Listening to both Democrats and Republicans, it sounds very obvious that they believe that Americans do not need to pay taxes, and do not need tarriffs. It seems to be the other party's fault that we have these unnecessary burdens. The major parties seem to not believe that the budget deficit means anything at all. Congresspeople are grinning from ear to ear as they have signed up for tax breaks for the wealthiest Americans, despite that all of this "new money" is actually borrowed.
Economic voodoo worshipers talk hopefully about how the tax cut is going to spur the economy so much that economic growth is assured, so much so that it will pay for the tax cut. "Deficits don't matter."
Well, they do matter. Did any of you people go to college? The last time we did this foolish experiment, we almost destroyed the global economy in 2008, and had to bail out the banks with hundreds of billions of dollars lost. Are we going to do that again? Apparently so. And most of the money we have borrowed in order to give tax breaks to wealthy Americans will wind up in Swiss bank accounts when the next crash occurs.
Despite the obvious proof that economic idiocy has the upper hand right now, I believe there is a nagging doubt in some parts of the government whether this is really a good idea. The Congressional Budget Office predicts a deficit of over one trillion dollars per year by 2020. The deficit was $587 Million, in 2016 and projected to $833 this year and over a trillion dollars by 2020. At some point, the global economy will lose confidence in the value of T-bills, and the economy will implode as it did in 2008. Sane economists (a minority to be sure) realize this is terrible.
To decrease the deficit, there are only two real options: either cut spending or increase revenues, both of which are painful. Congress is politically unable to cut spending. What do you expect from a group that spends 6 trillion dollars on chaos and death in the Middle East and refers to it as "our investment?" Nobody cares about an economic collapse, as long as it can be successfully blamed on the other side.
Increasing revenues can take only two forms: higher taxes or tarriffs. If any politician proposes to raise either one, the other side will scream about the disadvantages and ignore the basic function of restoring some balance to the deficit.
Raise taxes on the poor? Can't do that, say the liberals, the poor will suffer.
Raise them on the rich? Can't do that, say the conservatives, the rich are job creators.
How about raising the Federal Excise Tax on gasoline? Can't do that, it will hurt the transportation sector.
Well how about tariffs? This likewise brings a chorus of boos from both sides. Nobody is concerned about an economic collapse yet, only the immediate effects on industry. I have a friend that wa rather high up in the aluminum industry before retiring, and he doubts whether the tariff will spur much investment in new smelters, though the existing one might work at full capacity
The point of a tariff is not to punish foreign industries, it's to raise money to pay for the very real goods and services that the Federal Government provides (plus the stupid things like Middle Eastern wars, that are nevertheless considered essential). Really it isn't going to affect the demand for steel and aluminum very much, because industry will not build new plants based on the expectation of government support for prices. I don't think it is a trade war, it's mainly a way to cut our deficit by 5%. Yes it's painful, but not nearly as painful as an economic depression. The 2008 financial crisis is the worst economic disaster since the Great Depression of 1929. It occurred despite Federal Reserve and Treasury Department efforts to prevent it. In 2008, housing prices fell 31.8 percent and unemployment rose to above 9 percent. This is partly because the US chose to hand out tax credits to a growing economy, and went from a balanced budget in 2000-2001 to the bloated and escalating deficit that we have today. In 2009 and 2010 the government navigated out of the economic crisis, partly the the help of "stimulus" spending. This is in accordance with Keynesian theory, that in a recession the government needs to spend more to get the economy moving. This may not be possible if the deficit crisis worsens to the point that foreign lenders are no longer willing to lend America money.
The effect of the tariffs is to decrease the US ability to buy and consume cheap imported goods. It also means that US industry is incentivized to pick up the slack, which might result in additional employment. That is not disastrous. If you have to pay for the government somehow, it's not the worst thing you could do.
Make no mistake, tariffs are not a tool for job creation or punishing foreign countries. It's simply a way to pay for our government spending. This is a time when we should be paying down the debt, rather than borrowing more money to give to wealthy Americans.
I think it was a sorry mistake to give tax cuts to rich people who don't need them. This is just a down payment on a future economic disaster. Likewise it is a sorry mistake to continue pouring money down the Middle Eastern rathole, based on the mistaken belief that America is winning great friends by doing so.
If we are headed to a trillion dollar per year annual deficit, I don't see how to argue against an effort to try to stem the deluge with 50 billion dollars of new revenue. I would like to see something that gets phased in gradually rather than creating an abrupt change in the global economy. But the tariffs do not go far enough in my opinion--too little too late--and moreover our lawmakers lack the wisdom to make even the most obvious of funding cuts. That is just not going to happen.
