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Thread: It looks like Trump want to explode the deficit

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    Re: It looks like Trump want to explode the deficit

    Quote Originally Posted by Visbek View Post
    I'm sorry, but that is sheer insanity.

    Trump's plan cuts revenues by about $440 billion per year. $33 billion is a drop in the bucket.

    The DoE is less than 1% of the federal budget. Guess where half that money is spent? Oversight, maintenance and security of nuclear materials. So if you don't mind terrorists walking off with a bunch of fissile materials, go ahead and eliminate the DoE.



    "Block grants" are not free. It means giving money to the states without stipulations. So unless you're also going to slash federal spending on education by a huge amount, switching to block grants saves nothing.



    That's 2% of the gap.

    You've proposed $108 billion in cuts -- most of which we can't actually cut -- which leaves a $332 billion deficit.

    And of course, slashing that spending will in fact cause a contraction in GDP, and job losses, which means even less tax revenues.

    I hate to break this to you, but nearly 80% of federal spending is Social Security, Medicare, Medicaid, Defense, Veterans, and interest. Those programs are either untouchable, or Trump has put them off the table (notably defense). That's AFTER years of spending cuts. Unless we severely cut entitlements to seniors and defense spending, we cannot make this tax cut revenue-neutral via spending cuts.

    Next time, check your math.





    IRS budget is $11 billion. Yet again, that is chump change as far as the federal budget and Trump deficit are concerned.

    If Trump was proposing a tax cut that was genuinely revenue-neutral, and did not wind up taxing the bottom 99% to make tax cuts for the top 1%, that would not be a big issue. Heck, if it was reasonably fair and still progressive enough, I'd be fine with that.

    If you expect that to happen, then you are morally obligated to tell us all what you're smoking, and pass it around.

    The last tax plan he released during the campaign offered nothing of the sort. It's a huge tax cut for the wealthy; the top 1% will see their taxes drop by 6%, while the bottom 80% would see 1.7% cuts. It would also eliminate estate taxes, which currently only kick in for estates of $5.4 million and higher (less than 1% of the US population).

    Unsurprisingly, Trump's tax plan would heavily benefit... Trump and his family. It would reduce the pass-through rate on his business from 35% to 15%; it would lower his personal taxes by around 8-10%; it would completely eliminate any estate taxes he might have paid. Surprise!



    Actually, it's not quite the same. For example, pretty much all of Social Security goes into the hands of elderly Americans, who are taxed on it. They also spend it, which generates economic activity, and thus taxable activity. So if we cut Social Security by 10%, tax receipts are likely to drop slightly.

    The same if it's a program that employs people, like education. If we have to fire 500,000 teachers because we cut education spending by $70 billion (and yes, that could definitely happen) then that is 500,000 less people who we can tax, or might only tax at a lower rate if they can't find a comparable job, and again that's a big reduction in economic activity.

    Last but not least: The US has slashed taxes repeatedly since the 1980s. We've almost never raised taxes since the Reagan years. We keep cutting and cutting, and the debt keeps going up, and the cuts are never enough to satisfies Republicans or conservatives, for whom tax cuts are the solution to every problem -- even when they are destroying a state like Kansas.

    So go ahead, explain to us how we can slash $440 billion from federal spending, without spending the US economy into a tailspin. Then watch as Trump borrows trillions to pay for his tax cuts for the rich.
    I'm going to come back to this when I have time to respond point by point. But as a starter, I gave 2017 budget projections that I believe are more relevant than what you produced from 2015. We can probably agree that if you order all the spending from largest to smallest the list would look the same for both years but the amounts are different. But since you listed a 440B number (without a source) we need to be looking at 2017 numbers for relevance.
    "We need to ask some very tough questions of the senator from Illinois. It's not enough to be black, it's not enough to be articulate, it's not enough to be eloquent and a media darling. The only question will be how deaf an ear, or how blind an eye will people turn in order to turn a frog into a prince." -Eddie Huff

