{"id":1009354,"date":"2018-09-14T21:00:20","date_gmt":"2018-09-14T21:00:20","guid":{"rendered":"http:\/\/juniorminingnews.com\/?p=1009354"},"modified":"2018-09-14T21:00:20","modified_gmt":"2018-09-14T21:00:20","slug":"is-trumps-tax-cut-paying-for-itself-2","status":"publish","type":"post","link":"https:\/\/juniorminingnews.com\/?p=1009354","title":{"rendered":"Is Trump\u2019s Tax Cut \u201cPaying for Itself\u201d?"},"content":{"rendered":"

By Brian Maher<\/a><\/span> <\/p>\n

\"Chart\"<\/a><\/div>\n

This post Is Trump’s Tax Cut \u201cPaying for Itself\u201d?<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n

There is absolutely nothing wrong with America’s finances that a miracle couldn’t fix\u2026 as the great man said.<\/p>\n

We learn this week that 2018’s budget deficit currently rises Himalayan-high to $895 billion \u2014 a 39% increase over last year.<\/p>\n

The Congressional Budget Office (CBO) announced in April that the budget deficit would exceed $1 trillion in 2020.<\/p>\n

But CBO now estimates the deficit will top $1 trillion in 2019\u2026 one year ahead of schedule.<\/p>\n

The reason, simple as snow and as obvious as the nose on a man’s face:<\/p>\n

The United States government lays out far more money than it hauls aboard.<\/p>\n

The Republic demands its bread\u2026 circuses\u2026 its gladiator combats.<\/p>\n

But it prefers to buy on credit.<\/p>\n

\u201cDefense\u201d spending \u2014 up 10% on the year\u2026<\/p>\n

Social Security outlays \u2014 up 5%\u2026<\/p>\n

Medicare \u2014 up 7%.<\/p>\n

Overall federal spending has increased 7% this fiscal year\u2026 while tax revenues have increased only 1%.<\/p>\n

To the business we must add a 25% increase in net interest on the public debt.<\/p>\n

The economic men in practice at Washington assured us the Trump tax cuts would \u201cpay for themselves\u201d through higher growth.<\/p>\n

Treasury Secretary Steve Mnuchin \u2014 for example \u2014 assured us, \u201cThe plan will pay for itself with growth.\u201d<\/p>\n

Then we come to President Trump’s senior economic adviser\u2026<\/p>\n

Larry Kudlow is a swell enough fellow who is nonetheless trapped in 1981\u2026 like a fly trapped in amber.<\/p>\n

He argues that \u201cEven the CBO numbers show now that the entire $1.5 trillion tax cut is virtually paid for by higher revenues and better nominal GDP.\u201d<\/p>\n

But if outlays are up 7% while revenues are up 1%\u2026 how is the entire $1.5 trillion tax cut being paid for by higher revenues and better nominal GDP?<\/p>\n

We will gladly take correction if mistaken.<\/p>\n

But in our court stands economist Greg Mankiw.<\/p>\n

Mankiw was George W. Bush’s chairman of the president’s Council of Economic Advisers.<\/p>\n

From whom:<\/p>\n

\n

I do not know what numbers Larry is referring to\u2026 A reasonable rule of thumb, in my judgment, is that about one-third of the cost of tax cuts is recouped via faster economic growth.<\/em><\/p>\n<\/blockquote>\n

We’re heart and soul for tax cuts \u2014 provided they are twinned with spending cuts to match.<\/p>\n

There is something within the liver and lights that demands a square accounting.<\/p>\n

Spend less, it whispers \u2014 or more if you must.<\/p>\n

But pay your way as you go.<\/p>\n

Borrowing from tomorrow to pay for today is the way of the scoundrel\u2026 the profligate\u2026 the serial bankrupt.<\/p>\n

\u201cThe wicked borrows, and cannot pay back\u201d\u2026 as Psalm 37:21 reads.<\/p>\n

But worry not, soothes the official voice \u2014 deficits don’t matter.<\/p>\n

And for years they haven’t\u2026 or not overmuch.<\/p>\n

But the laws of economics will not be forever conned, the old-timers insist.<\/p>\n

Actions demand reactions\u2026 scales must ultimately balance\u2026 the free lunch has no existence this side of paradise.<\/p>\n

