Quote:
Originally Posted by Pete F.
As has been claimed here by several for more than a year
“Skeptical reporting has still been too favorable.
The 2017 tax cut has received pretty bad press, and rightly so. Its proponents made big promises about soaring investment and wages, and also assured everyone that it would pay for itself; none of that has happened.
Yet coverage actually hasn’t been negative enough. The story you mostly read runs something like this: The tax cut has caused corporations to bring some money home, but they’ve used it for stock buybacks rather than to raise wages, and the boost to growth has been modest. That doesn’t sound great, but it’s still better than the reality: No money has, in fact, been brought home, and the tax cut has probably reduced national income. Indeed, at least 90 percent of Americans will end up poorer thanks to that cut.
Let me explain each point in turn.“
But you’ll have to open the link and read the concise point by point explanation.
https://www.google.com/url?sa=i&sour...46490561312958 |
As Jim noted, Krugman doesn't discuss things that run counter to what he is trying to say here. Instead, he focusses on international corporate investment and its influence on federal government revenues, and he reverts to his usual sweeping, generalized theories within theories which forces him to inject weasel words such as "probably" and "don't necessarily correspond to anything real" which give a shadowy image of plausibility to his assertions.
Within his narrow, limited focus he somehow manages to refer to a "national" income, which is presumably the rest of us, and that 90% of Americans will end up poorer because of the tax cuts. I didn't find in his point by point analysis how the tax cuts made me poorer. So far, I am getting more money, not less.
Now, if he is referring to inflation, which I didn't find a reference to in his article, he may have a point. But inflation generally reflects markets improving too rapidly (which may be why he didn't mention it), which can be induced by lowering taxes. So, yes, lower taxes can lead to market expansion, which means the tax cuts are working, maybe too well. But the Fed tries to control that by raising interest rates to slow down market transactions, which creates a market slowdown and gives the false appearance that tax cut policy is not working.
Another inflationary cause is the previous administration's massive money pumping that wasn't used as intended because it basically couldn't find a demand for it in a stagnant market, but is now flooding an expanding market with more money than needed, thus lowering that money's purchasing value. So there is an added layer of inflation that is not a result of the tax cuts.
So he manufactures a global centric argument about money not returning to America because of the tax cuts, but actually flowing to foreign investors who profit because of lower taxes, which, supposedly, in effect, somehow means that the tax cuts are not only not working but they are making 90% of us poorer. But, as I said, he doesn't specifically say how that is so regarding us as individual tax payers. But he implies that is so because the tax cuts also benefit foreign investors. Nor does he mention how the foreign investors contribute to the market in the first place.
But his whole thesis rests solely on his narrow focus on what he claims is money not returning to America, but merely benefitting large corporations, one third of which are owned directly or through investment by foreigners. He disregards the multi-faceted purpose of the tax cuts, the least of which is not to "bring back money" to the U.S., but to bring back and/or create more jobs, including those produced by foreign entrepreneurs moving here. As well, the freeing up of money already here to create more jobs. And, as I can personally attest, to keep some of the people's money in their pocket rather than in the government's. But all of that, to his chagrin, means government wealth shrinks and so will some programs that some "people value" (He didn't say "some", I made the clarification to be more precise.)
He, in the final analysis, worries more about the loss of government income than in individuals gains in money and jobs. But in the end, our federal government never loses money. It refuses to. Even if it has to bleed us to get it.