No, Virginia, Tax Giveaways To The 1 % Don’t Work

Just a check in on the astonishing economy building super duper special magical powers of GOP TAX CUT POTION™.

Spoiler: it works just as well as the utter, don’t-let-the-pointy-heads-at-the-FDA-f**k-up-a-good-thing  quackery Orrin Hatch has spent so long protecting.

The latest by Dean Baker:

The ostensible rationale for the big cut in the corporate tax rate that was at the center of the tax cut is that it will lead to a flood of new investment.

Since the outlines of the tax cut had been known since September, businesses had plenty of time to plan how they would respond to lower tax rates. If lower rates really produce a flood of investment we should at least begin to see some sign in new orders once the tax cut was certain to pass.

The January report showed orders actually fell modestly for the second consecutive month. The drop occurs both including and excluding volatile aircraft orders. While this is far from conclusive, it is hard to reconcile with the view that lower taxes would lead to a flood of new investment.

Remarkably, these new data have gotten almost no attention from the media. Both the NYT and the Washington Post ran an AP story that just noted the drop in passing. Doesn’t anyone care if the tax cut works?

As everyone who wasn’t a Republican and or a CEO said, the tax bill was a sham, a way to transfer yet more wealth from labor to capital, from most of us to a very few, already hugely rich.

Image: Reginald Gray, The Banker, Smoking, 2002.



We Can Always Use Some Bitter, Cynical, Gallows Humor, So Here’s A Kudlow Post

Larry Kudlow is the pure distilled essence of a Trump appointment, the type specimen of the breed, and the perfect expression of the state of Republican “thinking” on not just economics, but any matter in which actual knowledge and a respect for empiricism might help.

Via Wikipedia, we find he is barely educated, at best, in the fields in which he now works:

Kudlow graduated from University of Rochester in Rochester, New York with a degree in history in 1969. Known as “Kuddles” to friends, he was a star on the tennis team and a member of the left-wing Students for a Democratic Society at Rochester.

In 1971, Kudlow attended Princeton University’s Woodrow Wilson School of Public and International Affairs, where he studied politics and economics. He left before completing his master’s degree.

I’ll admit that Kuddles is kinda cute, but an unfinished masters degree in a policy school is not one you’d usually associate with economics acumen.

He went on to a stellar business career, managing to get fired repeatedly for substance abuse on the job, including a claimed $10,000/month cocaine habit that got him canned from Bear Stearns in 1994. (It’s interesting to note that a frantic effort is underway today to diminish such inconvenient truths on Kudlow’s Wikipedia page.)

Fortunately for Kuddles, he cleans up well, dresses nicely, and can tok gud. So he was able to revive his career as a TV gasbag, with a series of appearances and then shows on CNBC, the network that figured out the markets could be covered like sports teams.

Unfortunately — for the rest of us, if not for the ever-failing-up Kudlow — he’s been wrong about almost every key economic call since Methuselah was in diapers.  He is a Laffer disciple, a supply-sider whose faith that there is no tax that is too low, no plutocrat whose needs must not be served, is impervious to any test of reality.

Consider this:

In 1993, when Bill Clinton proposed an increase in the top tax rate from 31 percent to 39.6 percent, Kudlow wrote, “There is no question that President Clinton’s across-the-board tax increases … will throw a wet blanket over the recovery and depress the economy’s long-run potential to grow.” This was wrong. Instead, a boom ensued. Rather than question his analysis, Kudlow switched to crediting the results to the great tax-cutter, Ronald Reagan. “The politician most responsible for laying the groundwork for this prosperous era is not Bill Clinton, but Ronald Reagan,” he argued in February, 2000.

And this:

Kudlow firmly denied that the United States would enter a recession in 2007, or that it was in the midst of a recession in early to mid-2008. In December 2007, he wrote: “The recession debate is over. It’s not gonna happen. Time to move on. At a bare minimum, we are looking at Goldilocks 2.0. (And that’s a minimum). The Bush boom is alive and well. It’s finishing up its sixth splendid year with many more years to come”. In May 2008 he wrote: “President George W. Bush may turn out to be the top economic forecaster in the country” in his “‘R’ is for ‘Right'”.

