The rethugs have to justify the economic rapine they intend to inflict. They have no policy beyond 'make as much money as fast as possible'. They know the Democrats will come in and fix things including bailing them out. If a few financial types had been jailed after the Great Recession, they might be a little more cautious, but hubris is the order of the day now.
look at the budget office under Harding and Coolidge. https://en.m.wikipedia.org/wiki/Presidency_of_Warren_G._Harding. They were proud of cutting taxes and government expenditures but the administration of Coolidge was followed by The Great Depression. I’ll admit I may be wrong. If you have evidence to the contrary, let me know and I’ll take a look.
Sorry a different subject. Please lobby Joe Biden to release American Indian Leonard Peltier who was falsely accused of aiding and abetting the murder of 2 FBI agents in 1975. The 2 that were charged were found not guilty and the FBI used Peltier to blame.
I will have the honor to perform this at the People's March tomorrow, Saturday, Jan 18 at 10 AM in Manhattan on Centre sat last stop on the 6 train. Please come out and support us.
I think Bessent believes what he says. What I don’t think is your personal opinion overrides actual facts, scientific process, and that mathematics is real. You have to realize that real scientists look harder for things that prove them wrong than things that support their opinion. For those who believe in following scriptures remember that Thessalonians says question everything.
The reduction in taxes doesn’t reduce the public’s need to pay for our infrastructure and our military. Instead, the tax windfall for the already wealthy forces the government to borrow more by selling treasury bonds to them paid for by increasing the national debt. Thus, the not wealthy majority is forced to forego taxes on the wealthy so we can pay them rent to borrow from them what should have been taxed. Then the wealthy turn around and say that the interest they collect is an excessive national expense, which must be paid for by reducing programs like medical insurance and social security. It’s just a program to transfer more wealth upward and further unbalance wealth.
Those of us who voted for Trump want a massive (preferably order of magnitude) reduction in military and infrastructure. I doubt Trump will deliver but this idea that we'd like tax cuts with all else being equal is why so many people on the left think we're being irrational.
Fundamentally i(f you care to understand why people like Trump and don't want to just be emotional) we feel most of these institutions no longer work for us and want them gone.
I've lived on privately maintained roads for decades. It's horrible. Half the people don't want to pay for any maintenance. Some people do the work. I even have a crazy neighbor who cussed me out for smoothing out the potholes with my tractor.
There are always people who believe in anarchy. It works well for the cunning, ruthless and cruel.
Legitimately curious… You grew up where there was only a single road everyone used, and everyone you knew helped maintain this single road (financially, structurally, etc.)?
Your idea of "The Road" is straight out of Cormac McCarthy. Only two states in the nation don't have county/borough/parish road commissioners: Rhode Island and Connecticut (both of which rely on State commissions.) I maintain my driveway, which, granted, is road-like for some citizens, and I even pick up trash along the public streets, but your position is patently false, or I may be misunderstanding the road you are talking about.
It's very sub optimal. Ideally we'd have institutions that work for us. But after decades of having our criticisms ignored many of us feel we'd be better off without them.
And yes we had a road many of us maintained ourselves. Different families had different equipment. We had a treasury everyone was obligated to pay into and held elections to decide how to dispose of the money.
It sounds like this road you mention is private. That is not a model for public roads... or is it? If you wanted to create a treasury to main public roads - how is that different than a borough commission? Is it the public machinery you object to? Without public roads - how do you visit people and institutions outside your family group?
How about the interstates - do you not travel beyond the village where you can maintain your roads? Do you inspect and repair/replace bridges, too? Or are there no rivers in your village.
you voted for Trump and you expect him to cut the military? I am trying real hard not to call you names. Please please...can you show us in a single speech where Trump promised to cut military spending? You want us not to spend money to fix roads and bridges? Some of us are guessing that the only thing you want "gone" is federal help for black single mothers (aka welfare queens). Jump in and holler I am wrong please!
3% of revenue on defense spending is about as low as we can go and we are close to that while getting great value for defense spending in Ukraine. Quite frankly going lower than 3% isn’t even worth it because Clinton was trending lower and Republicans freaked out and shoved Bush/Cheney down our throats and flushed $5 trillion down our throats because 20 guys used box cutters to evade our airport security.
The expectation WRT the military is based on his *results* from his last term. (btw I didn't vote for him then as I was expecting him to do the opposite.) He went after the military budget then and got us out of a lot of these retarded foreign conflicts.
Yeah I want it all gone. It's not helpful and it needs to go. If people in eg California really want the state to help people like black single mothers then they can take it out of their supposed budget surplus they keep telling the rest of us about rather than laundering it through the federal government.
that "rural" state you live in makes you proud that you don't help children in poverty right? Your policy you want from Trump is "you want it all gone" As in no government? In Russia, your model I assume, you know they still have a functioning government right? Can you show us an example of this "all gone" place you strive for?
I actually do help children and families in poverty. I've personally helped build houses for people and give quite a lot of money to the poor. I think the government is creating more poverty than it's fixing.
I'm not sure what you mean by Russia is my model. I'm not familiar with how their government or political culture works. My impression is that it's very corrupt and not exactly good for the people who live there either.
