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> There is essentially no evidence that the president’s tax cuts (his sole piece of major economic legislation) did anything to significantly improve America’s

> There is essentially no evidence that the president’s tax cuts (his sole piece of major economic legislation) did anything to significantly improve America’s macroeconomic performance. This is probably true. But there's also no evidence to support that it hurt either. It's quite disingenuous and misleading to make such claims when there hasn't even been a single year of tax filings since the new tax policies have taken effect. Policies, especially tax policies, have long lag effects. Also, there are so many variables and other factors to consider that it is impossible to think so 1-dimensionally.

RangerScience 8y ago
> Policies, especially tax policies, have long lag effects. Which would imply that any gains (or losses) now would have to do with policy changes during the prior administration, supporting the author's point. So, alright, what's misleading the implication that they could have any significant effect by now.
- bcheung 8y ago
  Or the prior prior administration, or the prior prior prior administration. Or the result of economic policies from other nations, or any other countless factors.
elgenie 8y ago
The short term impacts aren't that difficult to calculate because a lot of tax receipts come in throughout the year, as do reports on real wage growth, unemployment, and corporate investment activity. The federal deficit for May was $146.80B, 66% greater than May '17. There are times for the federal government to run a deficit and inject money into the economy, but when it's done largely as a corporate tax cut in a time of full employment and record corporate profits (both indicating that businesses don't see many opportunities to reinvest in themselves), you'd expect to see that money go out as stock buybacks and dividends. And that's exactly what we've been seeing. There's no need to wait for long term lag effects if the short term investments that are the only plausible story for those effects materializing simply haven't happened. Yes, the stock market has been propped up, but it's with fool's gold; there are no gains in either productivity or national capital stocks (public or private). Meanwhile, increase in debt service as a percentage of the federal budget has been guaranteed. The burden of proof is on the tax cut authors to prove the short term growth that justifies it.
- bcheung 8y ago
  Most economists would also say that rising interest rates discourage investment, incentivize saving, and reducing debt. So who can say really? That's kind of my point. So many interrelated factors. Impossible to isolate it to any 1 policy or event.
  - elgenie 8y ago
    What economists say that increasing interest rates reduce either existing debt or public debt? The cost of borrowing is increased, so obviously there's less new private debt issued, but the cost of debt service for both private debt and, crucially, public debt increase, which means greater budget shortfalls and more (compounding) public borrowing. If your point is "well, the economy is a very complicated system", that's an argument for avoiding a large drastic action done to that system against the vast majority of expert economic advice, not for it. This tax cut wasn't even the typical "We need to do something. This is something!" fallacy, it was "We don't need to do anything. This is something!".
  - dlp211 8y ago
    I'm not sure what economist your listening to that is telling you these things, but I suggest you stop listening to them post haste. You can't simultaneously discourage investment and increase savings. They are the same thing in economic parlance.
    - bcheung 8y ago
      How are they the same? Building up savings and paying down your credit cards are the exact opposite of investing. If you have to pay more on your mortgage and credit cards then that's less you can put into the stock market and invest in other things.
      - elipsey 8y ago
        I think "Savings Rate" here is meant in the technical sense, not in the sense of household finances. It's an accounting identity in macroeconomics: https://en.wikipedia.org/wiki/Savings_identity https://en.wikipedia.org/wiki/Savings_identity
maxxxxx 8y ago
"But there's also no evidence to support that it hurt either." If the tax cuts didn't vastly improve performance then they hurt a lot. They increased an already large deficit even more for which future generations will have to the pay the price.
- jack9 8y ago
  > If the tax cuts didn't vastly improve performance then they hurt a lot. The timescale for the determination is not left up to months. I don't personally think they were good, but to assert that you can tell right away, is disingenuous. The debt is already so large that this barely affects the momentum.
  - maskedSlacker 8y ago
    > The debt is already so large that this barely affects the momentum. The idea that a 66% increase in the deficit "barely affects the momentum" is absurd reflects either your ignorance or your bad faith. Apply that logic to your personal spending and see how long it takes before you're bankrupt.
    - seandougall 8y ago
      A 66% increase in the monthly deficit, in this case, amounts to about a 0.4% increase in national debt, by my back of the napkin math. I agree that it’s a dumb move, but I don’t think GP was wrong to say that it barely affects the momentum. You’re free to disagree, but it will help the discussion if you can find a way to do so without the ad hominems.
      - maxxxxx 8y ago
        You understand that deficits are cumulative, right?
        seandougall 8y ago
        Yyyyeeesss... that’s rather my point, that we’ve accumulated so much debt at this point that this doesn’t really move the needle as much as it sounds like when you ignore that accumulation and look only at a single month. Again, I’m not arguing that it’s a good idea. It is irresponsible, for sure. But the scale of it is akin to somebody with $10k in credit card debt opting to go out for dinner once.
decebalus1 8y ago
> But there's also no evidence to support that it hurt either. Yes, there is. People seem to forget that a tax cut is actually a government subsidy. Coupled with increased spending, if the assumption is that if the macroeconomic performance hasn't been improved that means it hasn't been hurt, then it remained constant despite the 'cuts' + 'increased spending'. Which means that it could have grown/improved if the tax cuts were not in place.
- refurb 8y ago
  Letting people keep more of the money they earned is a subsidy? That’s not how it works.
  - decebalus1 8y ago
    https://www.investopedia.com/terms/s/subsidy.asp https://www.investopedia.com/terms/s/subsidy.asp That's literally one form of subsidy. Also, did you know that inflation is a form of taxation? And it is indeed rising. So no, it's not actually letting people keep more of the money, especially if it's cash.
    - bcheung 8y ago
      And they literally changed the definition of literally to mean the exact opposite of literally. ;) When a word gets used incorrectly or conflated enough even official dictionaries will change. What's important is to understand the distinctions. There's something called Sapir-Whorf theory and one of the important concepts is that the more precision your definitions the more capable you are at cognition and understanding and interacting with the world. It's been said that Eskimos have 37 words for snow. This means that each different type of snow has different properties. They can more effectively operate in that environment compared to someone who thinks all snow is the same. Some would say that ice and water are the same, and in many ways they are correct, they are the exact same molecules, but if you are going to jump 3 stories off of a diving board onto solid ice instead of water you are going to learn that subtle distinction real fast. Similarly, conflating taxes and subsidizes reduces your ability to understand the distinctions and their different consequences. And when it comes to implementing policies can have similar effects as mistaking ice for water. It's important to understand things precisely and not conflate things. Even more so when your votes and actions have a consequence on other people's lives as well. We understand why you think they are the same, and in many contexts they can safely be conflated, but in many others it is dangerous to assume they are the same.
maoistinquisitr 8y ago
The key variable is Trump's total failure to implement his stated policies on immigration. https://www.numbersusa.com/news/more-400000-asylum-seekers-obtain-work-permits-fy2017 https://www.numbersusa.com/news/more-400000-asylum-seekers-o... Wages would be going way up if Trump were actually delivering in terms of deportations and the cessation of guest worker programs.