And this:

When Obama took office, Kudlow was detecting an “inflationary bubble.” That was wrong. He warned in 2009 that the administration “is waging war on investors. He’s waging war against businesses. He’s waging war against bondholders. These are very bad things.” That was also wrong, and when the recovery proceeded, by 2011, he credited the Bush tax cuts for the recovery. (Kudlow, April 2011: “March unemployment rate drop proof lower taxes work.”) By 2012, Kudlow found new grounds to test out his theories: Kansas, where he advisedRepublican governor Sam Brownback to implement a sweeping tax-cut plan that would produce faster growth. This was wrong. Alas, Brownback’s program has proven a comprehensive failure, falling short of all its promises and leaving the state in fiscal turmoil.

The reviews are coming in. Via the BBC:

David Stockman, Mr Kudlow’s former boss during the Reagan administration, told the Washington Post in 2016 that Mr Kudlow’s prediction that tax cuts would lead to growth was “dead wrong”. Instead, he said the cuts led to budget deficits.

More recently, he has warned that Mr Kudlow would not be able to rein in the president.

“As much as I love him … Larry’s voice is exactly the wrong voice that Donald Trump ought to be hearing as we go forward,” he told CNBC.

Liberal economist and New York Times columnist Paul Krugman has been sharply critical, noting that Mr Kudlow missed signs of the housing bubble and recession.

“At least he’s reliable — that is, he’s reliably wrong about everything,” Mr Krugman tweeted.

Indeed in December 2007 – just as the recession was beginning – Mr Kudlow wrote in the National Review: “There’s no recession coming. The pessimistas were wrong. It’s not going to happen.”

It is interesting that Kudlow himself doesn’t seem to disagree with his predecessor on the issue that got Cohn out. From a quick take bylined by him, Laffer and Stephen Moore (another stellar, always-wrong econ public intellectual) here he is on Trump’s tariff announcement:

Tariffs are really tax hikes. Since so many of the things American consumers buy today are made of steel or aluminum, a 25 percent tariff on these commodities may get passed on to consumers at the cash register. This is a regressive tax on low-income families.

I wonder how that squares with the new job. ETA: I know how it squares. It’s already been forgotten. We’ve always been at war with Eastasia.

But that’s just SOP in the circles in which Kudlow travels:  intellectual rigor doesn’t actually matter.  He’s under no obligation to be consistent in any of his pronouncements, and he certainly doesn’t have to be right about anything as long as he provides cover for the true Republican (n.b.: not just Trumpian) policy goal: the transfer of more and more of our society’s wealth to those who are already wealthy — and hence, in the GOP/Rand/Sociopath view of the world, those who are virtuous enough to deserve such riches.

For all of you who’ve wondered why the US can’t be more like Kansas — we may now we get to find out.

Image: Thomas Shields Clarke, A Fool’s Fool,  c. 1887.

Fiscal Conservatism Is Actually Robbing the Poor to Shower the Rich With Cash


It was another crazy news week, so it’s understandable if you missed a small but important announcement from the Treasury Department: The federal government is on track to borrow nearly $1 trillion this fiscal year — Trump’s first full year in charge of the budget.

That’s almost double what the government borrowed in fiscal year 2017.

Here are the exact figures: The U.S. Treasury expects to borrow $955 billion this fiscal year, according to a documents released Wednesday. It’s the highest amount of borrowing in six years, and a big jump from the $519 billion the federal government borrowed last year.

Treasury mainly attributed the increase to the “fiscal outlook.” The Congressional Budget Office was more blunt. In a report this week, the CBO said tax receipts are going to be lower because of the new tax law.