Is that due to tax cuts on the wealthy while working people end up paying more of their wages just to live. Swiley, you need to experience living in poverty.
sorry...I said SHOW IN A SINGLE SPEECH IN THE LAST YEAR WHILE HE WAS CAMPAIGNING THAT HE PROMISED TO CUT THE MILITARY....sorry for the caps, but this forum is sort of intellectual and you are meandering internet speak. no "wrt" abbreviations. Please speak plainly and if you can't explain yourself, look into your heart for why you need code and untrue words? Trump NEVER promised to cut military spending. I will leave you alone because if it's all just you white and say BS, God only gave me so much breath and I don't like wasting it please?
Aha, so you don’t want any assistance for poor families. Do you also see special education as wasteful? Social Security for lazy elders who don’t work? Medicare and Medicaid for people who have no employer-provided health insurance?
The federal government is completely derelict in *actual* defense as evidenced by the state of Southern Texas so the money going towards that needs to go towards something that's actually productive. Russia is a bogyman and China has no interest at all in a war with us.
Here in America, legislation is how we address problems like immigration. Trump had the worst record on legislation and blocked bipartisan immigration legislation while Biden was President.
In reality, the southern border is mostly a fake issue. It's about xenophobia and racism used to rile up the base. The biggest effect on your life is cheaper food and products. Funny how Republicans never go after the employers.
As an American, I am on the side of freedom and democracy. I buy into the U.S. being the leader of the free world. I see authoritarians like Putin and Xi has real threats to freedom. Your "Boogeyman" started a war of conquest in Ukraine that has affected the world economy and caused horrific death and destruction. Trump called Putin smart for trying to take over Ukraine.
Cheaper products don't matter if it's hard to get a job. The only people who would be really hurt by the inflation caused by killing immigration are those who aren't willing to actually work.
Actually they are already working. But wages haven’t (and won’t) keep up with inflation. Honestly, I don’t believe you have thought through any of your ideas for “burn it all down.” Maybe you should do a little research before you just keep posting MAGA talking points.
But that’s not what the newly empowered Congress is saying. You don’t get just tax cuts. You also get to pay for them by reducing the entitlement programs. So you have to consider who gets the most from the tax cuts, and who pays the most for them. There’s the rub.
A lot of these entitlement programs subsidize corporations. Many people point out that Walmart gets away with paying workers so little because they know these programs will cover many of their other expenses.
And maybe they won't cut much but the opposition wanted to *expand* it which is certainly not what we want.
Are you seriously considering punishing Walmart, one of the richest families on the planet, by significantly lowering their taxes? No. You’re favoring the richest over the working poor.
You sound like a decent person who wants to be understood. You say you don’t expect Trump to accomplish much. But that’s ok, as long as he destroys government programs. That doesn’t sound like a prescription for greatness. Be careful what you wish for.
Did Trump promise to cut the military? Literally did any Republican running for anything this election year run on cuts in military spending? You’re voting for a person who you hope will do something but has never even bothered lied saying they would. My only comment is that’s pretty on brand for a typical Republican/Libertarian mindset,
It feels to me like coloration was replaced with something else in the name of equity. I think this feeling is shared with a lot of other people who are dissatisfied with the way the US works now and that’s what’s driving a lot of what people are calling irrational.
I think it’s because white men feel they’re being deprived of some kind of birthright privilege, which makes them angry and scared. The rest of us had to work hard to get where we are, and we grew up understanding that we were not owed anything. Now those with inherent historical privilege want to blame others… 🤷♀️
Do you have specific things you’d like to eliminate? Have you considered the unintended consequences of your recommendations? That’s a nice slogan but not a policy recommendation.
The rational approach would be to evaluate what we are doing and make bipartisan changes as necessary. We could start by passing the bipartisan immigration legislation bill to address one concern of yours.
Observations like this one are the reason I love this newsletter: The BLS measures "growth rates between business cycle peaks, applying the Anna Karenina principle: all happy economies are alike, but each unhappy economy is unhappy in its own way."
Bessent said, without irony, that the expiration of the Trump 2017 Tax Scam would cause great disruption. Really? To whom? Rich guys like him who will have to pay slightly more in federal taxes impacting their lifestyle not one bit? Or greedy corporations that will just raise prices to cover? These guys live in a dream world. It is very sad that we have yet to see a Democratic president or Democratic Congress that is brave enough to take them on and raise marginal rates to a level that might actually make a difference.
Hi - most economists are not factoring the effect of Long Covid on economy - I do expect them to know as media has not covered it well.
Check out the recent study on about 300 K in Boston who had COVID - evaluated by MDs at Mass Gen and other hospitals - they picked 7% of patients with Long Covid
But when the same data was fed to precision tooled AI - 22.8% had Long Covid
As the waves of immune evasive variants continue this will grow.
Just making sure economists pay attention to these numbers.
Increase in disabilities and shrinking labor force - burden of Long Covid more on young in addition.
Thanks for pointing this out. It’s not being given any real consideration, as if covid is just done and gone. What is actually happening is quite frightening. Deaths, and ongoing immune dysregulation (which I have and U.S. a disabling condition) due to covid are still high. H5N1 and new covid variants are increasing and will add to the toll.
We had minimizers in Biden's administration - who did not know of despite a large number of us - advising that this virus can evade immunity even in those vaccinated and or infected - were ignored and called as left fringe (Dr. Ahish Jha's words).
Not only the virus variants can immune evade but now we know- there is no induction of long lasting plasma cells needed for sustained immunity - all we got was plasma cells producing Abs which waned in 4 months.