We suspect a great reckoning will prove once and for all that deficits do matter.<\/p>\n

At writing the national debt rings in at $21,479,156,738,092\u2026 and rising\u2026 rapidly.<\/p>\n

For your viewing pleasure, CBO’s projected trajectory of the national debt as a percentage of GDP:<\/p>\n<\/p>\n

The greatest burglars of America’s fiscal future?<\/p>\n

Social Security, Medicare and Medicaid\u2026 with interest on the debt into the bargain.<\/p>\n

If you accept the CBO at its word, mandatory spending \u2014 including these budget-busters and a few others \u2014 will constitute 78% of federal spending by 2026.<\/p>\n

That leaves only 22 cents per dollar for education, science, transportation and a hundred other priorities\u2026 including defense.<\/p>\n

Former Treasury official Peter Fisher’s waggish observation gains currency with each passing year:<\/p>\n

The federal government, says he, is a \u201cgigantic insurance company (with a sideline business in national defense and homeland security).\u201d<\/p>\n

Much truth is spoken in jest.<\/p>\n

With a spirit of doom upon us today, let us sink further into the mire\u2026<\/p>\n

According to no less an authority than the United States Treasury, projected tax revenues to fund Social Security and Medicare over the next 75 years fall $46.7 trillion short.<\/p>\n

\u201cUnfunded liabilities,\u201d these are called.<\/p>\n

But even these $46.7 trillion of unfunded liabilities may tell a mere fraction of America’s true indebtedness\u2026<\/p>\n

Economist and Boston University professor Larry Kotlikoff says Social Security, Medicare and Medicaid are not fully accounted for in official number crunching.<\/p>\n

These accounting shell games mask the actual debt, says Kotlikoff.<\/p>\n

What is America’s actual debt?<\/p>\n

Over the next 75 years, this Cassandra projects America’s true debt at an intergalactic $210 trillion.<\/em><\/p>\n

Kotlikoff, shaking his head in despair:<\/p>\n

\n

We have all these unofficial debts that are massive compared to the official debt. We’re focused just on the official debt, so we’re trying to balance the wrong books\u2026<\/em><\/p>\n

If you add up all the promises that have been made for spending obligations, including defense expenditures, and you subtract all the taxes that we expect to collect, the difference is $210 trillion. That’s the fiscal gap. That’s our true indebtedness.<\/em><\/p>\n<\/blockquote>\n

Kind heaven, no \u2014 could our fair land be $210 trillion in debt?<\/p>\n

On days such as this, when our hopes for America crash upon the shoals of actuarial mathematics and we wonder why we even bother\u2026 our thoughts turn to author Robert Benchley.<\/p>\n

We have told the tale before, but today we tell it again\u2026<\/p>\n

Benchley sat at his typewriter one day to tackle a vexing subject.<\/p>\n

He got one word into it \u2014 \u201cThe\u201d \u2014 when he came upon a brick wall. The words would not come.<\/p>\n

He soon threw up the sponge\u2026 and abandoned his typewriter in frustration.<\/p>\n

After soaking his head in the hotel bar he returned to visit the task anew, freshly inspired.<\/p>\n

With only one word to work with \u2014 \u201cThe\u201d \u2014 Benchley rapidly hammered out his article, presented here in its entirety:<\/p>\n

\u201cThe hell with it.\u201d<\/p>\n

Regards,<\/p>\n

Brian Maher
\nManaging editor, The Daily Reckoning<\/em><\/p>\n

The post Is Trump’s Tax Cut \u201cPaying for Itself\u201d?<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n

…read more<\/a> <\/p>\n

From:: Daily Reckoning<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

By Brian Maher This post Is Trump’s Tax Cut \u201cPaying for Itself\u201d? appeared first on Daily Reckoning. There is absolutely nothing wrong with America’s finances that a miracle couldn’t fix\u2026 as the great man said. We learn this week that 2018’s budget deficit currently rises Himalayan-high to $895 billion \u2014 a 39% increase over last […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"footnotes":""},"categories":[366],"tags":[],"_links":{"self":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1009354"}],"collection":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1009354"}],"version-history":[{"count":0,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1009354\/revisions"}],"wp:attachment":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1009354"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1009354"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1009354"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}