Just a check in on the astonishing economy building super duper special magical powers of GOP TAX CUT POTION™.
Spoiler: it works just as well as the utter, don’t-let-the-pointy-heads-at-the-FDA-f**k-up-a-good-thing quackery Orrin Hatch has spent so long protecting.
The ostensible rationale for the big cut in the corporate tax rate that was at the center of the tax cut is that it will lead to a flood of new investment.
Since the outlines of the tax cut had been known since September, businesses had plenty of time to plan how they would respond to lower tax rates. If lower rates really produce a flood of investment we should at least begin to see some sign in new orders once the tax cut was certain to pass.
The January report showed orders actually fell modestly for the second consecutive month. The drop occurs both including and excluding volatile aircraft orders. While this is far from conclusive, it is hard to reconcile with the view that lower taxes would lead to a flood of new investment.
Remarkably, these new data have gotten almost no attention from the media. Both the NYT and the Washington Post ran an AP story that just noted the drop in passing. Doesn’t anyone care if the tax cut works?
As everyone who wasn’t a Republican and or a CEO said, the tax bill was a sham, a way to transfer yet more wealth from labor to capital, from most of us to a very few, already hugely rich.
Image: Reginald Gray, The Banker, Smoking, 2002.
TenguPhule
Tax cuts can never fail. Tax cuts can only be failed.
eclare
I worked in corporate tax for about twenty years, corporations did not need a tax cut. It was always BS and failed simple math: if the government reduces the rate, the government gets lower revenue. I guess we’re all Kansas now.
Roger Moore
Everyone knows the real point was to give a bunch of money to the rich; the rest of that stuff was just a bunch of PR puffery. That the media isn’t reporting on whether it served its ostensible goals just proves they’re in on the scam.
The Dangerman
Everybody knows that the dice are loaded
Everybody rolls with their fingers crossed
Everybody knows the war is over
Everybody knows the good guys lost
Everybody knows the fight was fixed
The poor stay poor, the rich get rich
That’s how it goes
Everybody knows (Leonard Cohen)
Mnemosyne
@Roger Moore:
Yep. The tax cut “worked” because it gave massive tax cuts to rich people. Anyone who believed it was meant to do otherwise is too stupid to live. Even Laffer doesn’t believe in his own curve anymore.
Thoughtful David
The fvcking msm never point out these kinds of failures. It’s part of their high Broderism: if one side is consistently wrong, you can’t say anything about it because you don’t have anything to “balance” it with from the other side.
If they took their responsibility to educate their readers anywhere seriously, we wouldn’t have climate deniers and Kansas would be a laughingstock and we wouldn’t have Trump.
TenguPhule
@Mnemosyne:
I wish this was true. He’s still fucking promoting it.
kindness
Well there should be more pitchforks & torch baring mobs out there.
But we have kids doing it for us now. We are lazy ass shits I tell you.
dmsilev
@Mnemosyne: I look at some of the Republicans who have spent the last couple of days wondering aloud about why the Miraculous Tax Bill didn’t save the day in PA-18, and I think some of them really do believe that it was going to be wildly popular. Most are knowingly running the con game of course, but by now there are some who are, as you put it, too stupid to live.
NotMax
Obviously didn’t give enough to the 1%.
Villago Delenda Est
CEOs should be taxed until they bleed. Then taxed some more.
Fuck, Adam Smith figured this out over two centuries ago.
West of the Cascades
Although it’s almost certainly true that the tax cuts aren’t having their asserted benefit, it’s pretty weak to be arguing that from a single month of data from January 2018. Yes, the outline of the cuts were known in September, but the bill wasn’t passed until December 20th, and few corporations are going to start making investments based on potential tax cuts until that’s a done deal. There was a lot of kabuki theater by Collins et al. about opposing it, so it would not be surprising to not see any effect of the tax cut bill on durable goods orders the month after the bill passed.
Again – to be clear – I don’t think the tax bill could possibly have the effect on investment that the Republicans used to justify it – but one month’s data doesn’t prove that.