Anecdotally, 3% of my social network has long covid, which is consistent with the 7% estimate. That's still a big deal. But if it was 23%, it would be so obvious it would be staring everyone in the face.
The new approach suggests that 22.8% of the population experience the symptoms of long COVID, a figure that may paint a more realistic picture of the pandemic’s long-term toll. Because competent MDs picked only the obvious ones- and they are from Mass General - in my area I am the only one picking them and 2 hours away to enroll Recover Clinic which is full.
Probably important to realize not all long Covid is disabling to the point of not working. I have it and am very stable with daily medication. Pretty much my old self. It did disrupt my life for a year, so that matters, but it got much better over time.
Once you have Long Covid - 70% resolve in 2 years and 30% continue to progress (from a study).
Each recurrent Covid 19 infection in these patients worsens the course
Each Covid 19 infection incidence of Long Covid ~7% in unvaccinated (across all age groups) but ~3.5% in those vaccinated +possibly boosted (from studies).
Across all age groups is a big deal- chidlren attending schools - 8 hours a day 200 days a school year with no monitoring of indoor ventilation and due to Gun safety windows closed and door shut.
Add: Why did Democrats lose despite best work done to address - there is a lot of it - between two ‘is’ - inflation to infrastructure- 16.6 M in 4 years - compared to 16.5 M in 8 years - the second best after 18.6 M in 8 years and bested Carter’s 9.8 M in 4 years and after inflation $4 K in wages and gap in racial disparities in jobs the lowest.
Since 2021 - Biden was surely not on stump talking about what he was doing - only one advancing his agenda was Pete Buttigieg- who through Fox News and social media posts kept what he was doing - deftly avoiding not to overshadow the President - my hunch is Biden has had health problems compounded by COVID 19 infection and possibly Long COVID.
You cannot ignore evidence and those who advocated for mitigations were smacked as leftist fringe by Ahish Jha.
I have posted on Bluesky why we do not have prolonged immunity after vaccines and/or infections after Long Covid - just type long lasting plasma cells with vaccines against SARS CoV2 you will see a good article describing in detail.
While I agree that there is strong refutation of the idea that lowering taxes on the rich stimulates growth, i think there is strong theoretical support that high taxes on the rich do stimulate growth.
Side note: I'd love to be able to dig up charts with Krugman's ease, but I've given up on FRED. I can't seem to make it work
Okay, back to the subject matter.
There are lots of things that set the stage for growth that the Market cannot or will not provide. We broadly refer to that as infrastructure. Government, which can aggregate Capital (i.e., taxes) and allocate it without any consideration of profit, is the vehicle for providing that infrastructure. And that includes intangibles like a better educated workforce, or a legal system to keep business honest.
Another thing that government does that is not often appreciated is to create fiat money. Money is a hugely important factor in growth because it speeds up the rate of business. If you don't believe that, think where we'd be if barter was the means of conducting business.
Well, we could reduce taxes on the rich to zero, and just borrow more to keep a high level of government services, but interest payments would eat up dollars that otherwise would be allocated to infrastructure.
Bottom line, if you want more growth tax the rich big time.
Well, let us talk about something Prof. K did not take up in this piece. The other half of the elephant in the room. The magical idea that by cutting taxes revenue can be raised. This ridiculous assertion is based on a premise that at present rates, or higher rates if the present cuts are not extended, the Treasury is way over the bend in so far as collections are concerned, due diminishing returns to rate hikes. The first derivative is negative. You see, we are getting less money be cause we are taxing at too high a rate ! We are talking about income taxes. And practical if not theoretical nonsense btw. Krugman disposes of it quickly.
But never mind. Bessent affirmed that Trump’s number one goal is to see that Congress extends the temporary tax cuts enacted during his first term. Find me one man willing to bet his life on the prediction that this will lead to a flood of new revenues in to the Treasury. It won’t. It will do the opposite. With present levels of spending, and more or less constant levels of GNP, or even allowing for current growth, current budget deficits will need to be projected in to the future. This means the national debt will continue to grow. And Treasury will need to borrow more. And rates will go up. Never mind the tariffs. This is a best case scenario assuming Trumps tariffs don’t cause a Depression.
So, returning to Bessent’s article of faith that cutting taxes will stimulate growth by freeing up savings to be used for or borrowed against for purposes of investments needed to sustain it, what then happens to one’s belief in this faith when the Treasury Department steps in to the Bond Market in say September of 2025 with the largest bond offering in the history of Mankind to finance this shortfall, the Debt Ceiling having been blown away as Trump has requested ? And needs to mark up the coupon rates on its offerings to market, and when prices then nevertheless fall, yields soar, the Bond Market tanks, and interests coming roaring back ?? Will he still be a believer ? Is he now ? What do you think he is telling his Hedge Fund clients to do ?
Yes, Virginia. There is such a thing as crowding out. And that is what we will see. Private investors will be crowded out of the bond market. And the stock market will capsize too. And there will be insufficient savings available to fund private investments.
Thus under present conditions of large deficits, the soon to be new Treasury Secretary’s sworn belief under oath that tax cuts will result in faster GNP positive growth are simply too incredible to be shared. And I doubt he would bet his first born on their efficacy any more than he would on Baal.
JKG's Affluent society remains a great book on fallacies of mainstream economic thinking. At the basic level, the idea of growth as a SOLE economic purpose doesn't make sense. What the country and society needs is certain kind of things like standards of living, infrastructure, economic rights, clean environment, maximal employment etc. Our goal should be to achieve these objectives AND whatever growth comes is POST FACTO. Just pushing for growth without focusing on the things that matter is senseless. JKG elaborated on this pretty well. Here is my article in obsession with economic growth from perspective of my home country India.
