Today In: "Fiscal Responsibility Party"!

[Shirley]

CBO expects deficit to grow more than projected, warns that tariff hikes could harm growth

Federal deficits are expected to swell to higher levels over the next decade than previously expected, the nonpartisan Congressional Budget Office said in a new report Wednesday.

The CBO also said that President Donald Trump’s tariffs are projected to shrink gross domestic product by 2020, and warned that further tariff hikes could stifle economic growth.

The U.S. budget deficit is expected to hit $960 billion in 2019, and average a whopping $1.2 trillion per year between 2020 and 2029, according to the CBO’s look ahead at the U.S. budget and economic outlook over the next decade.

[...]

[Shirley]

[Shirley]

Same Shampoo, Smaller Bottle: How Americans Will Feel the Pain of Trump’s Trade War

...In an internal report circulated to investors a few weeks ago, J.P. Morgan’s chief U.S. equity strategist Dubravko Lakos-Bujas estimated the annual household cost of the trade war was expected to increase from around $600 to $1,000 after the most recent round of tariffs.

“President Trump all along has said that it’s China that’s paying,” Bown said in an interview with FRONTLINE. “But no, it’s the American consumers that are ultimately going to be paying a big chunk of these tariffs in the form of higher prices.”

In the early days of the trade war, President Donald Trump announced on Twitter that “trade wars are good, and easy to win.” The statement was roundly ridiculed.

“The reality is that the consumer is going to pay more, but it might not be in a bright-line way, where this sweater now costs five dollars more,” said David French, senior vice president of government relations at the National Retail Federation. “It may be something like, that this six-ounce shampoo now has four-and-a-half ounces in it at the same price.”

Retailers don’t like increasing prices, French said, so they may first turn to other techniques to cut corners. As stores and manufacturers scramble to source similar products or ingredients through alternative supply chains, it’s possible quality may start to suffer. They may also have to lay off employees or reduce their hours.

It’s also likely that retailers may spread price increases across other items, as in the case of washing machines. The devices, which were subject to the 2018 tariffs, went up in price by about 12 percent, while prices of dryers — which weren’t taxed — spiked simultaneously.

[...]

[Geezer]

Washington (CNN Business)The US budget deficit widened to $1.067 trillion for the first 11 months of the fiscal year, an increase of 19% over this time last year, the Treasury Department reported Thursday.

[Shirley]

Washington (CNN Business)The US budget deficit widened to $1.067 trillion for the first 11 months of the fiscal year, an increase of 19% over this time last year, the Treasury Department reported Thursday.

Good thing the Chinese are paying us all those tens of billions in tariffs, and Mexico is paying for the wall.

[Deleted User 62]

Washington (CNN Business)The US budget deficit widened to $1.067 trillion for the first 11 months of the fiscal year, an increase of 19% over this time last year, the Treasury Department reported Thursday.

Good thing the Chinese are paying us all those tens of billions in tariffs, and Mexico is paying for the wall.

Could you imagine the fiscal hell if they weren't?

[Mjl]

Washington (CNN Business)The US budget deficit widened to $1.067 trillion for the first 11 months of the fiscal year, an increase of 19% over this time last year, the Treasury Department reported Thursday.

Good thing the Chinese are paying us all those tens of billions in tariffs, and Mexico is paying for the wall.

And that the tax cuts paid for themselves

[Shirley]

Anyone know if Mr. Art of the Deal has arranged for Mexico to pay for the farmer bailout, too? Or, will those receiving the funds pay the government back, like the automakers did?

[Shirley]

With little protest, GOP succumbs to Trump on spending

Before adjourning for the year on Thursday, the GOP-controlled Senate approved a $1.4 trillion funding package embraced by President Trump that will push deficits to record levels — with hardly a peep from many Republicans who have shut down the government over spending in the past.

...The mammoth spending deal provides another stark indication of the Republican Party’s near-total capitulation to Trump, who pays little mind to the goals of fiscal austerity that animated the GOP establishment and its tea party wing during years of dramatic fiscal standoffs with President Barack Obama.