TenguPhule
@dmsilev:
And most of them are Republicans in the House of Representatives, with a bunch more in the Senate.
Villago Delenda Est
@Thoughtful David: Hence my nym.
Wipe them out. All of them.
p.a.
TenguPhule
@Villago Delenda Est:
Human plasma now retails for about $30 a pint from the source.
oatler.
Find out where they live. So we can, uh, reprimand them.
divF
Tom, I got an e-mail last week from the UC Berkeley Center for Chinese Studies, reminding people of awards and fellowships, including “the Joseph R. Levenson Chinese Studies Awards”. Is that your father ?
ETA: No, I’m not a Chinese scholar, the e-mail was sent to all the grad student affairs office email lists.
p.a.
I hate fucking ios and the inability to edit links in the link box to delete the supurfluous http://.
Roger Moore
@dmsilev:
I think you have the proportions wrong. Back in the era of Reagan, the people selling tax cuts by claiming they’d boost the economy were knowing liars. But a good fraction of the Republicans in Congress grew up under Reagan or even more recently, so they became Republicans because they believed the lie. That means a large chunk of the party are true believers.
satby
@p.a.: link not working?
p.a.
http://www.businessinsider.com/how-tax-rates-affect-investment-and-consumption-a-look-at-the-data-2011-1
here’ the fucking link, if anyone cares.
ET
Totally OT but Don Jr’s wife filed for divorce.
I should add that he is following I dad’s footsteps.
p.a.
@satby: I was trying to use the ‘link’ button, but ipad won’t put a cursor in the link box to delete the provided ‘http://‘ default. I have to enter the link into the main comment then edit, but I can never remember whether the “ belongs at front of the link text or not. 1st world problem, for sure.
Steeplejack
@West of the Cascades:
Jeepers, too soon for corporate investment to start ramping up, but apparently not too soon to decide on huge stock buybacks at a record pace—$170.8 billion just from January 1 to mid-February.
satby
@p.a.: if it helps, what I do is just highlight the default http and paste over it with the full link, which replaces it. And thanks, I was just reading your link. Good analysis there.
Roger Moore
@p.a.:
I think there’s a bigger reason increased tax rates are correlated with faster growth: there’s more than one limit on investment. The classic assumption is the limit on investment is how much money is available to invest. But there’s also the potential limit of having not enough places to invest because there aren’t enough people buying. We’re so used to thinking about available resources being the limit, but there’s a lot of indications (e.g. companies holding onto massive bundles of cash) that we’ve moved into the realm of there being too few promising investments. If that’s the case, we can probably improve things by taxing the hell out of the people sitting on cash and using the money to build new stuff or even to give it to people who are apt to spend it.
Tom Levenson
@divF: yup. That’s dad. I’ll write about him here sometime.
Mary G
O/T, but when did that ever stop me. I love this tweet from yesterday, and apologize if someone posted it and I missed it.
And it was down in a “holler” so he rode the 2 miles back home up a steep hill. Love these kids.
Brachiator
@Roger Moore:
The media has been both pretty honest and fairly accurate about the Trump tax bullshit. Taxes and economics are complex. Most people don’t pay attention. They just want to hear simplistic shit about booms and busts and tax cuts and Dow Jones Up, Dow Jones Down.
And again, people are not babies dependent on main street media pablum. Google “impact of tax cuts” takes you to every freaking tax and accounting news site, which have been remarkably consistent in detailing the potential negative impact of Trump’s folly. And they have been clear in how some corporations are immediately benefiting. Paying pittances in bonuses, and then laying people off or buying back their stock.
There was even a story this morning about how Sears is eking out a small profit because of the tax cut.
Isn’t this Ludlow jerk Trump just appointed a big believer in Laffer’s bullshit?
ETA: One thing you are not hearing is about how changes to individual taxes will take credits away from undocumented families who use ITINs for filing. They will be turned into 3rd class pseudo-citizens and fucking crushed because they no longer qualify for the Child Tax Credit. Meanwhile, the income threshold was raised so that wealthier families can now qualify for the credit.
