Closing Thought–17Jul19

Every time Trump or his knuckle draggers open their mouths we hear how successful this damn silly Trump trade war is….but just because he says something does not make it so….regardless what the drooling 30% thinks.

Despite the somewhat positive news that Trump would refrain from slapping new duties on an additional $300 billion worth of Chinese goods – which would have sparked a full-blown trade war. Americans have recently become irritated with Trump’s tariffs and his self-proclaimed label as Tariff Man, new IBD/TIPP polling shows, and first reported by Investor’s Business Daily.

The IBD/TIPP Poll covered 900 responses from June 20-27, 16% of respondents said Trump should increase tariffs if there’s no China trade deal this summer. Another 33% said Trump should remove all tariffs on China, even if a near-term agreement can’t be reached, while 44% said Trump should leave the duties in place.

While the President continues to insist that China pays the tariffs, Americans are starting to become more spectacle that he could be deceiving them

https://www.zerohedge.com/news/2019-06-29/new-poll-shows-almost-half-americans-think-trumps-trade-war-bad

Corporate media will not report the real story of Trump’s trade policies….instead they will tell the nation what is rosy and what is total manure.

“Lego Ergo Scribo”

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Ever Heard Of ‘Cause And Effect’?

Closing Thought–31May19

I realize that the “invasion” of Latin Americans is important to this president and “tariffs” are his answer to all our economic problems…..whether you believe these fantasies or not…there is a thing call ’cause and effect’……

That is ….. one process or state, a cause, contributes to the production of another process or state, an effect, where the cause is partly responsible for the effect, and the effect is partly dependent on the cause. In general, a process has many causes, which are also said to be causal factors for it, and all lie in its past.

A little simpler?

For every action there is an opposite but equal reaction. Did that help?

All that out of the way what am I going on about?

The newest utterance from Our Beloved Supreme Leader……

President Trump has vowed to slap new tariffs on all goods from Mexico—and to keep increasing them until the country stops migrants coming to the US. On June 10, the US “will impose a 5% Tariff on all goods coming into our Country from Mexico, until such time as illegal migrants coming through Mexico, and into our Country, STOP,” the president tweeted Thursday. “The Tariff will gradually increase until the Illegal Immigration problem is remedied at which time the Tariffs will be removed.” The White House says the tariffs will rise to 10% on July 1, then go up 5% each month after that until they hit 25% on Oct. 1, reports the Washington Post. Earlier Thursday, Trump told reporters he was going to make his biggest statement on the border so far.

Trump said in a statement that after October, the tariffs will remain at 25% “until Mexico substantially stops the illegal inflow of aliens coming through its territory.” The surprise announcement came on the day that Mexican President Andres Manuel Lopez Obrador began to ratify the USCMA trade deal with US and Canada, which could now be in jeopardy, reports Reuters. The tariffs could devastate Mexico’s economy, though experts including trade lawyer Daniel Ujczo suspect Trump will backtrack on the move, as he did with his threat to seal the border in March. “This seems more theater and tactics than a strategy to solve the migration crisis and rebalance North American trade,” Ujczo tells the AP.

Is this just something said to divert the attention of the MSM?  Will it remain if the markets tank?

Does he realize that if this is law and the economic activity in Mexico ceases it will create more people in search of economic security?  (That is cause and effect)…..

This is a silly trade policy…it is that simple……

But let us look at other economic news……

How about those “tax cuts”?……..(Read and weep!)

Despite lofty promises from President Donald Trump and the Republican Party, the $1.5 trillion in tax cuts that went into effect last year have done little—if anything—to raise workers’ wages, boost economic growth, or spur business investment.

That’s according to a new analysis by the nonpartisan Congressional Research Service (CRS), which appeared to vindicate warnings from progressive critics that the GOP tax cuts were little more than a scam designed to put more money in the pockets of wealthy Americans.

In its 23-page report (pdf), the independent research arm found that while the Republican tax law has not done much for workers or the overall economy, it has sparked a wave of stock buybacks, which primarily benefit rich executives.

https://www.commondreams.org/news/2019/05/29/virtually-no-wage-growth-surge-stock-buybacks-study-offers-more-proof-trump-tax-cuts

Billions are pouring into the US treasury because of the Trump tariffs……..

President Donald Trump likes to talk about the money Washington is making from the spate of tariffs his administration has imposed on global trading partners. The catch? Most of it is probably coming from American pocketbooks.

At a postelection news conference on Wednesday, Trump misleadingly claimed that billions of dollars would “soon be pouring into our Treasury from taxes that China is paying for us.”