I also don't take GOP's vodoo mantras at their face value. I mean, they can claim 3-3-3 plan will lift growth but they actually themselves don't really believe it. That is, their mantras are actually a veneer to achieve their other objectives which is giant tax cuts, deregulation, subsidies etc which gives fat profits to oligarchs but doesn't really boost any growth. GOP policy positions in fact are nothing but scams and don't even deserve a serious economic analysis.
Well I guess you have just about said it all. If Trump and his yes men really believed what they were saying, then he would not be asking for the debt ceiling to be blown away. And GNP growth for the sake of GNP growth alone is meaningless. Hurricanes can lead to GNP growth. So, I suppose, can a lot of pointless investments that generate activity. Current methods of economic accounting are either nonjudgmental as to value, or over time have gotten bent out of shape due to the weakening of premises on which they are based. All of which can be made to go away if you will simply repeat after me over and over: growth is good growth is good growth is good. Hence the field as we know of Green Accounting.
The Alluent Society was fun to read. Didn’t he say this in conclusion:
“There are no principles or concepts in economics worth knowing that can not be stated in plain ordinary English capable of being commonly understood “ ?
As I explained it to a colleague who was suckered by the GOP's pap:
In order to increase GDP, it is necessary to increase demand. Tax cuts to the wealthy who already bring in more money than they spend will give them more money to not spend, demand will not change and GDP will be the same. If instead you give more money to someone who must spend every dime they bring in, they will spend that money, demand will increase and GDP will increase.
Mr. Bessent's comments yesterday made clear that he does not understand this basic principle and also that he does not understand how tariffs work. Or...he does understand, but was lying in order to please Mr. Trump. Either way, he is unsuitable for the position.
I believe he said he would not look at increasing the Federal Minimum Wage from $7.25 when Senator Sanders asked him. If that person had more money they would definitely spend it
"Republicans believe, or claim to believe, that they can sharply raise productivity growth by cutting taxes on the rich. You could say that claim is unsupported by evidence. But that’s too weak; in fact, it’s powerfully rejected by the evidence."
You are so polite. Nepo-babies play Pig with the economy and you can explain it. What a relief to read you somewhere new.
Off-topic: Let's remember the most important part of Monday: Martin Luther King, Jr.
Thank you for the link to Catherine Rampell. Although I have cancelled my subscription to WaPo for what should be obvious reasons, she is on BlueSky so I will be able to follow her there.
It is not just productivity. From 1932 through 1981 the top marginal tax rate was 60% or higher and from 1944 through 1963 it was over 90%. During this period United States won WWII, put a man on the moon and established itself as the greatest military power in the world. The US also created the commercial aviation industry and the computer industry. It dominated global auto production. It became the dominant force in global culture an entertainment. This period was in fact the time that MAGA hatters are remembering when America was Great. Some would even say that America's fall from Greatness began in the period following Reagan's Tax Cut of the top marginal rate to less than 30%. The massive breadth and depth of American innovation and creativity that marked this period of super high marginal tax rates is unprecedented. It was a time in which America's middle class was large, prosperous, creative and yes probably also fairly productive.
As the professor said - “You could say that claim is unsupported by evidence. But that’s too weak; in fact, it’s powerfully rejected by the evidence”.
This single statement applies well to ALL the demonstrable lies Republicans believe.
The rethugs have to justify the economic rapine they intend to inflict. They have no policy beyond 'make as much money as fast as possible'. They know the Democrats will come in and fix things including bailing them out. If a few financial types had been jailed after the Great Recession, they might be a little more cautious, but hubris is the order of the day now.
look at the budget office under Harding and Coolidge. https://en.m.wikipedia.org/wiki/Presidency_of_Warren_G._Harding. They were proud of cutting taxes and government expenditures but the administration of Coolidge was followed by The Great Depression. I’ll admit I may be wrong. If you have evidence to the contrary, let me know and I’ll take a look.
Sorry a different subject. Please lobby Joe Biden to release American Indian Leonard Peltier who was falsely accused of aiding and abetting the murder of 2 FBI agents in 1975. The 2 that were charged were found not guilty and the FBI used Peltier to blame.
My song: Mr President Please Pardon Leon Peltier: https://www.youtube.com/watch?v=o8ell2BLzNA
I will have the honor to perform this at the People's March tomorrow, Saturday, Jan 18 at 10 AM in Manhattan on Centre sat last stop on the 6 train. Please come out and support us.
trite
I think Bessent believes what he says. What I don’t think is your personal opinion overrides actual facts, scientific process, and that mathematics is real. You have to realize that real scientists look harder for things that prove them wrong than things that support their opinion. For those who believe in following scriptures remember that Thessalonians says question everything.
Who are you replying to? Just asking.
I think you mean *his* (as in Bessent’s) when using the word “you” here. Correct?
correct
"I think Bessent believes what he says."
Stupid speculation.
Is there anything Republicans believe that ISN'T a lie?
You should speak in specifics, or it's just rhetoric.
Thanks for your advice, but you’re wrong. Regards.