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    Re: It looks like Trump want to explode the deficit

    Quote Originally Posted by joG View Post
    He would find out how reckless it is, if short rates were to go back to three or four percent.
    Why or how do short rates go back to three/four percent?
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

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    Re: It looks like Trump want to explode the deficit

    Quote Originally Posted by Incisor View Post
    No, you're inferring that from my post because there's no other way your argument makes any sense. I never said the only way to grow the economy is to increase government spending. You are trying to put words in my mouth in order for you to make an ideological point. Here's the thing; in no world will the private sector ever be able to make up for the drop in demand from government spending cuts. No way. Not ever. What Conservatives argue for, whether they know it or not, is deflation. And deflation is the worst possible thing to happen to the economy.
    In both of these posts, you have intimated that any significant economic growth in our country comes as a result of government spending. Here is what you first said:

    No they don't, because spending reduction results in less spending, which means less revenue.
    In a discussion about government spending, you argue there that a reduction in government spending will yield less revenue for the government. Since government's revenue comes from the tax base which is intrinsically tied to GDP, the opposite would also have to be true: that an increase in government spending would yield MORE revenue for the government. My argument is that I think that is untrue. I think it is faulty. If I misread your post, feel free to rephrase.
    "We need to ask some very tough questions of the senator from Illinois. It's not enough to be black, it's not enough to be articulate, it's not enough to be eloquent and a media darling. The only question will be how deaf an ear, or how blind an eye will people turn in order to turn a frog into a prince." -Eddie Huff

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    Re: It looks like Trump want to explode the deficit

    Quote Originally Posted by kamikaze483 View Post
    I'm going to come back to this when I have time to respond point by point. But as a starter, I gave 2017 budget projections that I believe are more relevant than what you produced from 2015. We can probably agree that if you order all the spending from largest to smallest the list would look the same for both years but the amounts are different. But since you listed a 440B number (without a source) we need to be looking at 2017 numbers for relevance.
    OK. Let's look at Proposed 2017.



    $4.2 trillion total.

    The amounts didn't change much. E.g. DoE did not increase spending by 1,000%.

    The Untouchables (SS, Medicare, DoD, VA, interest) = 87% of the total. That's $3.76 trillion.

    Oh, and Trump wants to spend about $100 billion a year on infrastructure spending. And another $20-40 billion on a border wall that won't stop people crossing, because most unauthorized immigrants just fly over it.

    You would literally have to terminate 80% of all remaining spending just to close the Trump Tax Gap. That will STILL leave the US with a $600 billion deficit.

    As to the costs of the tax plan, $440bn is actually favorable to Trump. It could go as high as $6 trillion over 10 years.
    Donald Trump Tax Plan Would Cost Up To $5.9 Trillion : NPR

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    Re: It looks like Trump want to explode the deficit

    Quote Originally Posted by Visbek View Post
    OK. Let's look at Proposed 2017.



    $4.2 trillion total.

    The amounts didn't change much. E.g. DoE did not increase spending by 1,000%.

    The Untouchables (SS, Medicare, DoD, VA, interest) = 87% of the total. That's $3.76 trillion.

    Oh, and Trump wants to spend about $100 billion a year on infrastructure spending. And another $20-40 billion on a border wall that won't stop people crossing, because most unauthorized immigrants just fly over it.

    You would literally have to terminate 80% of all remaining spending just to close the Trump Tax Gap. That will STILL leave the US with a $600 billion deficit.

    As to the costs of the tax plan, $440bn is actually favorable to Trump. It could go as high as $6 trillion over 10 years.
    Donald Trump Tax Plan Would Cost Up To $5.9 Trillion : NPR
    Ok. So for the purpose of discussion lets use your figures reportedly from the Office of Management and Budget. To clear the air a bit, I was not a Trump supporter though I did vote for him- so I do look at his stuff critically and am not a "Trumper."

