The American economy is not expected to expand very much in the near future. The Congressional Budget Office thinks the economy will grow about 2 percent a year over the next ten years, but many economists think even that low figure is optimistic.
A stagnant economy, of course, means paying pensions is more difficult, raising wages is more difficult, and tax revenues don’t grow.
And “Mr. Make American Great Again” is clueless. Deport millions of people? Give tax cuts to the rich? Put up trade barriers? Clueless.
Here is what Princeton Professor Alan S. Blinder, former vice chairman of the Federal Reserve Board, said: “Students learn in Economics 101 that lower taxes and/or higher levels of government spending can mitigate recessions by boosting aggregate demand. That simple Keynesian idea should be no more controversial today than Darwinian natural selection or global warming.”
It shouldn’t, but evidently most Republicans never took Econ 101. I read that over half don’t even think the climate is changing, and many of those same Republicans believe the earth was created in six days. As for Trump, he thinks global warming is a myth foisted by the Chinese to hurt American industry. I am not kidding.
[My editor points out that Republicans often call for lower taxes. The problem is that they call for lower taxes for the rich, which does little to raise aggregate demand. We should have learned by now that tax breaks for the rich have almost no effect on increasing demand. You need to cut taxes for people who will actually spend the money.]
I read a Time magazine article a few years back that the richest one percent can only spend $400,000 a year after their major purchases have been met. That s why tax rates above that should be much higher.
ReplyDeleteI'm fairly confident that I would have an easy time spending my tax cut.
ReplyDelete