5 ms·

I’m a Depression historian. The GOP tax bill is straight out of 1929

DonbunEf7 9y ago
Following the article's logic, in 2028, Robot Bernie Sanders will become the first cyborg president, running on a platform of a "Neo Deal", which will replace Social Security with Universal Social Welfare (UBI), consolidate Medicaid and Medicare into Universal Medicine (NHS), and of course a massive infrastructure package.
Miner49er 9y ago
Right now, the stock market is hitting all time high's just on the idea of a tax cut. Is it possible that it's investor's faults? They propel the market too high on tax cuts, and then it corrects in a crash?
- jrs95 9y ago
  Not that I'm an economist, but there's more of an intuitive link between tax cuts -> profits -> stock market gains than there is between tax cuts -> ... -> underconsumption -> Great Depression. Edit: Although after reading a bit more about this, it seems like you're on to part of the Keynesian explanation in which tax cuts are only partially responsible but goes something like tax cuts -> profits -> stock market gains -> overinvestment -> overproduction & underconsumption -> Great Depression. Although there are definitely some factors I left out there that have to do with their explanation for why it was the Great Depression that time around and not just a more typical recession, which they attribute to the same cycle which is supposedly inherent in capitalism without government intervention.
- garmaine 9y ago
  The market was on an all time high already back before the tax cut.
- mkovach 9y ago
  The market is at an all-time high because there is simply no other place to put money and see any reasonable interest.
  - RickJWag 9y ago
    With thinking like that you'll probably be wealthy some day. Good analysis.
jrs95 9y ago
I was under the impression that underconsumption was basically a discredited theory of what caused The Great Depression.
- rndmize 9y ago
  I'd be interested to know more on this. Sources/links?
  - jrs95 9y ago
    It's been forever since I've read about this, so I don't have much, but even just looking at the wikipedia page[1] the view expressed in this article seems to sort of fit with the Keynesian and to a lesser extent Marxist views listed. However, even those are a lot more complicated than what's in this article, which seems to be an oversimplification at best. What I was reading many years ago was likely from the perspective of a Monetarist, so it could have been a bit biased. Even so, the Keynesian view doesn't really seem to boil down to "tax cuts caused/exacerbated underconsumption which helped lead to The Great Depression". [1] https://en.wikipedia.org/wiki/Great_Depression#Mainstream_explanations https://en.wikipedia.org/wiki/Great_Depression#Mainstream_ex...
  - poke111 9y ago
    See here for one perspective https://fee.org/articles/the-great-depression-according-to-milton-friedman/ https://fee.org/articles/the-great-depression-according-to-m...
junkscience2017 9y ago
WaPo = HuffPost - CelebrityNews
- jrs95 9y ago
  It doesn't seem quite that similar. They're not as on board with some of the same culture war absurdities as HuffPo.
- SubiculumCode 9y ago
  Their opinion section tends to have a liberal bent, but their investigative journalism is strong.
perl4ever 9y ago
What I find conspicuous by its absence in the author's list is that the tax bill removes the $4,050 exemption for dependents. It seems like that would be a major tax increase for large families. It's very peculiar that Republicans would be mounting an assault on families with children, presumably a core constituency, and also odd that people opposed to the GOP aren't emphasizing it more.
- wnevets 9y ago
  Republicans have become walking and talking contradictions, it really shouldn't be surprising in 2017.
- jrs95 9y ago
  Perhaps that's what the Senate bill was like, but last time I checked the House bill did the opposite by expanding the child tax credit. Based on what we've seen them advocating for within the last decade or so, I would expect the end result will include a bigger deduction/credit for children.
  - perl4ever 9y ago
    The House bill seems to expand the child tax credit and add a family tax credit, but it also removes the personal exemption, so it's unclear to me how that nets out. But it sure creates uncertainty if nothing else. https://www.nytimes.com/interactive/2017/11/15/us/politics/every-tax-cut-in-the-house-tax-bill.html https://www.nytimes.com/interactive/2017/11/15/us/politics/e...
    - jrs95 9y ago
      The credits and the expanded standard deduction outweigh the removal of the personal exemption, especially with the rate changes. The House bill is fairly straightforward in regards to low to middle income families.
      - perl4ever 9y ago
        From the NY Times link I provided, I see the following: +1.6 trillion repealing personal exemption -0.64 trillion adding child and family credits -0.92 trillion increasing standard deduction So it does not seem as though the new credits and standard deduction outweigh the personal exemption overall. The net for these things is a small tax increase. And then there are the other deductions that are going away, so it seems like a net increase for average people, to provide AMT cuts, corporate cuts, and estate tax cuts.
southphillyman 9y ago
From my perspective trickle down doesn't work, so my question is...what's the long term benefit of this to rich people? Is it as simple as increase wealth as much as possible in the short term and figure out the rest later?
- gwbas1c 9y ago
  It's just short-sighted greed.
pc2g4d 9y ago
The author's connections between trickle-down economics and depression/recession seems simplistic. It's really not clear that the wealth disparity is what caused the depression or the great recession either. That said, I found his elucidation of what's actually contained in this tax plan to be useful, and strengthens my perception that it will lead to increased wealth concentration.
- pc2g4d 9y ago
  Here's a more balanced take: https://www.thebalance.com/trump-s-tax-plan-how-it-affects-you-4113968 https://www.thebalance.com/trump-s-tax-plan-how-it-affects-y...
ry4n413 9y ago
Wonder if he is putting his money where his mouth is.
UncleEntity 9y ago
Or, you know, maybe his ideas aren't really based on any sound theory at all. I personally believe that the Austrian business cycle theory has a much better chance of being right than "look, the Republicans did this then the economy crashed 2 decades later" but what do I know, I'm neither a economist nor a historian. ok, to be totally honest, I'm actually an art historian.
RickJWag 9y ago
From the Huffington Post's bio of the author: "Robert S. McElvaine is the Elizabeth Chisholm Professor of Arts & Letters and Professor of History at Millsaps College and the author of ten books and hundreds of articles and op-ed pieces. He has contributed to the speeches of several Democratic presidential candidates." Of course he doesn't see any good in the bill. History will tell us if he's right or just wrong in his biases.
RickJWag 9y ago
The author is a speech-writer for Democratic candidates. (Huffington Post reports this.) Meanwhile, MSNBC has this title today: "An open letter to Congress signed by 137 economists supporting GOP tax reform bill"
tmaly 9y ago
I would call this current incantation of a tax bill the "Squeeze the Middle" it seems they will be hit the most. I would have love to have seen a better pass through rate for mom and pop small businesses. I cannot understand why we need to give large conglomerates a break, places like GE paid almost zero taxes in recent years due to loopholes. How is lowering the corporate rate to 20% going to change that?