The reduction in taxes doesn’t reduce the public’s need to pay for our infrastructure and our military. Instead, the tax windfall for the already wealthy forces the government to borrow more by selling treasury bonds to them paid for by increasing the national debt. Thus, the not wealthy majority is forced to forego taxes on the wealthy so we can pay them rent to borrow from them what should have been taxed. Then the wealthy turn around and say that the interest they collect is an excessive national expense, which must be paid for by reducing programs like medical insurance and social security. It’s just a program to transfer more wealth upward and further unbalance wealth.
It's the same great sucking sound of cash flowing up towards the 1% as happened during the Reagan presidency and this Era of trickle down economics.
Those of us who voted for Trump want a massive (preferably order of magnitude) reduction in military and infrastructure. I doubt Trump will deliver but this idea that we'd like tax cuts with all else being equal is why so many people on the left think we're being irrational.
Fundamentally i(f you care to understand why people like Trump and don't want to just be emotional) we feel most of these institutions no longer work for us and want them gone.
"Those of us who voted for Trump want a massive (preferably order of magnitude) reduction in military and infrastructure."
Infrastructure? You want to reduce roads, bridges, and airports by an ORDER OF MAGNITUDE?
I've yet to meet a conservative who was willing to pave their own roads, but perhaps you're a maverick.
Yes. It’s not working for us. Kill it. Also yeah, where I grew up we maintained the road ourselves. It's fine.
I've lived on privately maintained roads for decades. It's horrible. Half the people don't want to pay for any maintenance. Some people do the work. I even have a crazy neighbor who cussed me out for smoothing out the potholes with my tractor.
There are always people who believe in anarchy. It works well for the cunning, ruthless and cruel.
Legitimately curious… You grew up where there was only a single road everyone used, and everyone you knew helped maintain this single road (financially, structurally, etc.)?
swiley,
Your idea of "The Road" is straight out of Cormac McCarthy. Only two states in the nation don't have county/borough/parish road commissioners: Rhode Island and Connecticut (both of which rely on State commissions.) I maintain my driveway, which, granted, is road-like for some citizens, and I even pick up trash along the public streets, but your position is patently false, or I may be misunderstanding the road you are talking about.
You continue to impress me,
Tim
It's very sub optimal. Ideally we'd have institutions that work for us. But after decades of having our criticisms ignored many of us feel we'd be better off without them.
And yes we had a road many of us maintained ourselves. Different families had different equipment. We had a treasury everyone was obligated to pay into and held elections to decide how to dispose of the money.
swiley,
It sounds like this road you mention is private. That is not a model for public roads... or is it? If you wanted to create a treasury to main public roads - how is that different than a borough commission? Is it the public machinery you object to? Without public roads - how do you visit people and institutions outside your family group?
Tim
How about the interstates - do you not travel beyond the village where you can maintain your roads? Do you inspect and repair/replace bridges, too? Or are there no rivers in your village.
you voted for Trump and you expect him to cut the military? I am trying real hard not to call you names. Please please...can you show us in a single speech where Trump promised to cut military spending? You want us not to spend money to fix roads and bridges? Some of us are guessing that the only thing you want "gone" is federal help for black single mothers (aka welfare queens). Jump in and holler I am wrong please!
Notice he said nothing about the fossil fuel welfare queens.
3% of revenue on defense spending is about as low as we can go and we are close to that while getting great value for defense spending in Ukraine. Quite frankly going lower than 3% isn’t even worth it because Clinton was trending lower and Republicans freaked out and shoved Bush/Cheney down our throats and flushed $5 trillion down our throats because 20 guys used box cutters to evade our airport security.
The expectation WRT the military is based on his *results* from his last term. (btw I didn't vote for him then as I was expecting him to do the opposite.) He went after the military budget then and got us out of a lot of these retarded foreign conflicts.
Yeah I want it all gone. It's not helpful and it needs to go. If people in eg California really want the state to help people like black single mothers then they can take it out of their supposed budget surplus they keep telling the rest of us about rather than laundering it through the federal government.
that "rural" state you live in makes you proud that you don't help children in poverty right? Your policy you want from Trump is "you want it all gone" As in no government? In Russia, your model I assume, you know they still have a functioning government right? Can you show us an example of this "all gone" place you strive for?
I actually do help children and families in poverty. I've personally helped build houses for people and give quite a lot of money to the poor. I think the government is creating more poverty than it's fixing.
I'm not sure what you mean by Russia is my model. I'm not familiar with how their government or political culture works. My impression is that it's very corrupt and not exactly good for the people who live there either.
where in the world can you show us a model of how great things are going to be... A COUNTRY....where it's "all gone"??? an EXAMPLE please?
I did not ask you who you help...this is troll behavior. If you can't answer simple questions, I think we are done?
Is that due to tax cuts on the wealthy while working people end up paying more of their wages just to live. Swiley, you need to experience living in poverty.
sorry...I said SHOW IN A SINGLE SPEECH IN THE LAST YEAR WHILE HE WAS CAMPAIGNING THAT HE PROMISED TO CUT THE MILITARY....sorry for the caps, but this forum is sort of intellectual and you are meandering internet speak. no "wrt" abbreviations. Please speak plainly and if you can't explain yourself, look into your heart for why you need code and untrue words? Trump NEVER promised to cut military spending. I will leave you alone because if it's all just you white and say BS, God only gave me so much breath and I don't like wasting it please?
Aha, so you don’t want any assistance for poor families. Do you also see special education as wasteful? Social Security for lazy elders who don’t work? Medicare and Medicaid for people who have no employer-provided health insurance?