RangerScience 8y ago

> Policies, especially tax policies, have long lag effects. Which would imply that any gains (or losses) now would have to do with policy changes during the prior administration, supporting the author's point. So, alright, what's misleading the implication that they could have any significant effect by now.

bcheung 8y ago
Or the prior prior administration, or the prior prior prior administration. Or the result of economic policies from other nations, or any other countless factors.

elgenie 8y ago

The short term impacts aren't that difficult to calculate because a lot of tax receipts come in throughout the year, as do reports on real wage growth, unemployment, and corporate investment activity. The federal deficit for May was $146.80B, 66% greater than May '17. There are times for the federal government to run a deficit and inject money into the economy, but when it's done largely as a corporate tax cut in a time of full employment and record corporate profits (both indicating that businesses don't see many opportunities to reinvest in themselves), you'd expect to see that money go out as stock buybacks and dividends. And that's exactly what we've been seeing. There's no need to wait for long term lag effects if the short term investments that are the only plausible story for those effects materializing simply haven't happened. Yes, the stock market has been propped up, but it's with fool's gold; there are no gains in either productivity or national capital stocks (public or private). Meanwhile, increase in debt service as a percentage of the federal budget has been guaranteed. The burden of proof is on the tax cut authors to prove the short term growth that justifies it.