And we all know what that means- we will suddenly become (and by we, I mean the Republicans and the media) with the debt and deficit, so something will have to be done. That something will not be getting rid of the newly enacted tax cut, the proximate cause of this mess:

Welfare hardly exists anymore in the United States. Yet in his ever-persistent war on the poor, Paul Ryan is pushing a proposal that “could include work requirements for welfare beneficiaries,” as Politico reports. And to do so, Ryan and other Republicans are trying out a shiny new rebrand.

According to Politico, at a GOP retreat, “Ryan urged congressional Republicans to tackle ‘workforce development.’ He messaged the somewhat amorphous phrase as a matter of ‘helping people[.]’” House Republican Study Committee Chairman Mark Walker followed a similar tack, saying, “If you really want someone to get out there and find fulfillment… even though you’ve got to get the framing or the phrasing right, wouldn’t you want to see that person excel?” and that “When we talk about ‘Medicaid reform,’ that’s not a great buzz phrase.”

The exact details of Ryan’s plans are not clear (after all, Temporary Assistance for Needy Families, the current version of welfare, already imposes strict work requirements), but he has consistently advocated for cuts to programs like Social Security, Medicare, and food stamps. And Donald Trump has already opened the door on tampering with Medicaid, allowing states to impose work requirements for the first time in the program’s 50-year history.

Winning the House and putting a dent in the Senate are national priorities.

The Party of Immiseration

The Republican Party is phenomenon that Tony Soprano would have recognized instantly:  a bust-out operation, by individuals (looking at you, Bob Corker), and collectively, as the tool by which the hyper-wealthy secure yet more at the expense of everyone else, including the merely rich.

I think this crowd of jackals understands, but it hasn’t yet fully penetrated even that part of the media that does, more or less, get what’s going on, that the tax heist is merely the most obvious of scams.  Everything the GOP does, every policy choice and hidden little adminstrative manouver is another swing of the pick in the most American of extractive industries — the one that treats most Americans as ore to be mined.

This, on the coming elder crisis, is what brought this notion to the fore for me:

Why did women’s rush into the work force stop? …

Caring for children is, to be sure, a formidable barrier to women’s work. In developed countries where parental leave is guaranteed by law and governments ensure free child care, women work at a much higher rate than in the United States.

Still, the consensus is incomplete. It misses perhaps the most significant impediment to women’s continued engagement in the labor market, one that is getting tougher with each passing year: aging. Focused laserlike on child care, we haven’t noticed that the United States is walking into an elder-care crisis.

What are the consequences of this combination of demography and a gendered burden of care?

About a quarter of women 45 to 64 years old and one in seven of those 35 to 44 are caring for an older relative, according to the American Time Use Survey.

A 2015 survey by the insurer Genworth Financial found that caregivers spend about 20 hours a week providing care — about half what a full-time worker would spend at work. Almost four in five said they had missed work, and about one in 10 lost a job. One in six reported losing around one-third of income because of caring responsibilities.

Sean Fahle of the State University of New York at Buffalo and Kathleen McGarry of the University of California, Los Angeles, tracked women in their early 50s to their early 60s for 20 years. Those who provided care, they found, were 8 percent less likely to work. Those at work cut their hours and had lower wage growth. Over time, Professor McGarry told me, caregivers risked lower incomes and a higher risk of poverty in old age.

And the kicker:

Older Americans may be healthier than ever. Still, as they age, they will inevitably develop disabilities and chronic conditions like dementia. “If you are superwealthy and can afford all sorts of things, this is not an issue,” noted Lawrence F. Katz, a professor of economics at Harvard. “But if you are middle class, this tends to end with your relatives’ losing all of their assets and relying on Medicaid or family care.”

Which is to say: the combination of improvements in what medicine can do, the lack of a basic and humane social insurance system and safety net in the United States, and persistent gender roles means that women face disproportionate costs and constraints on their lives; are more likely to be poor as they age; and face the loss of their parents’ assets and ultimately their own to the extractive industry known as elder care.

This is the nub of Republican governing philosophy.  Those of us who are not oligarchs both pay more in our lifetimes and must leave our children and grandchildren with less cash, and hence chance, to make their own lives better.