Following the article's logic, in 2028, Robot Bernie Sanders will become the first cyborg president, running on a platform of a "Neo Deal", which will replace Social Security with Universal Social Welfare (UBI), consolidate Medicaid and Medicare into Universal Medicine (NHS), and of course a massive infrastructure package.

Miner49er 9y ago

Right now, the stock market is hitting all time high's just on the idea of a tax cut. Is it possible that it's investor's faults? They propel the market too high on tax cuts, and then it corrects in a crash?

jrs95 9y ago
Not that I'm an economist, but there's more of an intuitive link between tax cuts -> profits -> stock market gains than there is between tax cuts -> ... -> underconsumption -> Great Depression. Edit: Although after reading a bit more about this, it seems like you're on to part of the Keynesian explanation in which tax cuts are only partially responsible but goes something like tax cuts -> profits -> stock market gains -> overinvestment -> overproduction & underconsumption -> Great Depression. Although there are definitely some factors I left out there that have to do with their explanation for why it was the Great Depression that time around and not just a more typical recession, which they attribute to the same cycle which is supposedly inherent in capitalism without government intervention.
garmaine 9y ago
The market was on an all time high already back before the tax cut.
mkovach 9y ago
The market is at an all-time high because there is simply no other place to put money and see any reasonable interest.
- RickJWag 9y ago
  With thinking like that you'll probably be wealthy some day. Good analysis.

jrs95 9y ago

I was under the impression that underconsumption was basically a discredited theory of what caused The Great Depression.

rndmize 9y ago
I'd be interested to know more on this. Sources/links?
- jrs95 9y ago
  It's been forever since I've read about this, so I don't have much, but even just looking at the wikipedia page[1] the view expressed in this article seems to sort of fit with the Keynesian and to a lesser extent Marxist views listed. However, even those are a lot more complicated than what's in this article, which seems to be an oversimplification at best. What I was reading many years ago was likely from the perspective of a Monetarist, so it could have been a bit biased. Even so, the Keynesian view doesn't really seem to boil down to "tax cuts caused/exacerbated underconsumption which helped lead to The Great Depression". [1] https://en.wikipedia.org/wiki/Great_Depression#Mainstream_explanations https://en.wikipedia.org/wiki/Great_Depression#Mainstream_ex...
- poke111 9y ago
  See here for one perspective https://fee.org/articles/the-great-depression-according-to-milton-friedman/ https://fee.org/articles/the-great-depression-according-to-m...

