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Thread: It looks like Trump want to explode the deficit

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    It looks like Trump want to explode the deficit

    So he's talking about cutting taxes AND a big infrastructure project.
    Now that probably won't come to pass but that sounds incredibly reckless.

    I know there is talk about dismantling the ACA but that isn't costing much right now

    I haven't seen any evidence about cuts anywhere else. What am I missing?
    Thankfully Mexico will pay for that wall or it would be even worse!

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    Re: It looks like Trump want to explode the deficit

    We have to wait and see if Mulvaney will have any real power. Either Trump just doesn't listen to him or that infrastructure idea is going down the drain.

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    Re: It looks like Trump want to explode the deficit

    Quote Originally Posted by KLATTU View Post
    So he's talking about cutting taxes AND a big infrastructure project.
    Now that probably won't come to pass but that sounds incredibly reckless.

    I know there is talk about dismantling the ACA but that isn't costing much right now

    I haven't seen any evidence about cuts anywhere else. What am I missing?
    Thankfully Mexico will pay for that wall or it would be even worse!
    He would find out how reckless it is, if short rates were to go back to three or four percent.

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    Re: It looks like Trump want to explode the deficit

    Quote Originally Posted by KLATTU View Post
    So he's talking about cutting taxes AND a big infrastructure project.
    Now that probably won't come to pass but that sounds incredibly reckless.

    I know there is talk about dismantling the ACA but that isn't costing much right now

    I haven't seen any evidence about cuts anywhere else. What am I missing?
    Thankfully Mexico will pay for that wall or it would be even worse!
    You're missing the part where you explain why increasing the deficit to spend on infrastructure will harm the economy. As always.
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    Re: It looks like Trump want to explode the deficit

    Quote Originally Posted by KLATTU View Post
    I haven't seen any evidence about cuts anywhere else. What am I missing?
    I think you are missing the following:

    1) The Department of Energy submitted a budget request for $32.5 billion dollars(https://energy.gov/sites/prod/files/...tinBrief_0.pdf)

    Trump has appointed Rick Perry who wishes to significantly dismantle the Department through consolidation of the critical components with other agencies and eliminating the rest. There's a lot of money right there.

    2) The request from the Department of Education was 69.4 BILLION DOLLARS. (http://www2.ed.gov/about/overview/bu.../17summary.pdf Betsy DeVos, the appointee to that department, supports eliminating the education department completely in favor of block grants provided to states, the administration of which would be consolidated with another department. There's some more money.

    3) Scott Pruitt has been assigned to the EPA, a person who has advocated the elimination of that department. The budget there is 8.267 billion (https://www.epa.gov/sites/production...tification.pdf)

    4) Trump's tax plan: Simplify the tax code to four brackets and eliminate deductions. This is the closest plan we have see to a flat tax, wherein each taxpayer simply pays the tax associated with their level of income, without all the deductions that complicate the process. This plan would do two things: a) it would offset tax cuts with fewer deductions, making it revenue neutral and b) it would provide the opportunity to make vast reductions at the IRS freeing up even more money in the budget.

    These were just a few of the things you are missing.

    Many on the left think the only way to shrink a deficit is to raise taxes. Spending reductions have the same effect.
    "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
    Many on the left think the only way to shrink a deficit is to raise taxes. Spending reductions have the same effect.
    No they don't, because spending reduction results in less spending, which means less revenue.

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    Re: It looks like Trump want to explode the deficit

    Quote Originally Posted by KLATTU View Post
    So he's talking about cutting taxes AND a big infrastructure project.
    Now that probably won't come to pass but that sounds incredibly reckless.

    I know there is talk about dismantling the ACA but that isn't costing much right now

    I haven't seen any evidence about cuts anywhere else. What am I missing?
    Thankfully Mexico will pay for that wall or it would be even worse!
    From the getgo during the campaign, I knew his budget didn't add up. No way.

    You can't cut revenues + increase expenditures, and balance an already upside-down budget. His claim is that the added deficits this will cause will be compensated by the revenues added by a further stimulated economy. At the least, this is T.B.D. But, I'm not sanguine about this at all. Because if so, then with 3+ decades of trickle-down Reaganomic tax cuts at the top - we should be awash in jobs & revenue! And it ain't so. It ain't so, because employment is a demand function, and all the tax cutting in the world will not increase employment unless there is increased demand for labor!

    So now, he's talking about a 5% import tariff. Sure that may bring in additional revenue, if he can get it past the GOP controlled Congress and Chamber of Commerce (highly doubtable). Perhaps he can do it with an Executice Order, but at what cost? Inflation at the best, and a trade war at the worst?

    Despite all the naysayers, this Obama economy has been slowly chugging along with no drama for years. Low inflation, low interest rates, falling unemployment, a recently increasing labor force participation, slowly rising wages, recovered housing market, and moderate sustained growth. It's been fine, as far as I can see. And last quarter was pretty warm too, with 3.5% growth rate leading to a Fed tightening.