It’s a system based on the continued extraction of capital from the bottom and middle to the top. The Republican Party’s stock in trade is immiseration, and it will continue to be as long as it is a wholly owned subsidiary of a small handful of those on top for whom the rest of us resemble nothing so much as West Virginia mountain tops.

Mere election annihilation is too good for them.  I’d take it though, though.

Thomas Cole, The Voyage of Life: Old Age, 1839-40.

Remember The Maine (Senator)!

Following up on Betty’s post below…

Pursuing the Maine chance, Susan Collins is all over a small part of the map on the Senate tax-theft/heath-care-wrecking/federal-overreach/America-gutting  bill.

She voted in favor of the motion to proceed, but she’s now signaling that she isn’t yet a solid “yes” on final passage:

Republican U.S. Senator Susan Collins said on Thursday she was not committed to voting for the Senate tax bill, citing concerns over healthcare and a deduction for state and local taxes.

Collins told reporters at a Christian Science Monitor breakfast it would be “very difficult for me to support the bill if I do not prevail on those two issues” but she was encouraged by her discussions with leadership.

Hedge, dodge, waver and waffle:  the net is that she’s still susceptible to pressure.  I think she’s beginning to feel the heat on at least two talking points:  that the bill raises taxes on many, probably most of her constituents, which is a bad place for a New England Republican to be; and that the health care measures she’s been pursuing are fig leaves that will gut her loudly proclaimed commitment to preserving access for all those who have it now.

I called her DC office and left a message and then spoke to a weary staffer in one of her state offices.  I encourage you all to do the same — especially when you can leave a recording that doesn’t necessarily mark you as a non-Mainer.

Contact info for all her offices here.

Image: Alexander Coosemans, Still life with fruit and lobster before 1689.

They’re Totally Going to Pass This Tax Cut For Their Millionaire and Billionaire Buddies

First things first- it’s just not normal that I have both Senators Joe Manchin and Shelly Moore Capito’s phone numbers, as well as Rep. David McKinley’s, programmed into my iphone address book because every week or so I have to call them to beg them to stop trying to destroy the country. THIS. IS. NOT. NORMAL.

What makes it even stranger is I have to call and beg them to not do extremely UNPOPULAR things:

Senate Republicans’ effort to pass tax reform is at a crucial juncture. As some senators waffle on whether to support the bill, they may want to spare a glance toward public opinion: Poll after poll shows that more voters than not are opposed to their efforts. In fact, the GOP bill is one of the least popular tax plans since Ronald Reagan’s day.

About a third of voters currently support the Republican tax reform package, according to an average of five surveys released1 this month. In a Quinnipiac University survey, just 25 percent of voters approved of the plan. Surveys from ABC News/Washington Post, CNN, Morning Consult and YouGov put approval of the plan slightly higher, but all are still at 36 percent or lower. Meanwhile, an average of the five polls puts opposition at 46 percent.

Why is support so low? Americans are opposed to the bill because they think it disproportionately benefits the rich. (It likely will.) President Trump’s administration has argued, however, that there were similar complaints about the Reagan tax cut plan of 1981, which preceded an economic boom.

This tax cut is less popular than past tax INCREASES. A while back I made a joke about what compromise was like with crazy people:

I really don’t understand how bipartisanship is ever going to work when one of the parties is insane. Imagine trying to negotiate an agreement on dinner plans with your date, and you suggest Italian and she states her preference would be a meal of tire rims and anthrax. If you can figure out a way to split the difference there and find a meal you will both enjoy, you can probably figure out how bipartisanship is going to work the next few years.

We’re now to the point where the American people are screaming for Italian, and the Republicans are looking back at us and telling us that spaghetti is out of the god damned question, and not only are we getting tire rims and anthrax but we need to wash it down with liquid drano.

This is insanity. They literally want to push the country off a cliff to provide aid and comfort to people who don’t need it and have openly stated they aren’t even going to spend the money the way the Republicans say they will.