    And to clarify further, obviously everything we discuss about what Trump and a GOP Congress will do and what results those actions might have is totally theoretical.

    Point 1: I expect Trump to view the government as a business. He will want the country to "make a profit," which in the world of government equates to receipts in excess of expenditures. I expect that he also has no notion that this can be achieved in 1 year or two years. So, for Trump, a budget surplus that can be applied to reduce the national debt will be the medium range goal. In the meantime, a businessman would establish goal markers each year that would put the organization on track to achieve the desired medium and longer range results. Those goal markers would, in the short run, be progressive reductions in deficit spending. These are not facts, but they are how I perceive that Trump will likely be looking at the country's finances.

    Point 2: So if those are the goals, how would a businessman approach this? He would have a two fold approach: 1) increase revenue and 2) decrease expenditures, the combined effect of which, in a business, would widen the profit margin.

    Your first point was that Trump's plan would reduce revenue by $440B at minimum. I opened your article from NPR and saw that the actual source of the $5.9 trillion dollar number was research done by The Tax Foundation. Here is the actual report.

    Details and Analysis of the Donald Trump Tax Reform Plan, September 2016 | Tax Foundation

    Here are a few of the assumptions of the authors of the report, quoted from the report itself:

    The Taxes and Growth Model does not take into account the fiscal or economic effects of interest on debt. It also does not require budgets to balance over the long term, nor does it account for the potential macroeconomic or distributional effects of any changes to government spending that may accompany the tax plan. This plan is a large net tax cut, and therefore, the need to finance it is likely to have macroeconomic impacts of its own. These macroeconomic impacts could vary depending on how and if the tax cut is financed.
    Therefore, as to your first point about Trump's tax plan, there are a LOT of ways that Trump could offset this 440 Billion-6 Trillion projected reduction in revenue.
    "We need to ask some very tough questions of the senator from Illinois. It's not enough to be black, it's not enough to be articulate, it's not enough to be eloquent and a media darling. The only question will be how deaf an ear, or how blind an eye will people turn in order to turn a frog into a prince." -Eddie Huff

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    Re: It looks like Trump want to explode the deficit



    Quote Originally Posted by Brewdog View Post
    I don't care about Chicago. ISIS could nuke it and I would just drink a beer and laugh.
    Quote Originally Posted by MickeyW View Post
    I feel the same way. liberal government doing the same stupid behavior over and over again....the Pavlov's Dog of the nation.
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    The russians did the right thing..

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    Re: It looks like Trump want to explode the deficit

    Quote Originally Posted by kamikaze483 View Post
    Ok. So for the purpose of discussion lets use your figures reportedly from the Office of Management and Budget. To clear the air a bit, I was not a Trump supporter though I did vote for him- so I do look at his stuff critically and am not a "Trumper."

    And to clarify further, obviously everything we discuss about what Trump and a GOP Congress will do and what results those actions might have is totally theoretical.
    Yep. We are still talking about proposals.


    Point 1: I expect Trump to view the government as a business. He will want the country to "make a profit," which in the world of government equates to receipts in excess of expenditures. I expect that he also has no notion that this can be achieved in 1 year or two years. So, for Trump, a budget surplus that can be applied to reduce the national debt will be the medium range goal. In the meantime, a businessman would establish goal markers each year that would put the organization on track to achieve the desired medium and longer range results. Those goal markers would, in the short run, be progressive reductions in deficit spending. These are not facts, but they are how I perceive that Trump will likely be looking at the country's finances.
    I'd be here all day if I have to explain how a government is not like a business, and never should be, and how that would be an utter disaster.

    But, for the moment, let's accept that Trump wants to run a surplus.

    In that case, he is doing the exact opposite of what will produce that result. By cutting taxes, he will eviscerate revenues -- hence the Trump Tax Gap. He's explicitly said he wants to increase defense spending and spend on infrastructure, which makes the hole bigger. If he cuts Social Security or Medicare or VA spending for 2017, he and every Republican who supported him will be thrown out so fast that Trump Tower itself will spin for a week.

