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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.



Late Night Horrorshow Open Thread: Maybe They’ll Call It ‘Brown Apron’

Mick Mulvaney’s brill idea seems to have evaporated overnight, but Repubs never give up on a proposal that looks like a chance to screw The Undeserving while allowing a little free-market looting… er, “privatization”… of the common treasury. So I figure we’ll soon be seeing sketches of the proposed Versace-designed uniforms for the troops of the ‘SNAP czar’ in charge of seeing those people are humiliated and starved for the crime of being poor:

The Trump administration is proposing a major shake-up in one of the country’s most important “safety net” programs, the Supplemental Nutrition Assistance Program, formerly known as food stamps. Under the proposal, most SNAP recipients would lose much of their ability to choose the food they buy with their SNAP benefits.

The proposal is included in the Trump administration budget request for fiscal year 2019. It would require approval from Congress…

Currently, SNAP beneficiaries get money loaded onto an EBT card they can use to buy what they want as long as it falls under the guidelines. The administration says the move is a “cost-effective approach” with “no loss in food benefits to participants.”

The USDA believes that state governments will be able to deliver this food at much less cost than SNAP recipients currently pay for food at retail stores — thus reducing the overall cost of the SNAP program by $129 billion over the next 10 years.

This and other changes in the SNAP program, according to the Trump administration, will reduce the SNAP budget by $213 billion over those years — cutting the program by almost 30 percent.

Joel Berg, CEO of Hunger Free America, a hunger advocacy group that also helps clients access food-assistance services, said the administration’s plan left him baffled. “They have managed to propose nearly the impossible, taking over $200 billion worth of food from low-income Americans while increasing bureaucracy and reducing choices,” Berg says…

It isn’t clear how billions of dollars’ worth of food each year would be distributed to millions of SNAP recipients who live all over the country, including dense urban areas and sparsely populated rural regions. The budget says states will have “substantial flexibility in designing the food box delivery system through existing infrastructure, partnerships or commercial/retail delivery services.”

Critics of the proposal said distributing that much food presents a logistical nightmare. “Among the problems, it’s going to be costly and take money out of the [SNAP] program from the administrative side. It’s going to stigmatize people when they have to go to certain places to pick up benefits,” says Jim Weill, president of the nonprofit Food Research and Action Center…

According to Dean, from CBPP, the Trump administration wants to trim an additional $80 billion from the SNAP program by cutting off about 4 million people who currently receive food assistance. Most of them live in states that have decided to loosen the program’s eligibility requirements slightly. Under the administration’s proposal, states would no longer be able to do so…

Of course, the biggest beneficiaries of SNAP are American farmers and local food retailers, both of whom need those ‘food stamp moochers’ as paying customers.

For more background, Simon Maloy at Media Matters has a good summary of the “decades of conservative lies about welfare” behind “Trump’s SNAP attack”.

(Fifty-four more excellent questions from Lowrey here.)


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

Amazing:

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.



CHIPping away at the deficit

Let’s imagine that there is a situation where a popular program can be extended.

Let’s imagine that popular program uses public-private partnerships.

Lets imagine that popular program’s extension needs no hard to agree upon pay-fors.

Let’s imagine that popular program’s extension is actually deficit reducing.

One would think that the vote to extend a deficit reducing popular program would be 422-7 in the House and 95-2 in the Senate.

That would be a nice strand of the multiverse to live in.

It is not our strand of the multiverse.

The Congressional Budget Office (CBO) estimates that extending CHIP saves money compared to the counterfactual of doing nothing.

The CBO thinks the following in their estimate:

  • Some kids currently on CHIP will get insured by going to the Exchanges
  • Some parents of kids currently on CHIP who are currently uninsured will get covered on the Exchanges
  • The repeal of the individual mandate increased projected premium subsidies
  • Fewer net kids will be covered even with spill-over coverage into the Exchanges

That to me sounds like a reasonable set of assumptions.  CHIP is cheaper for the federal government than paying Exchange subsidies for low to middle-income kids because CHIP is primarily paying near Medicare rates to providers instead of usually more than Medicare rates on the Exchanges.

A clean extension of CHIP saves money against the counterfactual of no change in policy or law.   That money could be used to enhance state match rates.  It could be used to reduce the total debt load.  It could be used for reinsurance.  It could be used for 5,001 things.

And yet, CHIP is still not being extended, 103 days after its long term funding was not renewed.

 

 



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.