Apropos Of Not Much

So I read the latest over at Talking Points Memo on the slow-rolling Republican “moderate” cave on the tax bill to Trump and the GOP’s I Got Mine/Tongue-Bath-A-Billionaire Caucus.  That led me to a Twitter rant born of despair and rage.

The TL:DR is that dominant-power decline has happened before, will happen to whoever comes next, and is well underway now.  None of this is new; none original.  It just bubbled up, and as misery loves company, I give you a slightly edited version of the rant below.

As the GOP prepares to transfer wealth up and gut national finances in the process, it’s worth reflecting a little on national power. US predominance is no law of nature. It emerged in specific historical circumstances, & it will erode (is eroding) within its historical moment.

Trump and GOP actions are powering that decline, from gutting US diplomacy to abandoning soft power/trade alliances to an over reliance on the trappings of military power on the international security side to an attack on the US’s domestic capacity to solve problems, propel economic growth, and secure good lives for the great mass of its people.

The attack on universities that is both part of GOP rhetoric and built into the tax bill, for example is an attack both on civic life (in the form of engaged and critical-thinking citizens) and on the dollars and sense of economic life. Universities are where research happens, ideas turn into companies and all that. Whack them and we become not just dumber, but poorer too.

More decline follows as the basic sequence of life gets made harder for more people. CHIP follies are making pregnancy and childhood more wretched and even deadly. Ongoing assaults on the ACA, Medicaid and Medicare do the same for all of us and if/when the GOP passes its tax bill, most Americans will see taxes and deficits go up, threatening Social Security and everyone’s old age.

This kneecapping of American well-being and power extends across the policy spectrum.  Crapping on the environment isn’t just a matter of not hugging trees.  Just ask the citizens of Flint, MI if bad water is just an aesthetic loss. Recall the LA of my childhood and consider whether air pollution is just a matter of obscured views and great sunsets, etc.

All of these (and many more) domestic policy choices actually make us poorer, as individuals and as a nation. One more example: we already have crappier infrastructure than many of our national competitors. Among much else, that means it can take us longer to get to work — which is both an individual cost and and a net weakening of the US economy as a whole.

These are hidden taxes, charges we pay not in cash, but in our ability to choose how to spend our lives. That cuts US productivity as a matter of GDP, and our contentment as a matter of GHQ (Gross Happiness Quotient) (I made that up. I think.)

None of this means American will (necessarily) collapse entirely. It just means we will be less well off and, in the context of national power, less able to act in the world as a whole. We won’t be able to afford as much (see Britain, post 1918), and…we will — we already — find ourselves with less moral capital, less ability to persuade and encourage fidelity and emulation abroad. (Again, see Britain, post 1918).

There’s real danger ins such decline.  See Putin’s post Soviet Russia for one approach to the loss of economic, military and ideological/moral power.

In that context, it wouldn’t surprise me in the least to see Trump, backed by the GOP, launch into a second war of choice in an as many decades, with similarly awful consequences.

But, that said, even though nations find it hard enough just to muddle through a relative decline in international stature, the world goes on, in somewhat different order. That’s happening now. We can’t really stop it.

We do have a choice though — we can accept a relative decline that still has the US eagerly pursuing a rich and just future…

Or we can dive further the implications of the current GOP program, and watch as our politics become yet more of a zero sum game in which those with the most grab all the crumbs they can, leaving the rest of us to our own devices, while US power dwindles.

And that, by way of the long road home, leads me here: Trump’s GOP* is a fundamentally anti-American party. It is working as hard as it can to deliver wealth and power to a small constituency to the detriment of our national interest. That’s how an organized crime ring acts, not a party of government.

And with that….this thread.  It is open.

*And it is his party, or, if you prefer, he’s the predictable face of what that party has long been becoming.

Images: J. W. M. Turner, The Fighting Temeraire tugged to her last Berth to be broken up1839.

after Hieronymous Bosch, The Hay Wain (central panel of a tryptich), between 1510-1520.