A tax preparer friend did a projection for one of his clients in this situation, who earned about $30,000 with two kids and saw that he would owe an additional $1,023 because of lost credits. The idea appears to be to try to drive these people underground.
Mandalay
@Steeplejack: Exactly. Plus, nobody could have predicted…
p.a.
@Roger Moore: Interesting. That may be the most 1st world problem ever: We have all this money but nothing promising to do with it!!!
Aye, there’s the rub.
Fair Economist
@p.a.:
Dingdingding! We have a winner!
Mnemosyne
@TenguPhule:
Andrew Wakefield is still promoting the idea that vaccines cause autism despite having his medical license revoked for lying about it. Grifters promote the thing that makes them money because that’s what grifters do.
Kristine
@p.a.:
Which is also why capital gains taxes should be higher rather than lower.
Shell
That cigar ash is about to fall into his wine glass.
TenguPhule
@Mnemosyne:
Best as I can tell, they’re both snorting their own distribution. They’re true believers in bullshit.
p.a.
@Brachiator: I think Kudlow got the job because Cramer wouldn’t take the pay cut ?
burnspbesq
@TenguPhule:
If you believe in the diminishing marginal utility of wealth, the Laffer Curve is logically inevitable. What we can say with certainty is that we have no idea where the inflection point is, because we’ve never observed the behavior implied by the Laffer Curve, even in the Eisenhower administration when the top marginal rates were above 90 percent. The polite way to put it is that the Laffer Curve is an intellectual curiosity that has no practical application. There are plenty of less polite ways to put it.
geg6
@p.a.:
Yes, that last sentence exactly. I refer you to the 1950s and early 1960s.
Mnemosyne
@TenguPhule:
The biggest danger of running a long con is that you start to believe your own patter. Look up Oliver Hartzell or James Addison Reavis.
Patricia Kayden
Republican agenda in a nutshell: Tax cuts for the rich. Cuts on entitlement programs for the working class.
They’re so lucky that working class suckers keep voting for them.
TenguPhule
@burnspbesq:
All of which can be found in this blog’s archives at some point.
Mary G
@Kristine: This. When Mitt Romney released his tax returns, I was furious that he paid a lower percentage than my caregiver, who works harder than anyone I’ve known.
burnspbesq
@Steeplejack:
That was the inevitable result of the design of the deemed-repatriation tax. The gross amount of post-1986 deferred foreign income (not just the net amount after the deduction that reduces the effective rate to between 8 and 15.5 percent) increases PTI, which can then be actually repatriated without a second taxable event. That was the whole idea, to get that cash back onshore, and the incentive to do it was a major rate reduction. Give CFOs cash, and they know what to do.
burnspbesq
@TenguPhule:
Huge amounts of it can also be found in and around Greeley, Colorado.
No Drought No More
TPM reports: “..Vanessa Trump reportedly filed for an uncontested proceeding where “she’s not expecting a legal battle over custody of the couple’s five children or their assets.”
My guess is Vanessa isn’t worried much about anything having to do with D Jr., if only because all her problems with him can be ended with a single phone call to Mueller Inc. No doubt it’s also occurred to D. Jr. to watch his step, too. After all, she’ll likely control his commissary allowance at whatever prison he lands in, and he’s accustomed to living large.
rikyrah
@Villago Delenda Est:
Truth
burnspbesq
@Steeplejack:
Like, duuuuuh: it’s the shareholders’ fucking money, and if management can’t put it to good use, they should give it the fuck back to them.
Yarrow
Speaking of money…
danielx
Ecrasez l’infame!
TenguPhule
@burnspbesq:
Steal it.
Baud
Whole article worth a read.
https://www.washingtonpost.com/amphtml/politics/trump-decides-to-remove-national-security-adviser-and-others-may-follow/2018/03/15/fea2ebae-285c-11e8-bc72-077aa4dab9ef_story.html
Mary G
WaPo says McMaster is toast:
And:
Yarrow
@Mary G: Trying to imagine how the confirmation hearings for the new people will go.
