924e4c88-...7-5465a6ce1a00

You claim it won't pay for itself, with your fixed pie economy point of view. Others, including the former CBO Director Douglas Holtz-Eakin, thinks it will. I'll take Mr. Holtz-Eakin's Ph.D in Economics from Harvard - informed opinion on this.

[finnbow]

Originally Posted by whell

You claim it won't pay for itself, with your fixed pie economy point of view. Others, including the former CBO Director Douglas Holtz-Eakin, thinks it will. I'll take Mr. Holtz-Eakin's Ph.D in Economics from Harvard - informed opinion on this.

Holtz-Eakin is a dedicated supply-sider and the president of a right-wing think tank, the American Action Network. He's about as credible as your Dear Leader's other Alt-Economist, Stephen Moore. There's not a single, credible non-partisan economist or economic think tank who believes that this tax cut will pay for itself.

If you believe this tax cut will pay for itself, you likely also gullible enough to believe that your Dear Leader isn't a liar and a racist.

[whell]

Originally Posted by finnbow

Holtz-Eakin is a dedicated supply-sider and the president of a right-wing think tank, the American Action Network. He's about as credible as your Dear Leader's other Alt-Economist, Stephen Moore. There's not a single, credible non-partisan economist or economic think tank who believes that this tax cut will pay for itself.

If you believe this tax cut will pay for itself, you likely also gullible enough to believe that your Dear Leader isn't a liar and a racist.

I think this is hilarious. First, I need to catch myself before fall into the absurd talk track that a corp tax reduction - or tax reduction of any sort - must "pay for itself". If for no other reason that the totality of our tax code is made up of so many moving parts that a singular event like a relatively modest reduction in corporate income tax - which accounts for only about 10% of total tax revenue - is going to somehow send the US government into fiscal distress.

Second, to "pay for itself", we'd need to sustain on average an increase in economic growth of 1% over the current CBO projection of 1.9% for 10 years. Since economic growth rates over the past 10 - 15 years are at historic lows, and most economics suggest the economy is poised for a period of sustained growth, are we really saying that economic growth of 2.9% per year is an unreasonable estimate? (And I don't necessarily but the idea that since we're nearing "theoretical full employment" the prospects for economic growth are compromised).

Even if its 2.5%, we can certainly take steps to "pay for" the a tax rate reduction in other ways. The federal budget is a cesspool of overspending and opportunities to reduce the scope of "paying for" a tax reduction are everywhere.

[finnbow]

Originally Posted by whell

...The federal budget is a cesspool of overspending and opportunities to reduce the scope of "paying for" a tax reduction are everywhere.

They are indeed and they were either untouched by this package or Trump promised to leave them untouched.

[whell]

Originally Posted by finnbow

They are indeed and they were either untouched by this package or Trump promised to leave them untouched.

Untrue. Remember this from earlier in 2017. The House keeps kicking a budget deal down the road, so we've not gotten to the spending part yet.

https://www.nytimes.com/interactive/...t-details.html

So, more to come on the spending side of the equation.

[Dondilion]

Originally Posted by finnbow

I don't doubt that $1.5 trillion in tax cuts for corporations and the wealthy will have some positive impacts for corporations or the wealthy and will trickle down somewhat on the less privileged. The issue is whether this tax package was the right thing to do at the time in terms of equity, the deficit and inflation. A couple of anecdotes don't make it so.

Well put!