He got the first part right. Federal revenue from tariffs in the third quarter increased by more than 33% from the same quarter last year, Treasury Department data shows. And in October — the first full month in which all tariffs announced to date were in effect — the monthly collection appears to have doubled from the 2017 level to about $6 billion, according to estimates from daily receipts.

https://markets.businessinsider.com/news/stocks/trump-tariffs-revenue-up-sharply-american-costs-increase-2018-11-1027713336

These Trade Wars are good for the US, right?

President Trump’s trade battles are costing the U.S. stock market $5 trillion and counting, according to Deutsche Bank.

Given the bulk of equity returns come from equity price appreciation, in an escalated trade war with China and now Mexico, the U.S. is losing trillions of dollars in foregone returns as markets sink on the negative headlines, the bank said Friday.

“The costs of the trade war in our view are about its indirect impacts,” said Deutsche Bank chief strategist Binky Chadha in a note to clients. “The trade war has been key in preventing a recovery in global growth and keeping US equities range bound. Foregone US equity returns from price appreciation (12.5% annual rate) for 17 months are worth $5 trillion.”

https://www.cnbc.com/2019/05/31/trumps-trade-wars-have-cost-the-stock-market-5-trillion-and-counting-deutsche-bank.html

Someone explain to me where the “good news” is in all this trade war stuff?

Modern Monetary Policy

Yep I am about to bore the crap out of my reader…..when it comes to economics the average person glazes over and goes to that “happy place” in the mind until the talk is finished.

But I feel I need to drop some info on my readers……there has been much in the MSM about the Green New Deal and the proposals by a couple of candidates about taxing the rich……

I want to give my reader a look into the policies and the economics of them…..

First the call to “Tax The Rich”……

I don’t consider myself an MMTer, but there is a basic Keynesian concept which has been associated with MMT, which is both true and important. For the federal government, taxes are not about raising revenue, taxes are about reducing consumption to prevent inflation.

The point is that the federal government does not need taxes for revenue, since it can just print money. It instead taxes to create the room in the economy for government spending. This view is sometimes wrongly taken as a “get of jail free” card, where the government can spend whatever it wants without worrying about raising revenue.

That could be true in a deep downturn. However, if the economy is near its full employment level of output, where additional demand will lead to rising inflation, we are pretty much back in the world where we need taxes to offset spending. Any major increase in government spending will lead to higher inflation, unless we have higher taxes or have some other mechanism to reduce demand in the economy.

https://www.counterpunch.org/2019/02/20/modern-monetary-theory-and-taxing-the-rich/

Next how about that Green New Deal that is getting the conservs lathered up to the point that they resurrect a fear from the 1950s……

Much of the Democratic Party, including almost the entire pack of contenders for the Democratic presidential nomination, has embraced the concept of a Green New Deal (GND). This is an ambitious plan for slashing greenhouse gas emissions, while at the same time creating good-paying jobs, improving education, and reducing inequality.

At this point, the specific policies entailed by these ambitious goals are largely up for grabs, as is the question of how to pay for this agenda. One way of paying for it, borrowing from the economic doctrine know as Modern Monetary Theory (MMT), is that we don’t have to.

Modern Monetary Theory argues that a government that prints its own currency is not constrained in its spending by its tax revenue. Some on the left have argued that we can just print whatever money we need to finance a GND. This claim does not make sense.

 
All this is possible…it will NEVER fly with conservs who live and die on tax cuts……a real shame….for this countries needs big ideas once again…..the Repubs are NOT those people.

Those Dem Economic Plans

*********Posted from a secret location known only to myself and everyone on the 4th floor of Memorial Hospital.********

The 2018 elections has brought us a few young freshmen Congresspeople and with the 2020 election looming large a candidate has issued a plan to solve our revenue people….

Let’s look at the economic proposal of announced presidential candidate Sen. Elizabeth Warren……

Two economists who are advising Warren, Emmanuel Saez and Gabriel Zucman of University of California at Berkeley, announced to the Washington Post that the senator is proposing an annual tax of two percent for assets over $50 million, as well as a three percent tax for assets above $1 billion. The proposal, the economists estimate, would raise $2.75 trillion over 10 years and would affect just .1 percent of American households—raising the percentage at which their wealth is taxed to just 4.3 percent from 3.2 percent. 

The “Ultra-Millionaire Tax” would apply to “all household assets…including residences, closely held businesses, assets held in trust, retirement assets, assets held by minor children, and personal property with a value of $50,000 or more,” according to a paper by the economists.

