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Would you expect them to cut the IRS, if they're trying to cut deficits? Obama and Clinton (with Republican congresses) ACTUALLY cut deficits -- Clinton even g

by EGreg 2y ago

Would you expect them to cut the IRS, if they're trying to cut deficits? Obama and Clinton (with Republican congresses) ACTUALLY cut deficits -- Clinton even got a surplus. Bush and Trump extended tax cuts which ballooned them back into trillions (also the trillion-dollar wars). A few quotes: Cheney 2004 about deficits: "Reagan proved deficits don't matter" Trump 2017 about deficits: "Yeah, but I won't be here" Clinton: https://www.youtube.com/watch?v=AX3a-2yrQwY https://www.youtube.com/watch?v=AX3a-2yrQwY Andrew Samwick, Bush's chief economist: You are smart people. You know that the tax cuts have not fueled record revenues. You know what it takes to establish causality. You know that the first order effect of cutting taxes is to lower tax revenues. We all agree that the ultimate reduction in tax revenues can be less than this first order effect, because lower tax rates encourage greater economic activity and thus expand the tax base. No thoughtful person believes that this possible offset more than compensated for the first effect for these tax cuts. Not a single one. And the Republicans have just done it again! Tax cuts for the ultra-wealthy.

jordanb 2y ago
I kinda feel like you're not being charitable with the OP My read is that the OP is saying that the air quality monitors in China were a massive soft-power win for the US, and it also shamed the Chinese government. So if you start from the assumption that this current administration sees the Chinese government as a rival who should be opposed, then this kind of effort that bypasses the Chinese government and provides a resource to the Chinese people should be supported. If the administration claims to see China as a rival, but then cuts such an obviously beneficial project, reasonably, you gotta wonder if the administration is telling the truth about it's relationship with the Chinese government.
- llm_nerd 2y ago
  Their argument seems to be that the current administration is playing checkers with tennis rackets on trampolines. Nothing makes sense or actually serves any goals, and are just random child-like stomping and smashing. In this case someone probably saw this as somehow related to "the environment" so it's bad.
  - ikr678 2y ago
    I think it's more, any free service provided by the government shouldn't exist on principle (because this is a potential market opportunity for someone else). That it had environment in the title is just extra bonus.
    - lodovic 2y ago
      Domestically, that is correct, you are taking away an opportunity in the market. But in a foreign embassy there are no such competitors. And controlling air pollution is typically a job for the government.
AnthonyMouse 2y ago
> We all agree that the ultimate reduction in tax revenues can be less than this first order effect, because lower tax rates encourage greater economic activity and thus expand the tax base. No thoughtful person believes that this possible offset more than compensated for the first effect for these tax cuts. Not a single one. This is kind of an embarrassing mistake for an economist. The theory that lower taxes can increase tax revenues is that they increase the rate of GDP growth. For example, with a lower tax rate, GDP might grow at 8%/year instead of 4%/year. Under different circumstances the difference might be larger or smaller, but as long as the lower tax rate improves GDP growth at all, compounding will eventually cause it to yield higher tax revenue at the lower rate. 20% of 1.08^15 is more than 35% of 1.04^15, and 20% of 1.08^50 is more than 370% of 35% of 1.04^50. This doesn't have to be an instantaneous effect for it to be real.
- frikskit 2y ago
  Redo your analysis with something less absurd than 8%. For example 4.5% and you see no improvement in 100 years. 5% growth and it takes 59 years. Historically major tax cuts in the US increased GDP growth by -1 to 1.5%. You bring up a good point but in all realistic scenarios it actually misleads.
  - AnthonyMouse 2y ago
    The actual numbers depend on the state of the economy, but you can't just lower the one without considering the others. Historically "major tax cuts" were actually very small: https://fred.stlouisfed.org/series/FYFRGDA188S https://fred.stlouisfed.org/series/FYFRGDA188S These were tax cuts on the order of 1-3% of GDP, so of course the effect on GDP growth was similarly muted. Meanwhile the baseline level of recent US GDP growth isn't 4%, it's more like 2.5%, making a 0.5% increase much more significant for such a small tax cut, so it's not absurd that a hypothetical doubling of the growth rate could result from a hypothetical 15% of GDP reduction in taxes. The hypothetical was just using larger numbers on multiple dimensions. You get a similar payback period if you use smaller numbers all around, e.g. a reduction in the overall tax rate from 23% to 21.5% resulting in an increase in the GDP growth rate from 2.5% to 3%. Moreover, the exact rate is difficult to calculate given limited data (and depends on changing factors in the economy), but the point is the existence of the effect. And it's not obvious that even quite long payback periods wouldn't be worth it, since the lower tax rate and the higher growth rate could then be sustained thereafter indefinitely.

