Listen to my Alternative Visions radio show of January 12, 2018 for my analysis of the Trump Tax Cuts’ true dimensions. How they amount to more than $5 trillion in cuts over the decade to corporations, businesses, investors and the wealthiest 1% households. How the budget deficit hit will be twice the official government $1.45 trillion.
To listen GO To:
http://prn.fm/alternative-visions-trumps-tax-cuts-5-trillion-not-1-5t-01-12-18/
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http://alternativevisions.podbean.com
SHOW ANNOUNCEMENT:
Dr. Rasmus starts the show with comments on last week’s announcement by WalMart raising its minimum wage and the Bloomberg News story about China considering cutting back buying US Treasury bonds. The rest of the show addresses the Trump Tax Cuts true extent of tax reduction on corporations, businesses, investors and the wealthiest 1% households. Jack debunks the notion that the US budget deficit hit from the tax cuts will equal only $1.46 trillion, the official government estimate, showing it is based on the absurd assumption of a 10 year annual average GDP growth rate of 3% and no recession occurring for another decade (or 19 years from the last). The deficit hit will be at least twice, or $3 trillion. Tax hikes on the middle class are about $2 trillion. So the tax cuts for corporate America et. al. therefore exceed $5 trillion. Rasmus then estimates the $5 trillion from the major provisions of the Act: $1.5t from corporate rate reduction, $1t from accelerated depreciation write-offs, $.5t from elimination of corporate AMT, and between $2-$2.5t for US multinational corporations from repatriation of $2.8t to $4.0t profits in offshore subsidiaries and tax havens and a future offshore tax rate reduction from 35% formerly, to 8%. Rasmus explains the cornerstones of the US global economic empire: the twin deficits (trade-budget), free trade (benefits share with local capitalist elites offshore), the dominance of the US dollar as global trading currency, and US domestic tax policy that ensure trillions of profits keep flowing to investors via dividends, stock buybacks, and capital gains.
Dr. Jack Rasmus @drjackrasmus
My guess is that within a year or 2, our deficits will be in the trillion dollar range.
mz
mikiesmoky@aol.com
China’s threat not to buy US Treasuries may be fake news but the underlying issues are very serious. The “threat” is linked to Trump’s endless tweets to nuke North Korea. Although Trump may be a clown to many, the Chinese, Japanese, and Koreans all too painfully remember that the only time nuclear weapons were used was against Asians, by Americans. There is substantial evidence that Nagasaki and Hiroshima were not directed at Japan’s collapsing military but at Joe Stalin. The message to Joe was if you step out of line we will reduce Moscow to radioactive rubble. Chomsky has long argued that the economic integration of Asia—-China, Japan & Korea, was and is a major threat to US hegemony. Thus, Trump’s tweets are directed at China. But China on the other hand may be saying, diplomatically or otherwise, that if you nuke North Korea, we will tank your economy. Which is probably the only threat—-money—-that Trump understands. Yes, China may be joined “at the hip” with the US but if the joint becomes radioactive China will lash back with economic butchery.
Excellent contribution once again, Ben. Thanks for the data. Re. the CBO estimate of the federal debt increase over the next decade, the data I saw was $9.5 trillion–and that partially accepts some of the phony growth forecasts by Trump and Ryan and, as you note, assumes no recession for another ten years which would make it nearly 20 years without recession, when the average historically between recessions is 8-9 years (which we’re now at). A majority of even mainstream economists predict recession in 2020. I am predicting 2019 and perhaps early 2019.
I’m certain the Federal debt will exceed $10trillion more by 2028 and, if recession, at least $2 trillion more. The Fed will have to raise rates even higher to fund this deficit, and perhaps even higher if the US trade war results in China, Japan, and others buying less Treasury bonds.
I can’t believe the economic stupidity of the economic and political elites in the US now determining policy–fiscal, monetary, trade…etc. The quality of their leadership compared to past US capitalists is astounding!
And you’re right about the revenue obtainable from a financial transactions tax. I’ve written about it with estimations several times in the past, including in 2016 when I challenged Democrats attaching Sanders’ call for a financial transaction tax (which he then mostly shelved talking about publicly). The Democrats leadership–the money bags that took over the party with Clinton (aka the DLC faction)–sabotaged Sanders anyway. The Democrats will never never propose such a tax. They’re too close to moneybag bankers like Goldman Sachs and others.
The CBO report shows the publicly owned debt to rise from 76% of GDP to 96% by 2028. Here’s the link, see page 4 :https://www.cbo.gov/system/files/115th-congress-2017-2018/reports/53651-outlook.pdf — an increase (from 76% to 96% of GDP) of 20% of $23 trillion (the average GDP for 2018 through 2028) is $4.6 trillion of additional debt. So new debt = $4.6 trillion. The page 4 chart shows a cumulative added debt of $12 trillion, but with growth of GDP the percent does not climb that high. They assume a 4.9% of GDP average annual deficit, that would be $1.1tr. average deficit for 10 years. And they assume no recession. ?? At the same time many Republicans are proposing a balanced budget amendment to the Constitution. My solution is to tax financial assets. I found a stat from the Tax Policy Center (Urban Institute) that said $488 billion was collected nationally in state and local property taxes. I calculate that the same tax rate applied to financial assets would generate $1.1 trillion a year. This is about equal to the amount of income taxes paid by about 80% of the lower-earning tax payers. I looked at the tax figures from the Joint Committee on Taxation. So, let the top-earning 24.4% with incomes over $100,000 pay income taxes and tax the wealth of the 1% at the real estate property tax rate, and get the same revenue. Maybe raise that wealth tax rate to 2 or 2.5%, and eliminate the deficit, and the debt, eventually. Wealth (net worth) has doubled since January 2009, from $48 trillion to $98.7 trillion (adjusted for inflation, an increase of 87%). With $50 trillion in new wealth in 9 years, it’s time for a tax on that wealth. The federal budget for 2018 is $4.1 trillion, by comparison. The Social Security Trust Fund is $2.9 trillion. It’s time for a wealth tax. My blog is http://benL8.blogspot.com, Economics Without Greed. Thank you JR.