bcheung 8y ago
Most economists would also say that rising interest rates discourage investment, incentivize saving, and reducing debt. So who can say really? That's kind of my point. So many interrelated factors. Impossible to isolate it to any 1 policy or event.
- elgenie 8y ago
  What economists say that increasing interest rates reduce either existing debt or public debt? The cost of borrowing is increased, so obviously there's less new private debt issued, but the cost of debt service for both private debt and, crucially, public debt increase, which means greater budget shortfalls and more (compounding) public borrowing. If your point is "well, the economy is a very complicated system", that's an argument for avoiding a large drastic action done to that system against the vast majority of expert economic advice, not for it. This tax cut wasn't even the typical "We need to do something. This is something!" fallacy, it was "We don't need to do anything. This is something!".
- dlp211 8y ago
  I'm not sure what economist your listening to that is telling you these things, but I suggest you stop listening to them post haste. You can't simultaneously discourage investment and increase savings. They are the same thing in economic parlance.
  - bcheung 8y ago
    How are they the same? Building up savings and paying down your credit cards are the exact opposite of investing. If you have to pay more on your mortgage and credit cards then that's less you can put into the stock market and invest in other things.
    - elipsey 8y ago
      I think "Savings Rate" here is meant in the technical sense, not in the sense of household finances. It's an accounting identity in macroeconomics: https://en.wikipedia.org/wiki/Savings_identity https://en.wikipedia.org/wiki/Savings_identity

maxxxxx 8y ago

"But there's also no evidence to support that it hurt either." If the tax cuts didn't vastly improve performance then they hurt a lot. They increased an already large deficit even more for which future generations will have to the pay the price.

jack9 8y ago
> If the tax cuts didn't vastly improve performance then they hurt a lot. The timescale for the determination is not left up to months. I don't personally think they were good, but to assert that you can tell right away, is disingenuous. The debt is already so large that this barely affects the momentum.
- maskedSlacker 8y ago
  > The debt is already so large that this barely affects the momentum. The idea that a 66% increase in the deficit "barely affects the momentum" is absurd reflects either your ignorance or your bad faith. Apply that logic to your personal spending and see how long it takes before you're bankrupt.
  - seandougall 8y ago
    A 66% increase in the monthly deficit, in this case, amounts to about a 0.4% increase in national debt, by my back of the napkin math. I agree that it’s a dumb move, but I don’t think GP was wrong to say that it barely affects the momentum. You’re free to disagree, but it will help the discussion if you can find a way to do so without the ad hominems.
    - maxxxxx 8y ago
      You understand that deficits are cumulative, right?
      - seandougall 8y ago
        Yyyyeeesss... that’s rather my point, that we’ve accumulated so much debt at this point that this doesn’t really move the needle as much as it sounds like when you ignore that accumulation and look only at a single month. Again, I’m not arguing that it’s a good idea. It is irresponsible, for sure. But the scale of it is akin to somebody with $10k in credit card debt opting to go out for dinner once.

decebalus1 8y ago

> But there's also no evidence to support that it hurt either. Yes, there is. People seem to forget that a tax cut is actually a government subsidy. Coupled with increased spending, if the assumption is that if the macroeconomic performance hasn't been improved that means it hasn't been hurt, then it remained constant despite the 'cuts' + 'increased spending'. Which means that it could have grown/improved if the tax cuts were not in place.

refurb 8y ago
Letting people keep more of the money they earned is a subsidy? That’s not how it works.
- decebalus1 8y ago
  https://www.investopedia.com/terms/s/subsidy.asp https://www.investopedia.com/terms/s/subsidy.asp That's literally one form of subsidy. Also, did you know that inflation is a form of taxation? And it is indeed rising. So no, it's not actually letting people keep more of the money, especially if it's cash.
  - bcheung 8y ago
    And they literally changed the definition of literally to mean the exact opposite of literally. ;) When a word gets used incorrectly or conflated enough even official dictionaries will change. What's important is to understand the distinctions. There's something called Sapir-Whorf theory and one of the important concepts is that the more precision your definitions the more capable you are at cognition and understanding and interacting with the world. It's been said that Eskimos have 37 words for snow. This means that each different type of snow has different properties. They can more effectively operate in that environment compared to someone who thinks all snow is the same. Some would say that ice and water are the same, and in many ways they are correct, they are the exact same molecules, but if you are going to jump 3 stories off of a diving board onto solid ice instead of water you are going to learn that subtle distinction real fast. Similarly, conflating taxes and subsidizes reduces your ability to understand the distinctions and their different consequences. And when it comes to implementing policies can have similar effects as mistaking ice for water. It's important to understand things precisely and not conflate things. Even more so when your votes and actions have a consequence on other people's lives as well. We understand why you think they are the same, and in many contexts they can safely be conflated, but in many others it is dangerous to assume they are the same.

maoistinquisitr 8y ago

The key variable is Trump's total failure to implement his stated policies on immigration. https://www.numbersusa.com/news/more-400000-asylum-seekers-obtain-work-permits-fy2017 https://www.numbersusa.com/news/more-400000-asylum-seekers-o... Wages would be going way up if Trump were actually delivering in terms of deportations and the cessation of guest worker programs.