I think the critics should cool their jets about tariffs and instead focus on the trillion dollar deficit.
Economic voodoo worshipers talk hopefully about how the tax cut is going to spur the economy so much that economic growth is assured, so much so that it will pay for the tax cut. "Deficits don't matter."
Well, they do matter. Did any of you people go to college? The last time we did this foolish experiment, we almost destroyed the global economy in 2008, and had to bail out the banks with hundreds of billions of dollars lost. Are we going to do that again? Apparently so. And most of the money we have borrowed in order to give tax breaks to wealthy Americans will wind up in Swiss bank accounts when the next crash occurs.
Despite the obvious proof that economic idiocy has the upper hand right now, I believe there is a nagging doubt in some parts of the government whether this is really a good idea. The Congressional Budget Office predicts a deficit of over one trillion dollars per year by 2020. The deficit was $587 Million, in 2016 and projected to $833 this year and over a trillion dollars by 2020. At some point, the global economy will lose confidence in the value of T-bills, and the economy will implode as it did in 2008. Sane economists (a minority to be sure) realize this is terrible.
To decrease the deficit, there are only two real options: either cut spending or increase revenues, both of which are painful. Congress is politically unable to cut spending. What do you expect from a group that spends 6 trillion dollars on chaos and death in the Middle East and refers to it as "our investment?" Nobody cares about an economic collapse, as long as it can be successfully blamed on the other side.
Increasing revenues can take only two forms: higher taxes or tarriffs. If any politician proposes to raise either one, the other side will scream about the disadvantages and ignore the basic function of restoring some balance to the deficit.
Raise taxes on the poor? Can't do that, say the liberals, the poor will suffer.
Raise them on the rich? Can't do that, say the conservatives, the rich are job creators.
How about raising the Federal Excise Tax on gasoline? Can't do that, it will hurt the transportation sector.
Well how about tariffs? This likewise brings a chorus of boos from both sides. Nobody is concerned about an economic collapse yet, only the immediate effects on industry. I have a friend that wa rather high up in the aluminum industry before retiring, and he doubts whether the tariff will spur much investment in new smelters, though the existing one might work at full capacity
The point of a tariff is not to punish foreign industries, it's to raise money to pay for the very real goods and services that the Federal Government provides (plus the stupid things like Middle Eastern wars, that are nevertheless considered essential). Really it isn't going to affect the demand for steel and aluminum very much, because industry will not build new plants based on the expectation of government support for prices. I don't think it is a trade war, it's mainly a way to cut our deficit by 5%. Yes it's painful, but not nearly as painful as an economic depression. The 2008 financial crisis is the worst economic disaster since the Great Depression of 1929. It occurred despite Federal Reserve and Treasury Department efforts to prevent it. In 2008, housing prices fell 31.8 percent and unemployment rose to above 9 percent. This is partly because the US chose to hand out tax credits to a growing economy, and went from a balanced budget in 2000-2001 to the bloated and escalating deficit that we have today. In 2009 and 2010 the government navigated out of the economic crisis, partly the the help of "stimulus" spending. This is in accordance with Keynesian theory, that in a recession the government needs to spend more to get the economy moving. This may not be possible if the deficit crisis worsens to the point that foreign lenders are no longer willing to lend America money.
The effect of the tariffs is to decrease the US ability to buy and consume cheap imported goods. It also means that US industry is incentivized to pick up the slack, which might result in additional employment. That is not disastrous. If you have to pay for the government somehow, it's not the worst thing you could do.
Make no mistake, tariffs are not a tool for job creation or punishing foreign countries. It's simply a way to pay for our government spending. This is a time when we should be paying down the debt, rather than borrowing more money to give to wealthy Americans.
I think it was a sorry mistake to give tax cuts to rich people who don't need them. This is just a down payment on a future economic disaster. Likewise it is a sorry mistake to continue pouring money down the Middle Eastern rathole, based on the mistaken belief that America is winning great friends by doing so.
If we are headed to a trillion dollar per year annual deficit, I don't see how to argue against an effort to try to stem the deluge with 50 billion dollars of new revenue. I would like to see something that gets phased in gradually rather than creating an abrupt change in the global economy. But the tariffs do not go far enough in my opinion--too little too late--and moreover our lawmakers lack the wisdom to make even the most obvious of funding cuts. That is just not going to happen.
I think the critics should cool their jets about tariffs and instead focus on the trillion dollar deficit.
 |
| The Master Plan of American politicians is to get re-elected before the economic deluge hits, and then try to blame it on the other party. |
No comments:
Post a Comment