    He absolutely cannot cut interest spending, as that would be putting the US into default. Doing so would be a disaster that not only would increase interest rates (thus increasing the debt far more than he'd save with a default), it would basically cause the global economy to melt down. Seriously.

    If he didn't cut taxes at all, he'd still have to eliminate everything else to get any sort of surplus. No FAA, no highway spending at all, no infrastructure spending, no ICE / border control, no food inspections, no more FCC, no one watching nuclear power plants, no one fixing the grid, no one managing federal water supplies, zero federal education spending, every single national park closed.... That is not happening.

    By the way, this is pretty much what Kansas has done since around 2011. Under the spell of Laffer's supply side voodoo economics, they slashed taxes in an attempt to draw businesses into the state. Instead, what happened is that local businesses reorganized to take advantage of the tax cuts, few businesses moved in, there was minimal growth, and it's triggered years of revenue shortfalls and fiscal crises for the state. For some inexplicable reason they raised sales taxes, which is a regressive tax that occasionally drives Kansans across the border to shop. Kansas wasn't spending much to begin with, so they've had to raid transportation funds, cut education spending, delayed state pension fund payments, and sell off the state's tobacco settlement for $158 million.

    I'm pretty sure they've had to cut over $1 billion in spending since implementing the plan. And the short-term fixes are not working, because they keep having annual shortfalls.


    Here are a few of the assumptions of the authors of the report, quoted from the report itself....
    Yes, I'm aware of that assumption. That's why they included the "dynamic scoring," which is a highly optimistic scenario in which Trump's tax cut sparks massive growth.

    And even in that scenario, his plan results in anywhere from $3 billion to $4 billion in reduced tax revenues over 10 years.

    As the old saying goes: You can't cut your way to growth.

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    Re: It looks like Trump want to explode the deficit

    He wants a $1 trillion infrastructure plan and completely revamp our nuclear arsenal and probably add to it.

    Real deficit hawk he is.

    Long live Operation Valkyrie SST

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    Re: It looks like Trump want to explode the deficit

    Quote Originally Posted by Visbek View Post
    Yep. We are still talking about proposals.



    I'd be here all day if I have to explain how a government is not like a business, and never should be, and how that would be an utter disaster.

    But, for the moment, let's accept that Trump wants to run a surplus.

    In that case, he is doing the exact opposite of what will produce that result. By cutting taxes, he will eviscerate revenues -- hence the Trump Tax Gap. He's explicitly said he wants to increase defense spending and spend on infrastructure, which makes the hole bigger. If he cuts Social Security or Medicare or VA spending for 2017, he and every Republican who supported him will be thrown out so fast that Trump Tower itself will spin for a week.
    Eviscerate revenues? My earlier point was that, YES- assuming there are no macroeconomic changes (i.e. regulatory reduction to spur growth... laffer curve effect, etc.) that would actually RAISE GDP, producing additional revenue from the tax base even in the face of lower percentage tax rates on individuals and businesses) and also assuming that there will be no spending reductions along with the tax cuts, the revenue to the government would be significantly reduced. I do not think that those assumptions are appropriate ones in this case. But I can't prove that because we really don't know what he is actually going to do.

    Let's come back later to Medicare, SS and VA. You described these earlier as "untouchables." They aren't. These are the true entitlements and the countries obligations have to be met, but saying that they are untouchable suggests that they are efficient and effective and streamline and the expenses can't be significantly reduced. There is a TON that can be done here to save taxpayer dollars as, per your pie chart, this is the largest expense item in the budget

    Quote Originally Posted by Visbek View Post
    He absolutely cannot cut interest spending, as that would be putting the US into default. Doing so would be a disaster that not only would increase interest rates (thus increasing the debt far more than he'd save with a default), it would basically cause the global economy to melt down. Seriously.
    Here I agree with you 100%