junkscience2017 9y ago

WaPo = HuffPost - CelebrityNews

jrs95 9y ago
It doesn't seem quite that similar. They're not as on board with some of the same culture war absurdities as HuffPo.
SubiculumCode 9y ago
Their opinion section tends to have a liberal bent, but their investigative journalism is strong.

perl4ever 9y ago

What I find conspicuous by its absence in the author's list is that the tax bill removes the $4,050 exemption for dependents. It seems like that would be a major tax increase for large families. It's very peculiar that Republicans would be mounting an assault on families with children, presumably a core constituency, and also odd that people opposed to the GOP aren't emphasizing it more.

wnevets 9y ago
Republicans have become walking and talking contradictions, it really shouldn't be surprising in 2017.
jrs95 9y ago
Perhaps that's what the Senate bill was like, but last time I checked the House bill did the opposite by expanding the child tax credit. Based on what we've seen them advocating for within the last decade or so, I would expect the end result will include a bigger deduction/credit for children.
- perl4ever 9y ago
  The House bill seems to expand the child tax credit and add a family tax credit, but it also removes the personal exemption, so it's unclear to me how that nets out. But it sure creates uncertainty if nothing else. https://www.nytimes.com/interactive/2017/11/15/us/politics/every-tax-cut-in-the-house-tax-bill.html https://www.nytimes.com/interactive/2017/11/15/us/politics/e...
  - jrs95 9y ago
    The credits and the expanded standard deduction outweigh the removal of the personal exemption, especially with the rate changes. The House bill is fairly straightforward in regards to low to middle income families.
    - perl4ever 9y ago
      From the NY Times link I provided, I see the following: +1.6 trillion repealing personal exemption -0.64 trillion adding child and family credits -0.92 trillion increasing standard deduction So it does not seem as though the new credits and standard deduction outweigh the personal exemption overall. The net for these things is a small tax increase. And then there are the other deductions that are going away, so it seems like a net increase for average people, to provide AMT cuts, corporate cuts, and estate tax cuts.

southphillyman 9y ago

From my perspective trickle down doesn't work, so my question is...what's the long term benefit of this to rich people? Is it as simple as increase wealth as much as possible in the short term and figure out the rest later?

gwbas1c 9y ago
It's just short-sighted greed.

pc2g4d 9y ago

The author's connections between trickle-down economics and depression/recession seems simplistic. It's really not clear that the wealth disparity is what caused the depression or the great recession either. That said, I found his elucidation of what's actually contained in this tax plan to be useful, and strengthens my perception that it will lead to increased wealth concentration.

pc2g4d 9y ago
Here's a more balanced take: https://www.thebalance.com/trump-s-tax-plan-how-it-affects-you-4113968 https://www.thebalance.com/trump-s-tax-plan-how-it-affects-y...

ry4n413 9y ago

Wonder if he is putting his money where his mouth is.

UncleEntity 9y ago

Or, you know, maybe his ideas aren't really based on any sound theory at all. I personally believe that the Austrian business cycle theory has a much better chance of being right than "look, the Republicans did this then the economy crashed 2 decades later" but what do I know, I'm neither a economist nor a historian. ok, to be totally honest, I'm actually an art historian.

RickJWag 9y ago

From the Huffington Post's bio of the author: "Robert S. McElvaine is the Elizabeth Chisholm Professor of Arts & Letters and Professor of History at Millsaps College and the author of ten books and hundreds of articles and op-ed pieces. He has contributed to the speeches of several Democratic presidential candidates." Of course he doesn't see any good in the bill. History will tell us if he's right or just wrong in his biases.

RickJWag 9y ago

The author is a speech-writer for Democratic candidates. (Huffington Post reports this.) Meanwhile, MSNBC has this title today: "An open letter to Congress signed by 137 economists supporting GOP tax reform bill"

tmaly 9y ago

I would call this current incantation of a tax bill the "Squeeze the Middle" it seems they will be hit the most. I would have love to have seen a better pass through rate for mom and pop small businesses. I cannot understand why we need to give large conglomerates a break, places like GE paid almost zero taxes in recent years due to loopholes. How is lowering the corporate rate to 20% going to change that?