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TAX CUTS, DEBT AND ECONOMIC GROWTH

December 10, 2017

TAX CUTS, DEBT AND ECONOMIC GROWTH

Today a lady professor in her blog asking for commentary noted tongue in cheek that GOP lawmakers with their vote for this vicious so-called tax bill (with its horrendous effects) must not have grandchildren. My response to her observation, slightly edited, was as follows:

Ah, but Professor, the GOP lawmakers do have grandchildren and have indeed considered how this “greed now” so-called tax bill affects their progeny. The bill provides for virtual extinction of the estate tax so that inherited wealth is passed on unimpeded to heirs and devisees. The bill also adds greatly (via tax cuts and definitions of income) to the troves of the present superrich so that they have more to leave to their successors. Piketty treats this problem at length in his book (my secular bible – Capital in the Twenty-First Century) with an historical look at inherited wealth and patrimonial capitalism.

The bill now pending in conference (and whose effects are almost universally decried by responsible economists) thus provides for more money for the superrich and a mechanism for passing on such increased troves to their untaxed successors, and with our economic growth in the doldrums and virtually certain to remain there, the money to pay for such reductions in current taxes for those most able to pay has to come from somewhere in what Stiglitz has designated as our “economic pie,” and the only place it can come from is the rest of us.

Republicans tell us that economic growth will offset the some 1.5 to 2 trillion dollar addition to our debt. Right! And the moon is made from green cheese! As we all know (not just economists), economic growth depends wholly upon aggregate demand, and with the shrinking wherewithal to the mass of consumers occasioned by Republican giveaways to the superrich (those who cannot consume more since the lawns on their estates are already crowded with Rolls Royces) and for other good reasons, I view the grossly misnamed “tax cuts and jobs bill” as a spike in the heart of our economy and predict a recession in 2018 or no later than 2019 when the impact of this bill (if finally passed) reduces aggregate demand and results in negative growth which will in turn INCREASE OUR DEBT.

So how, as you rightly ask, do we end what these myth-making Republicans are leaving us beyond voting them out of office? Answer: We take voters off the Yellow Brick Road and introduce them to reality via a stern science known as arithmetic, a science immune to myth and ideology.     GERALD       E

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