Warren’s proposal, which economist Thomas Piketty recommended in his book “Capital in the Twenty-First Century,” comes weeks after Rep. Alexandria Ocasio-Cortez (D-N.Y.) first told the press about her plan to tax income over $10 million at 70 percent—a proposal supported by a majority of Americans, including 45 percent of Republicans, according to a poll by The Hill.

https://www.commondreams.org/news/2019/01/24/warren-forces-issue-massive-economic-inequality-2020-debate-ultra-millionaire-tax

The freshman women we are calling AOC has a different take on taxing billionaires…..her thought is a 70% tax on them and her thoughts are rooted deep in American’s beliefs….

In 1835, Alexis de Tocqueville produced one of the earliest accounts of the American dream. In his famous study of the Jacksonian U.S., the Frenchman wrote that Americans possessed “the charm of anticipated success” — a ubiquitous optimism that he attributed to our country’s democratic character, and to the “general equality of condition” that prevailed among its “people.”

On Wednesday night, Sean Hannity took de Tocqueville to task. In the Fox News’ host’s telling, general economic equality is not a precondition for the American dream, but rather, an insurmountable obstacle to it — because the American dream is (apparently) to earn more than $10 million year without having to pay a top marginal tax rate higher than 37 percent.

Of course, Hannity did not actually frame his argument as a rebuke of de Tocqueville. His true target was Alexandria Ocasio-Cortez.

http://nymag.com/intelligencer/2019/01/ocasio-cortez-aocs-billionaires-taxes-hannity-american-democracy.html

Because her calls are so American that the GOP is running sacred from her proposals….yes running sacred!

What AOC is proposing

The short version is that Alexandria Ocasio-Cortez is proposing a new 70% tax bracket on income above $10 million. The increased tax on the wealthy would fund what Ocasio-Cortez calls a “Green New Deal,” which would combat both climate change and economic inequality.

Unsurprisingly, this has attracted lots of attention from both ends of the political spectrum. Some agree with the proposal. Some think it’s ludicrous and fear it would derail economic growth. Others think the rich should certainly pay more, but that the addition of a single super-high tax bracket isn’t the best solution.

And, like most tax proposals put forth by politicians, this one is misunderstood by much of the American public.

https://www.fool.com/taxes/2019/01/24/alexandria-ocasio-cortezs-70-tax-plan-what-all-ame.aspx

Let’s watch to see who wins this thing…..but first why would this have the GOP looking over their shoulders…..

Remember that massive tax cuts awhile back?  Appears it did NOTHING it was said it would do…….

The National Association of Business Economics’ (NABE) quarterly business conditions poll published on Monday found that while some companies reported accelerating investments because of lower corporate taxes, 84 percent of respondents said they had not changed plans. That compares to 81 percent in the previous survey published in October.

The White House had predicted that the massive fiscal stimulus package, marked by the reduction in the corporate tax rate to 21 percent from 35 percent, would boost business spending and job growth. The tax cuts came into effect in January 2018.

https://www.reuters.com/article/us-usa-economy-investment-idUSKCN1PM0B0

Turn The Page!

Tax The Rich

The chant goes up…Tax the rich….Tax the rich…..somewhere there will be villagers with pitchforks waiting on the arrival of the “tax man”…..

Enough fanciful stuff……there is a movement taking to the airwaves a proposal for a 70% tax on the ultra-rich…..and by damn the idea has got a majority approval in the polls…..

Rep. Alexandria Ocasio-Cortez (D-N.Y.) sparked a flood of hysterical and error-filled responses from the right when she suggested in a recent “60 Minutes” interview that America’s top marginal tax rate should be hiked to 70 percent to help pay for bold progressive programs, but a survey published on Tuesday found that the majority of Americans are on the freshman congresswoman’s side.

Conducted by The Hill in partnership with the market research firm HarrisX, the poll found that 59 percent of the U.S. public supports raising the marginal tax rate on the richest Americans to 70 percent. The poll also found a “surprising amount of support” for the proposal among Republicans, with 45 percent backing the idea along with 71 percent of Democrats.

https://www.commondreams.org/news/2019/01/15/poll-shows-majority-

back-70-tax-rate-ultra-rich-ocasio-cortezs-radical-proposal

The media is not down with this proposal……however the economics of this are sound…looking at it without the bias of a political party……

Taxes impede economic growth and high taxes kill the economy, right?. This is the belief among many who criticize Representative Alexandria Ocasio-Cortez’s proposal to raise taxes on the wealthy to 70% or more. But what does the evidence really tell us?