Baud
@Mary G: Jesus Christ, Mary.
Jerzy Russian
@burnspbesq:
What you are smelling there is money, or so I have been told.
Jerzy Russian
@Baud:
What about Joseph?
Tilda Swintons Bald Cap
@Mary G: If Bolton gets the job we’re all toast.
Steeplejack
@burnspbesq:
Thank you, blinkered tax attorney. What you say is true. But the point is that the tax cut was sold on the premise that “management” would put the money to good use, with hints of shovel-ready projects all ready to go if that sweet, sweet cash would just come home.
But now we are told that, well, it takes a while to put those projects together and get them going—while at the same time it is obvious that the corporations had detailed stock buyback programs primed and ready to go on day one.
Mary G
@Baud: You beat me to it! Jinx! I owe you an adult beverage.
This is another great graph from the same story:
@Tilda Swintons Bald Cap: I know. But I think, like Flynn, he’d only last a couple of Scaramuccis. He would take credit for everything and piss Twitler off.
mad citizen
On topic, I picked up a library book sale 2010 book today titled “Zombie Economics: How Dead Ideas Still Walk Among Us” by John Quiggin, an economist at University of Queensland. Looks like a good read, with chapters including “The Efficient Markets Hypothesis” and “Trickle-Down Economics”
Jeffro
@Mary G: He’s probably thinking “WPA” – you know, from FDR days?
Yarrow
Speaking of people needing confirmation, this seems important:
Link.
Corner Stone
@Steeplejack: His argument is essentially the same as when GWB passed his tax cut saying that a deficit was the people’s money and he was just returning it to them. That turned out well.
Jim, Foolish Literalist
@Baud: @Mary G:
“Jesus, Kellyanne, we have to have somebody who’s not a dignity wraith!” (h/t Josh Marshall)
From the same article
This is like the “perjury trap”. If you’re afraid of the “perp walk”, if “everybody fears the perp walk”, then isn’t everybody…
Mary G
@Tilda Swintons Bald Cap: Other people are concerned as well:
Baud
@Yarrow: Saw that earlier. We’ll see what happens.
mad citizen
@Baud: So his briefings are what, like 10 minutes or something? I was listening to a multi-state work thing today, the group being political appointees, thinking about how much more detailed the discussions were when most of the states around me were Democratic vs now with the R’s controlling things. The way they embraced anti-intellectualism has been amazing to me. Eventually, it renders one unable to govern very well, and resort to BS as your main M.O.
Corner Stone
@Mary G:
What bullshit is this? Trump never cared about other people and in fact loves humiliating people that dared to work in his admin, or do something he doesn’t like.
Doug R
Let’s see. 100% tariff on a North American built plane with USA parts? Check.
10% tariff on aluminum? Check.
25$ tariff on steel? Check.
Drop out of TPP? Check.
How come the aircraft business ain’t doing so good?
http://us.bombardier.com/us/about_bombardier_in_country.html
Baud
@mad citizen:
I remember constant mocking of Obama’s level of transparency. Another set of people who are largely quiet now.
efgoldman
@Tilda Swintons Bald Cap:
Give him a field commission to major general on the condition that he physically lead the troops into the desert.
schrodingers_cat
@Corner Stone: He is afraid of chunky Lex Luther.
Shell
Always think that sounds like a ’70’s Saturday morning kids show.
Gin & Tonic
@Jim, Foolish Literalist: I’ve never feared a perp walk myself. Maybe my life is too boring…
TenguPhule
@Baud: We are all going to die horribly.
Corner Stone
@schrodingers_cat: Not like he’s going to fire him face to face. Trump will be in FL when it goes down.
Redshift
I went to my local county budget town hall tonight, because someone needs to advocate for paying the cost of civilization against the tax whiners. God, they’re annoying!
I definitely did my civic duty. On the plus side, the room was only about half full, so at least the tax bozos aren’t very energized this year.
raven
@TenguPhule: Oh whatever,
TenguPhule
@Yarrow:
Are there no circus gifs of clowns emerging one by one from the tiny little car, only to be hit by shaving cream pies to the face?
raven
@TenguPhule: Or maybe a bunch of chicken littles.