by EGreg 2y ago

jordanb 2y ago

I kinda feel like you're not being charitable with the OP My read is that the OP is saying that the air quality monitors in China were a massive soft-power win for the US, and it also shamed the Chinese government. So if you start from the assumption that this current administration sees the Chinese government as a rival who should be opposed, then this kind of effort that bypasses the Chinese government and provides a resource to the Chinese people should be supported. If the administration claims to see China as a rival, but then cuts such an obviously beneficial project, reasonably, you gotta wonder if the administration is telling the truth about it's relationship with the Chinese government.

llm_nerd 2y ago
Their argument seems to be that the current administration is playing checkers with tennis rackets on trampolines. Nothing makes sense or actually serves any goals, and are just random child-like stomping and smashing. In this case someone probably saw this as somehow related to "the environment" so it's bad.
- ikr678 2y ago
  I think it's more, any free service provided by the government shouldn't exist on principle (because this is a potential market opportunity for someone else). That it had environment in the title is just extra bonus.
  - lodovic 2y ago
    Domestically, that is correct, you are taking away an opportunity in the market. But in a foreign embassy there are no such competitors. And controlling air pollution is typically a job for the government.

AnthonyMouse 2y ago

> We all agree that the ultimate reduction in tax revenues can be less than this first order effect, because lower tax rates encourage greater economic activity and thus expand the tax base. No thoughtful person believes that this possible offset more than compensated for the first effect for these tax cuts. Not a single one. This is kind of an embarrassing mistake for an economist. The theory that lower taxes can increase tax revenues is that they increase the rate of GDP growth. For example, with a lower tax rate, GDP might grow at 8%/year instead of 4%/year. Under different circumstances the difference might be larger or smaller, but as long as the lower tax rate improves GDP growth at all, compounding will eventually cause it to yield higher tax revenue at the lower rate. 20% of 1.08^15 is more than 35% of 1.04^15, and 20% of 1.08^50 is more than 370% of 35% of 1.04^50. This doesn't have to be an instantaneous effect for it to be real.

frikskit 2y ago
Redo your analysis with something less absurd than 8%. For example 4.5% and you see no improvement in 100 years. 5% growth and it takes 59 years. Historically major tax cuts in the US increased GDP growth by -1 to 1.5%. You bring up a good point but in all realistic scenarios it actually misleads.
- AnthonyMouse 2y ago
  The actual numbers depend on the state of the economy, but you can't just lower the one without considering the others. Historically "major tax cuts" were actually very small: https://fred.stlouisfed.org/series/FYFRGDA188S https://fred.stlouisfed.org/series/FYFRGDA188S These were tax cuts on the order of 1-3% of GDP, so of course the effect on GDP growth was similarly muted. Meanwhile the baseline level of recent US GDP growth isn't 4%, it's more like 2.5%, making a 0.5% increase much more significant for such a small tax cut, so it's not absurd that a hypothetical doubling of the growth rate could result from a hypothetical 15% of GDP reduction in taxes. The hypothetical was just using larger numbers on multiple dimensions. You get a similar payback period if you use smaller numbers all around, e.g. a reduction in the overall tax rate from 23% to 21.5% resulting in an increase in the GDP growth rate from 2.5% to 3%. Moreover, the exact rate is difficult to calculate given limited data (and depends on changing factors in the economy), but the point is the existence of the effect. And it's not obvious that even quite long payback periods wouldn't be worth it, since the lower tax rate and the higher growth rate could then be sustained thereafter indefinitely.