    With the rising wages, falling unemployment, increased workforce participation, and especially the increasing growth rate and subsequent fed tightening, I'm actually becoming slightly concerned with the economy becoming inflated. We're a seem to be a bit away from that, but everywhere I go I see help-wanted signs (which of course is good, unless it leads to inflation).

    So my main concern is that Trump will upset the economy. It's been sustained, and moderate. I don't want to see it injured by weakening, or conversely put into an inflationary situation.

    And tariffs? Argh! Scares the hell out of me, with nearly everything we have being imported from China. They hold all our dollars too, and if they start getting nervous "good bye strong dollar and hello inflation"!

    TL;DR His budget don't add up - the economy's now reasonable enough & improving, I hope he don't wreck it!
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    Re: It looks like Trump want to explode the deficit

    Quote Originally Posted by kamikaze483 View Post
    I think you are missing the following:

    1) The Department of Energy submitted a budget request for $32.5 billion dollars(https://energy.gov/sites/prod/files/...tinBrief_0.pdf)

    Trump has appointed Rick Perry who wishes to significantly dismantle the Department through consolidation of the critical components with other agencies and eliminating the rest. There's a lot of money right there.

    2) The request from the Department of Education was 69.4 BILLION DOLLARS. (http://www2.ed.gov/about/overview/bu.../17summary.pdf Betsy DeVos, the appointee to that department, supports eliminating the education department completely in favor of block grants provided to states, the administration of which would be consolidated with another department. There's some more money.

    3) Scott Pruitt has been assigned to the EPA, a person who has advocated the elimination of that department. The budget there is 8.267 billion (https://www.epa.gov/sites/production...tification.pdf)

    4) Trump's tax plan: Simplify the tax code to four brackets and eliminate deductions. This is the closest plan we have see to a flat tax, wherein each taxpayer simply pays the tax associated with their level of income, without all the deductions that complicate the process. This plan would do two things: a) it would offset tax cuts with fewer deductions, making it revenue neutral and b) it would provide the opportunity to make vast reductions at the IRS freeing up even more money in the budget.

    These were just a few of the things you are missing.

    Many on the left think the only way to shrink a deficit is to raise taxes. Spending reductions have the same effect.
    re: #'s 1 - 4.

    Theory & campaign rhetoric. The actual occurrence (and proposed savings) is T.B.D.

    (I do believe some form of #4 may occur, but again its efficacy - like the above - is T.B.D,)
    "When fascism comes to America, it will be wrapped in the flag and carrying a cross." - Sinclair Lewis

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    Re: It looks like Trump want to explode the deficit

    Quote Originally Posted by KLATTU View Post
    So he's talking about cutting taxes AND a big infrastructure project.
    Now that probably won't come to pass but that sounds incredibly reckless.

    I know there is talk about dismantling the ACA but that isn't costing much right now

    I haven't seen any evidence about cuts anywhere else. What am I missing?
    Not much. Nothing that makes his calculations work any better.

    1) Cutting taxes can increase growth -- depending on how the cuts are designed. However, they will not be able to generate anywhere near enough of an increase in revenues to offset the lost tax revenues.

    2) Trump wants to push some of the costs of the infrastructure plan to the private sector -- e.g. you rebuild it, you bought it. The problem there is that most of the infrastructure we need is either way too expensive with too little return for the private sector (e.g. the NYC Gateway Project will probably cost $20 billion) or is projects that can't make any money for those private investors (e.g. that small bridge over a stream that needs to be replaced)

    3) Republicans seem to not care about deficits... as long as they have political power, and get to cut taxes for the wealthy.

    4) Trump claims that by starting trade wars with our trading partners, he will fix the trade balance and generate enough economic activity to offset the lost revenue. I've read the report, and the guy who wrote it is pretty much bat-**** insane.

    5) Conservative / Republican-run states like Kansas have tried this approach, slashing taxes and insisting the growth will eventually increase tax revenues. They're on year 5 now, and all it's done is create 5 years of fiscal crises for the state. (They are facing another shockig $346 billion shortfall: Kansas faces $346 budget deficit in current fiscal year | The Kansas City Star) They can't borrow, and the state spends very little, so they are raiding transportation taxes and slashing education budgets. It's a disaster.


    Thankfully Mexico will pay for that wall or it would be even worse!
    I hope that's a joke, because Mexico will not pay one thin dime for new fencing on the border.
    Last edited by Visbek; 12-22-16 at 12:37 PM.

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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.
    Exactly!

    Rates are already bumping-up w/o any external influence.

    And now he wants tariffs!

    But just wondering, Jo: How would you describe the current state of the U.S. economy?

    (I put down my thoughts in post #7)
    "When fascism comes to America, it will be wrapped in the flag and carrying a cross." - Sinclair Lewis

    The 10 Commandments of Logic - (Courtesy of Abbazorkzog Blog)

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