Jeffro
Why doesn’t Trumpov just directly install the cast of “Fox and Friends” in his cabinet, and be done with it? There’s no one else he trusts.
Also: since Trumpov clearly just wants to play the part of all-day talking head on the weekdays, and wrestling ‘heel’ on the weekends, can we work on those angles? Get him alternating spots on Fox and CNBC (or even a fake Fox and CNBC – he won’t know he’s not really being broadcast anywhere) plus a gig shaving heads in some WWE ring someplace?
Jim, Foolish Literalist
I’ll leave this down here (for entertainment purposes only) so’s not to sully the fresh thread
And that critique from an on-line role-playing playwright (and I say that as a big fan) is the most critical thing I think I’ve ever read about Mattis
efgoldman
@Gin & Tonic: You don’t remember when Buddy or one or another of the Patriarcas was arrested?
Steeplejack
@Yarrow:
Hmm, other outlets, including the New York Times, reported the same thing.
. . . And I see from the linked article that the Times also has run a partial retraction (apparently, phrasing somewhat vague).
I hope Haspel’s nomination brings the whole CIA torture shitshow back into the public spotlight. Obama’s gone, so the Republicans can’t paint it as partisan retribution, and the whole thing stinks the farther away we get from the hysteria right after 9/11. Christ, we’re talking about things that we executed Germans and Japanese for after World War II.
That ProPublica story has some surreal tidbits:
Gin & Tonic
@efgoldman: Sure do. But I don’t expect that I will be. Unless you know something I don’t.
SFAW
@Mary G:
Right duration, wrong reason.
Millard Filmore
@burnspbesq:
We don’t know what that curve looks like and don’t know where we are on that curve.
p.a.
@mad citizen: Quiggin has a good presence on the (in the) intertubes. Believe Crooked Timber (been a long time since I went there, if it still exists), and the kinda odd uggabugga, where I believe he produced
this
diagram of the Bush Crime Family.
joel hanes
@burnspbesq:
What we can say with certainty is that we have no idea where the inflection point is, because we’ve never observed the behavior implied by the Laffer Curve, even in the Eisenhower administration when the top marginal rates were above 90 percent.
Lawyers. I just don’t know about you guys.
An engineer would say:
We have actually carried out large-scale experiments on the national economy, and small-scale experiments in some states (see tables, Appendix A).
All the available evidence is consistent with the hypothesis that the inflection point must be somewhere above a 90% marginal rate, and inconsistent with any lower value
We could make useful tentative predictions with a rule-of-thumb assumption that it’s at 95%, to be refined later when further evidence is available.
Thus our recommendation: raise taxes on the rich.
Ruckus
@Roger Moore:
Extreme excess cash is accumulated by the super rich to give them a stiffy, not for any other reason. They don’t invest it because then they wouldn’t be able to have a stiffy and that is an issue for them because they wouldn’t then be able to screw the rest of us. In the 50s, when the marginal rate was dramatically higher, the rich still got rich but the rest of the economy actually worked, as it always does when that money is invested in the economy rather than creating rich stiffies.
IOW fuck a bunch of dick measuring numbers for assholes who couldn’t spend all their money if they wanted to.
joel hanes
@p.a.:
Wow, I haven’t read uggabugga since Obama was inaugurated.
I’ll go look.
Millard Filmore
@Gin & Tonic:
A life without a record is a wasted life.
Ken
@ET:
He’s already got wife #2 lined up and has been having an affair with her since the last time wife #1 was pregnant?
p.a.
@mad citizen: @p.a.: @joel hanes: Just checked Crooked Timber and Quiggin has a post today!
Think I confused CT’s Quiggin with uggabugga’s Quiddity! Apologies to both.
BillCinSD
@joel hanes: Also, people have estimated the total tax rate that maximizes revenue at around 70%.
http://voices.washingtonpost.com/ezra-klein/2010/08/where_does_the_laffer_curve_be.html