Do high taxes really hurt the economy as much as they believe, and will lowering them have much of an impact on stimulating it? The economic literature is clear — tax breaks to encourage economic relocation or investment decisions are inefficient and wasteful. Hundreds of studies reach this conclusion. When businesses are surveyed regarding factors important to their investment decisions, taxes often come in behind proximity to markets, suppliers, and the quality of the labor force. These other factors occupy a larger percentage of a business’s budget than do taxes, and all of them are far more critical to long-term success than are taxes. Businesses occasionally admit this. Nearly 62 percent of those interviewed in a California study on hiring tax credits indicated that they had never or rarely affected their decision to employ individuals.

https://www.counterpunch.org/2019/01/09/tax-the-rich-history-proves-alexandria-ocasio-cortez-may-be-correct/

I know this will not fly with the GOP for they think that tax cuts for the rich will solve all our economic problems…..wishful thinking….it has not done so in many decades and will not work now.

Time for the uber rich to start pulling their weight to society….they profit most from society then why can they not pay for their privilege?

Why Not?

As a matter of fact……the entire “progressive agenda” is fiscally  responsible….the agenda…..

  • We are currently planning to spend $45.2 trillion over the next decade on healthcare as a country.
  • A single payer Medicare for All system would cost $32.6 trillion over the next decade, saving us $13.2 trillion.
  • Freezing defense spending at 2017 levels would save us $780 billion over the next decade.
  • Reversing the Trump tax cuts would bring in an additional $1.9 trillion of revenue.
  • Reversing the Bush tax cuts would bring in an additional $3.3 trillion of revenue.
  • Closing three corporate tax loopholes (exclusion of rental income, capital gains, and deferral of controlled foreign corporations’ income) would bring in another $2.72 trillion of revenue.
  • If the entire “progressive agenda” is implemented, we would save $18.74 trillion over the next decade.

I approve of the agenda and will support it as long as too many changes are not included.

That is where it will not fly in DC….it is fiscally responsible…..the GOP has NO idea how to be fiscally responsible…..sounds good in sound bytes but the GOP just cannot find the on switch to fiscal responsibility.

Reaganomics To The Rescue

Since the 1980’s Reaganomics has been the saving grace of the GOP…..they use clever propaganda to get the American people to believe the stupidity of trickle down economics or Reaganomics…tax cuts labeled tax reform that benefits few and those are the wealthy.

There is a good chance that all the hard work done by Repubs in 2017 may be for naught…..Reaganomics may not save the GOP this time…..

Republican hopes for holding control of Congress in the midterm elections hinge on the success of Reagan-style tax cuts and deregulation. However, without significant progress early this year on entitlements and infrastructure — with substantial focus on the chronic problems of rural communities and smaller cities — those policies may not prove to be enough.

During the Bush-Obama years, annual economic growth was only 1.8%, but the prosperity instigated by the expansion of financial services, biotechnology and digital industries was adequate to satisfy voters in the citadels of progressive thinking on the two coasts and among communities supported by major universities.

President Donald Trump won an unlikely victory in 2016 by energizing voters in the nation’s interior — places that fell victim to globalization and were left behind by the recent recovery.

https://www.marketwatch.com/story/reaganomics-may-not-save-the-republicans-2018-01-08

2018 will be the tell of the tape…..will the economic double talk win the day?

Will Reagaomics save the GOP?

Voodoo Economics Returns

Roll us over and do it again!

Our Congress is once again on a break (is there ever a time when this isn’t so?)  They have tried health issues and failed…..they are talking abut some sort of gun regulations…..and since nothing is sticking to the wall then they will go to the ever popular tax reform.

And since the GOP is in control then we will try their fix for the economy…..supply-side solutions.

This solution has not been a answer for 30+ years….hey, why not try it again?

Our president has decided the “voodoo economics” will solve all the ills of our economy….

Billionaire US President Donald Trump wants to reform the US tax system, like others before him. But his plan looks more like tax cuts for America’s wealthiest and some of the world’s biggest corporations.

Although it’s yet to be fleshed out, it’s based on the idea that the cuts will pay for themselves, with the economic growth they generate in years to come. Yet, that’s never happened in the history of US tax cuts.

In economics jargon: this is a classic supply-side response to a demand-side problem. But why help companies and investors if workers are the ones in trouble?

It’s been done before and George HW Bush famously called it “voodoo economics” to discredit the notion that cutting tax rates will increase revenues.

Source: Donald Trump’s ‘voodoo economics’ | USA | Al Jazeera

An IST factoid:  Tax cuts have NEVER paid of themselves!

But you will be asked to buy into the dream anyway…..you cannot drain the swamp and keep the crap in place.

I have written on this subject before and pointed to the fallacy……..

Source: It Is Always Supply Side Economics – In Saner Thought

Source: The Humor That Is Trickle Down Economics – In Saner Thought

Source: Let’s End The Illusion Now! – In Saner Thought

A laughable solution that the population falls for almost every time.