So, roads and bridges don't work for you.
So, having the ability to defend ourselves from authoritarian regimes like Russia and China doesn't work for you.
That does come across as completely irrational.
The federal government is completely derelict in *actual* defense as evidenced by the state of Southern Texas so the money going towards that needs to go towards something that's actually productive. Russia is a bogyman and China has no interest at all in a war with us.
More irrationality.
Here in America, legislation is how we address problems like immigration. Trump had the worst record on legislation and blocked bipartisan immigration legislation while Biden was President.
In reality, the southern border is mostly a fake issue. It's about xenophobia and racism used to rile up the base. The biggest effect on your life is cheaper food and products. Funny how Republicans never go after the employers.
As an American, I am on the side of freedom and democracy. I buy into the U.S. being the leader of the free world. I see authoritarians like Putin and Xi has real threats to freedom. Your "Boogeyman" started a war of conquest in Ukraine that has affected the world economy and caused horrific death and destruction. Trump called Putin smart for trying to take over Ukraine.
I wonder who is telling these people to migrate. Bet it’s a republican looking for labor to exploit and of course to make it an issue.
Cheaper products don't matter if it's hard to get a job. The only people who would be really hurt by the inflation caused by killing immigration are those who aren't willing to actually work.
You do get that we had record job creation under Biden, right?
Actually they are already working. But wages haven’t (and won’t) keep up with inflation. Honestly, I don’t believe you have thought through any of your ideas for “burn it all down.” Maybe you should do a little research before you just keep posting MAGA talking points.
Southern Texas is not a U.S. state.
state
/stāt/
noun
A condition or mode of being, as with regard to circumstances.
But that’s not what the newly empowered Congress is saying. You don’t get just tax cuts. You also get to pay for them by reducing the entitlement programs. So you have to consider who gets the most from the tax cuts, and who pays the most for them. There’s the rub.
A lot of these entitlement programs subsidize corporations. Many people point out that Walmart gets away with paying workers so little because they know these programs will cover many of their other expenses.
And maybe they won't cut much but the opposition wanted to *expand* it which is certainly not what we want.
Are you seriously considering punishing Walmart, one of the richest families on the planet, by significantly lowering their taxes? No. You’re favoring the richest over the working poor.
You sound like a decent person who wants to be understood. You say you don’t expect Trump to accomplish much. But that’s ok, as long as he destroys government programs. That doesn’t sound like a prescription for greatness. Be careful what you wish for.
The issue here is you have an irrational belief that the government doesn’t work in every way, with no evidence.
I think it works. I'm saying Trump voters feel it doesn't work for them and often works against them.
Maybe it's just rhetoric but even the official rhetoric for the past few years has been explicitly that.
Perhaps take a humility pill and realize you speak for no one but yourself.
Did Trump promise to cut the military? Literally did any Republican running for anything this election year run on cuts in military spending? You’re voting for a person who you hope will do something but has never even bothered lied saying they would. My only comment is that’s pretty on brand for a typical Republican/Libertarian mindset,
This is not intended with offense, but people who feel that way should go live off the grid. The rest of us are trying to survive as a society.
Yeah I think that was the response in the 70s. I think we’re running out of room for that and that’s why you’re getting Trump.
Poison pill over cooperative work and care? Gee, thanks.
It feels to me like coloration was replaced with something else in the name of equity. I think this feeling is shared with a lot of other people who are dissatisfied with the way the US works now and that’s what’s driving a lot of what people are calling irrational.
I think it’s because white men feel they’re being deprived of some kind of birthright privilege, which makes them angry and scared. The rest of us had to work hard to get where we are, and we grew up understanding that we were not owed anything. Now those with inherent historical privilege want to blame others… 🤷♀️
You are thinking of Ron Paul…there isn’t much daylight between Biden and Trump on most issues.
I don't think Biden's administration is what most of the people on the left wanted. He feels like a strawman so I try to avoid going after him.
I don't recall Trump, or any other Republican advocating any cuts at all to the military. Perhaps you could provide a citation.
Do you have specific things you’d like to eliminate? Have you considered the unintended consequences of your recommendations? That’s a nice slogan but not a policy recommendation.
Torch as much as possible and we can clean up the mess afterwards.
Burning things down isn't rational or efficient.
The rational approach would be to evaluate what we are doing and make bipartisan changes as necessary. We could start by passing the bipartisan immigration legislation bill to address one concern of yours.
Yes, we’ve been asking for rationality for a while and feel the other side has been unwilling to compromise.
Observations like this one are the reason I love this newsletter: The BLS measures "growth rates between business cycle peaks, applying the Anna Karenina principle: all happy economies are alike, but each unhappy economy is unhappy in its own way."
So agree!
Dear Prof Krugman,
1) they clearly have no idea both in economics and politics, similarly to their voters;
2) they clearly have a gift in shifting responsibility for damages they make to other (innocent) people;
3) that is how they won the elections, that is how they will govern.
Bessent said, without irony, that the expiration of the Trump 2017 Tax Scam would cause great disruption. Really? To whom? Rich guys like him who will have to pay slightly more in federal taxes impacting their lifestyle not one bit? Or greedy corporations that will just raise prices to cover? These guys live in a dream world. It is very sad that we have yet to see a Democratic president or Democratic Congress that is brave enough to take them on and raise marginal rates to a level that might actually make a difference.
