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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, unemploy

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

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