Republican tax cuts will hurt Americans. And Democrats will pay the price

["Dave Farber" <farber () gmail com>]

Begin forwarded message:

> From: Dewayne Hendricks <dewayne () warpspeed com>
> Date: November 23, 2017 at 9:33:56 AM EST
> To: Multiple recipients of Dewayne-Net <dewayne-net () warpspeed com>
> Subject: [Dewayne-Net] Republican tax cuts will hurt Americans. And Democrats will pay the price
> Reply-To: dewayne-net () warpspeed com
>
> Republican tax cuts will hurt Americans. And Democrats will pay the price
> The consequences of the tax program will shelve support for the Republicans, but once in power the Democrats’ hands 
> will be financially bound for years
> By Bruce Bartlett
> Nov 20 2017
> <https://www.theguardian.com/commentisfree/2017/nov/20/republican-tax-cuts-democrats>
>
> I think many Democrats and independent political observers are puzzled by the intensity with which Republicans are 
> pursuing their tax cut. It’s not politically popular and may well lead to the party’s defeat in next year’s 
> congressional elections. So why do it?
>
> The answer is that Republicans are pushing the tax cut at breakneck speed precisely because they know they are 
> probably going to lose next year and in 2020 as well. The tax cut, once enacted, however, will bind the hands of 
> Democrats for years to come, forcing them to essentially follow a Republican agenda of deficit reduction and prevent 
> any action on a positive Democratic program. The result will be a steady erosion of support for Democrats that will 
> put Republicans back in power within a few election cycles.
>
> The theory was laid out almost 30 years ago by two Swedish economists, Torsten Persson and Lars EO Svensson. In a 
> densely written article for the Quarterly Journal of Economics in 1989, they explained why a stubborn conservative 
> legislator would intentionally run a big budget deficit. 
>
> It has to do with what economists call time inconsistency – the consequences of actions taken today may not appear 
> until the future, when a different political party will be in power. Thus the credit or blame will accrue to that 
> party rather than the one that implemented the policy, because voters tend to attribute whatever is happening today 
> to the party in power today even if that party had nothing to do with it.
>
> Thus Barack Obama got blamed for a recession and resulting budget deficits he had nothing to do with originating. No 
> matter how many times the Congressional Budget Office showed that the vast bulk of the budget deficits in his 
> administration were baked in the cake the day he took office, Republicans nevertheless blamed him and his policies 
> exclusively for those deficits.
>
> Of course, another reason for those deficits is that Republicans systematically decimated the federal government’s 
> revenue-raising capacity during the George W Bush administration with one huge tax cut after another. All of these 
> were sold as necessary to get the economy growing again. The failure of the economy to respond positively was never 
> taken as evidence of the failure of those tax cuts, but rather as showing the need for even more and bigger tax cuts.
>
> The payoff for this orgy of tax-cutting came when Obama took office. All of a sudden, Republicans noticed that there 
> were large deficits and insisted that Obama do something about them right this minute! They even made the nonsensical 
> argument that spending cuts would stimulate growth by reducing the burden of government. 
>
> Democrats did a poor job of explaining how Franklin Roosevelt tried exactly that in 1937, slashing government 
> spending because his treasury secretary told him it would restore business confidence. The result was a sharp 
> downturn that raised unemployment, which had been trending down.
>
> Obama’s hands were tied by the deficit hawks in his own party as well and prevented from offering an economic 
> stimulus adequate to offset the loss of aggregate demand resulting from the great recession that began in December 
> 2007 on Bush’s watch. Obama even joined with Republicans to slash spending in the 2011 budget deal and put in place 
> budget controls that made it virtually impossible to pursue any positive Democratic initiatives for the balance of 
> his presidency. No wonder Trump won.
>
> [snip]
>
> Dewayne-Net RSS Feed: http://dewaynenet.wordpress.com/feed/
> Twitter: https://twitter.com/wa8dzp



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