Manchin and Sinema had a big hand in hobbling raising rates in the last four years. Ugh.
How will Bessert/Trump do it? By having Trump’s new people at BLS produce the statistics they require. Voila! 3/3/3.
Hi - most economists are not factoring the effect of Long Covid on economy - I do expect them to know as media has not covered it well.
Check out the recent study on about 300 K in Boston who had COVID - evaluated by MDs at Mass Gen and other hospitals - they picked 7% of patients with Long Covid
But when the same data was fed to precision tooled AI - 22.8% had Long Covid
As the waves of immune evasive variants continue this will grow.
Just making sure economists pay attention to these numbers.
Increase in disabilities and shrinking labor force - burden of Long Covid more on young in addition.
Thanks for pointing this out. It’s not being given any real consideration, as if covid is just done and gone. What is actually happening is quite frightening. Deaths, and ongoing immune dysregulation (which I have and U.S. a disabling condition) due to covid are still high. H5N1 and new covid variants are increasing and will add to the toll.
We had minimizers in Biden's administration - who did not know of despite a large number of us - advising that this virus can evade immunity even in those vaccinated and or infected - were ignored and called as left fringe (Dr. Ahish Jha's words).
Not only the virus variants can immune evade but now we know- there is no induction of long lasting plasma cells needed for sustained immunity - all we got was plasma cells producing Abs which waned in 4 months.
Check my post on this on Bluesky.
https://bsky.app/profile/670rv.bsky.social/post/3lfwooce5wk2n
Anecdotally, 3% of my social network has long covid, which is consistent with the 7% estimate. That's still a big deal. But if it was 23%, it would be so obvious it would be staring everyone in the face.
Not my numbers!
The new approach suggests that 22.8% of the population experience the symptoms of long COVID, a figure that may paint a more realistic picture of the pandemic’s long-term toll. Because competent MDs picked only the obvious ones- and they are from Mass General - in my area I am the only one picking them and 2 hours away to enroll Recover Clinic which is full.
https://www.massgeneralbrigham.org/en/about/newsroom/press-releases/new-medical-ai-tool-identifies-more-cases-of-long-covid-from-patient-health-records
Probably important to realize not all long Covid is disabling to the point of not working. I have it and am very stable with daily medication. Pretty much my old self. It did disrupt my life for a year, so that matters, but it got much better over time.
Once you have Long Covid - 70% resolve in 2 years and 30% continue to progress (from a study).
Each recurrent Covid 19 infection in these patients worsens the course
Each Covid 19 infection incidence of Long Covid ~7% in unvaccinated (across all age groups) but ~3.5% in those vaccinated +possibly boosted (from studies).
Across all age groups is a big deal- chidlren attending schools - 8 hours a day 200 days a school year with no monitoring of indoor ventilation and due to Gun safety windows closed and door shut.
Add: Why did Democrats lose despite best work done to address - there is a lot of it - between two ‘is’ - inflation to infrastructure- 16.6 M in 4 years - compared to 16.5 M in 8 years - the second best after 18.6 M in 8 years and bested Carter’s 9.8 M in 4 years and after inflation $4 K in wages and gap in racial disparities in jobs the lowest.
Since 2021 - Biden was surely not on stump talking about what he was doing - only one advancing his agenda was Pete Buttigieg- who through Fox News and social media posts kept what he was doing - deftly avoiding not to overshadow the President - my hunch is Biden has had health problems compounded by COVID 19 infection and possibly Long COVID.
You cannot ignore evidence and those who advocated for mitigations were smacked as leftist fringe by Ahish Jha.
I have posted on Bluesky why we do not have prolonged immunity after vaccines and/or infections after Long Covid - just type long lasting plasma cells with vaccines against SARS CoV2 you will see a good article describing in detail.
While I agree that there is strong refutation of the idea that lowering taxes on the rich stimulates growth, i think there is strong theoretical support that high taxes on the rich do stimulate growth.
Side note: I'd love to be able to dig up charts with Krugman's ease, but I've given up on FRED. I can't seem to make it work
Okay, back to the subject matter.
There are lots of things that set the stage for growth that the Market cannot or will not provide. We broadly refer to that as infrastructure. Government, which can aggregate Capital (i.e., taxes) and allocate it without any consideration of profit, is the vehicle for providing that infrastructure. And that includes intangibles like a better educated workforce, or a legal system to keep business honest.
Another thing that government does that is not often appreciated is to create fiat money. Money is a hugely important factor in growth because it speeds up the rate of business. If you don't believe that, think where we'd be if barter was the means of conducting business.
Well, we could reduce taxes on the rich to zero, and just borrow more to keep a high level of government services, but interest payments would eat up dollars that otherwise would be allocated to infrastructure.
Bottom line, if you want more growth tax the rich big time.
Well, let us talk about something Prof. K did not take up in this piece. The other half of the elephant in the room. The magical idea that by cutting taxes revenue can be raised. This ridiculous assertion is based on a premise that at present rates, or higher rates if the present cuts are not extended, the Treasury is way over the bend in so far as collections are concerned, due diminishing returns to rate hikes. The first derivative is negative. You see, we are getting less money be cause we are taxing at too high a rate ! We are talking about income taxes. And practical if not theoretical nonsense btw. Krugman disposes of it quickly.