    Quote Originally Posted by Visbek View Post
    If he didn't cut taxes at all, he'd still have to eliminate everything else to get any sort of surplus. No FAA, no highway spending at all, no infrastructure spending, no ICE / border control... no one fixing the grid, no one managing federal water supplies, zero federal education spending, every single national park closed.... That is not happening.
    The problem with this argument is that you ignore two things. 1) The inefficiencies and cost savings opportunities that are available with the entitlements which represents 28% of the total budget and 2) that revenue would remain static. This goes by to the dynamic effect macroeconomics that would occur based on regulatory policy, the laffer curve, and lots of other things. The GDP MIGHT grow even with the tax cuts, depending on the macroeconomic effects of Trump's policies.

    Quote Originally Posted by Visbek View Post
    By the way, this is pretty much what Kansas has done since around 2011. ....
    Here we may not ever agree, because I do believe that the Laffer curve has tremendous validity under certain economic circumstances and I venture to guess that your economic beliefs are more Keynesian, which I discount a lot of. I don't think it works the way a lot of people believe that it does. Lets look at Georgia, where I live. Perhaps that plan didn't work in Kansas, but it has worked here. There are HUGE tax breaks in GA for the film industry. We now house the largest movie studio outside of Hollywood and the economic development and the increase in the tax base with all this additional industry has been huge.

    Georgia film industry expert to speak at Warner Robins Convention and Visitors Bureau annual meeting | The Telegraph



    Quote Originally Posted by Visbek View Post
    Yes, I'm aware of that assumption. That's why they included the "dynamic scoring," which is a highly optimistic scenario in which Trump's tax cut sparks massive growth.

    And even in that scenario, his plan results in anywhere from $3 billion to $4 billion in reduced tax revenues over 10 years.

    As the old saying goes: You can't cut your way to growth.
    That old saying doesn't ring true with me, though many people believe that. That is Keynesian economics. I do believe in demand side economics. I believe in having a function (in our case the FED) to control the flow of money into and out of the market, but I don't believe that infusions directly from the government have a greater effect than removing barriers to growth from businesses, which is what you would probably refer to as trickle down. These are fundamental differences on which we are never likely to agree.
    "We need to ask some very tough questions of the senator from Illinois. It's not enough to be black, it's not enough to be articulate, it's not enough to be eloquent and a media darling. The only question will be how deaf an ear, or how blind an eye will people turn in order to turn a frog into a prince." -Eddie Huff

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    Re: It looks like Trump want to explode the deficit

    Quote Originally Posted by Sietske22 View Post
    He wants a $1 trillion infrastructure plan and completely revamp our nuclear arsenal and probably add to it.

    Real deficit hawk he is.

    Interesting post. What actually is the infrastructure Trump wants to invest in? Here is a quote from Trump's website regarding his infrastructure plans:

    Create thousands of new jobs in construction, steel manufacturing, and other sectors to build the transportation, water, telecommunications and energy infrastructure needed to enable new economic development in the U.S., all of which will generate new tax revenues.
    A targeted and smart infrastructure plan including those items (especially transportation and airport security improvements) are likely to pay for themselves through the economic development opportunities created by improved infrastructure. These improvements may make doing business easier and faster, allowing companies to develop and expand and therefore increasing the tax base over and above the trillion dollars spent on it. (One trillion over 10 years by the way). That's 1 trillion in new spending. The national debt when Bush left office was 10 trillion. Under Obama, that has increased to 19 million. And it is not clear if this 100 billion per year would be deficit spending. If they turn out to be revenue neutral, there is no impact on the debt.
    "We need to ask some very tough questions of the senator from Illinois. It's not enough to be black, it's not enough to be articulate, it's not enough to be eloquent and a media darling. The only question will be how deaf an ear, or how blind an eye will people turn in order to turn a frog into a prince." -Eddie Huff

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