But never mind. Bessent affirmed that Trump’s number one goal is to see that Congress extends the temporary tax cuts enacted during his first term. Find me one man willing to bet his life on the prediction that this will lead to a flood of new revenues in to the Treasury. It won’t. It will do the opposite. With present levels of spending, and more or less constant levels of GNP, or even allowing for current growth, current budget deficits will need to be projected in to the future. This means the national debt will continue to grow. And Treasury will need to borrow more. And rates will go up. Never mind the tariffs. This is a best case scenario assuming Trumps tariffs don’t cause a Depression.
So, returning to Bessent’s article of faith that cutting taxes will stimulate growth by freeing up savings to be used for or borrowed against for purposes of investments needed to sustain it, what then happens to one’s belief in this faith when the Treasury Department steps in to the Bond Market in say September of 2025 with the largest bond offering in the history of Mankind to finance this shortfall, the Debt Ceiling having been blown away as Trump has requested ? And needs to mark up the coupon rates on its offerings to market, and when prices then nevertheless fall, yields soar, the Bond Market tanks, and interests coming roaring back ?? Will he still be a believer ? Is he now ? What do you think he is telling his Hedge Fund clients to do ?
Yes, Virginia. There is such a thing as crowding out. And that is what we will see. Private investors will be crowded out of the bond market. And the stock market will capsize too. And there will be insufficient savings available to fund private investments.
Thus under present conditions of large deficits, the soon to be new Treasury Secretary’s sworn belief under oath that tax cuts will result in faster GNP positive growth are simply too incredible to be shared. And I doubt he would bet his first born on their efficacy any more than he would on Baal.
JKG's Affluent society remains a great book on fallacies of mainstream economic thinking. At the basic level, the idea of growth as a SOLE economic purpose doesn't make sense. What the country and society needs is certain kind of things like standards of living, infrastructure, economic rights, clean environment, maximal employment etc. Our goal should be to achieve these objectives AND whatever growth comes is POST FACTO. Just pushing for growth without focusing on the things that matter is senseless. JKG elaborated on this pretty well. Here is my article in obsession with economic growth from perspective of my home country India.
https://3rdworldecon.substack.com/p/indias-soylent-green-model-of-economic
I also don't take GOP's vodoo mantras at their face value. I mean, they can claim 3-3-3 plan will lift growth but they actually themselves don't really believe it. That is, their mantras are actually a veneer to achieve their other objectives which is giant tax cuts, deregulation, subsidies etc which gives fat profits to oligarchs but doesn't really boost any growth. GOP policy positions in fact are nothing but scams and don't even deserve a serious economic analysis.
Well I guess you have just about said it all. If Trump and his yes men really believed what they were saying, then he would not be asking for the debt ceiling to be blown away. And GNP growth for the sake of GNP growth alone is meaningless. Hurricanes can lead to GNP growth. So, I suppose, can a lot of pointless investments that generate activity. Current methods of economic accounting are either nonjudgmental as to value, or over time have gotten bent out of shape due to the weakening of premises on which they are based. All of which can be made to go away if you will simply repeat after me over and over: growth is good growth is good growth is good. Hence the field as we know of Green Accounting.
The Alluent Society was fun to read. Didn’t he say this in conclusion:
“There are no principles or concepts in economics worth knowing that can not be stated in plain ordinary English capable of being commonly understood “ ?
Reagan's trickle down BS is the grift that keeps on grifting since the 80's.
As I explained it to a colleague who was suckered by the GOP's pap:
In order to increase GDP, it is necessary to increase demand. Tax cuts to the wealthy who already bring in more money than they spend will give them more money to not spend, demand will not change and GDP will be the same. If instead you give more money to someone who must spend every dime they bring in, they will spend that money, demand will increase and GDP will increase.
Mr. Bessent's comments yesterday made clear that he does not understand this basic principle and also that he does not understand how tariffs work. Or...he does understand, but was lying in order to please Mr. Trump. Either way, he is unsuitable for the position.
I believe he said he would not look at increasing the Federal Minimum Wage from $7.25 when Senator Sanders asked him. If that person had more money they would definitely spend it
"Republicans believe, or claim to believe, that they can sharply raise productivity growth by cutting taxes on the rich. You could say that claim is unsupported by evidence. But that’s too weak; in fact, it’s powerfully rejected by the evidence."
You are so polite. Nepo-babies play Pig with the economy and you can explain it. What a relief to read you somewhere new.
Off-topic: Let's remember the most important part of Monday: Martin Luther King, Jr.
Thank you for the link to Catherine Rampell. Although I have cancelled my subscription to WaPo for what should be obvious reasons, she is on BlueSky so I will be able to follow her there.
Dear Professor- yeah Bessent gave the game away when he said basically that extending the TCJA was so critical.
It is not just productivity. From 1932 through 1981 the top marginal tax rate was 60% or higher and from 1944 through 1963 it was over 90%. During this period United States won WWII, put a man on the moon and established itself as the greatest military power in the world. The US also created the commercial aviation industry and the computer industry. It dominated global auto production. It became the dominant force in global culture an entertainment. This period was in fact the time that MAGA hatters are remembering when America was Great. Some would even say that America's fall from Greatness began in the period following Reagan's Tax Cut of the top marginal rate to less than 30%. The massive breadth and depth of American innovation and creativity that marked this period of super high marginal tax rates is unprecedented. It was a time in which America's middle class was large, prosperous, creative and yes probably also fairly productive.
He also believes that a $7.25 minimum wage is “fine.”