...All told, the agreement could add more than $500 billion to the deficit over the next decade, according to the Committee for a Responsible Federal Budget. The deficit — or gap between federal government spending and tax revenue — is expected to eclipse $1 trillion this year...

[DCHawk1]

With little protest, GOP succumbs to Trump on spending

Before adjourning for the year on Thursday, the GOP-controlled Senate approved a $1.4 trillion funding package embraced by President Trump that will push deficits to record levels — with hardly a peep from many Republicans who have shut down the government over spending in the past.

...The mammoth spending deal provides another stark indication of the Republican Party’s near-total capitulation to Trump, who pays little mind to the goals of fiscal austerity that animated the GOP establishment and its tea party wing during years of dramatic fiscal standoffs with President Barack Obama.

...All told, the agreement could add more than $500 billion to the deficit over the next decade, according to the Committee for a Responsible Federal Budget. The deficit — or gap between federal government spending and tax revenue — is expected to eclipse $1 trillion this year...

Sigh.

[ousdahl]

Since when wuz the tea party ever about fiscal austerity?

[Mjl]

And not one candidate brought that up at the debate. IMO it is the #1 issue right now and nobody can do anything about it because Democracy.

[Shirley]

Sunday will mark the second birthday of President Trump’s signature legislative achievement: a nearly $2 trillion, deficit-financed tax cut weighted toward corporations and the wealthy. Unfortunately, on this birthday — like the first one — our toddler is way behind on nearly all its developmental milestones.

Americans were promised, for instance, that the tax cuts wouldn’t add a penny to federal deficits. In fact, they would more than pay for themselves, reducing government debt.

When virtually every single independent analyst predicted the opposite, Republicans attacked the refs.

But the refs were right.

In the fiscal year that recently ended, the deficit once again widened, to nearly $1 trillion. That is 26 percent higher than the deficit in fiscal 2018 and an astounding 48 percent higher relative to 2017, the last full year before the tax cuts were in place.

Yes, the deficit went up partly because spending did. But it has also increased because tax revenue isn’t coming in nearly as strongly as you’d expect during an economic expansion. In fact, thanks to Trump’s tax overhaul, corporate tax revenue is down more than a fifth since fiscal 2017. The Congressional Budget Office has predicted that the legislation overall will end up adding nearly $2 trillion in red ink over a decade.

As you may recall, the tax law’s boosters promised it would pay for itself by supercharging the economy. Just two weeks before signing the bill, Trump foresaw “6 percent growth.” If true, that would have been quite an achievement — roughly triple what independent forecasters predicted for the upcoming decade.

...in reality the economy is on track to grow slightly more than 2 percent this year. That’s respectable, sure, especially given the country’s demographic challenges. But it’s below the average during the postwar period (about 3 percent) and well below the rate when Bill Clinton was impeached (4.5 percent).

It’s also pretty close to that long-run trend predicted before these tax cuts.

Dig a little deeper, and the GOP’s pro-growth claims look even worse. The mechanism by which these tax cuts were supposed to goose growth, after all, was by stimulating business investment. But business investment has shrunk each of the past two quarters.

Apparently, whatever modest boost the tax cuts gave to investment was not sufficient to overcome the drag from Trump’s trade wars (which Trump also insists are helping the economy).

This illusory investment bonanza was also supposed to fuel higher wages. As the tax bill was working its way through Congress, Trump’s Council of Economic Advisers published an analysis promising that corporate tax cuts alone would “increase average household income in the United States by, very conservatively, $4,000 annually.”

Yet in the most recently available data, inflation-adjusted wages are rising at about the same year-over-year pace as they were in the couple of years before Trump took office.

Those big raises apparently got lost in the mail. Perhaps they were accidentally routed to fund record share buybacks.

[...]

[DCHawk1]

Sunday will mark the second birthday of President Trump’s signature legislative achievement: a nearly $2 trillion, deficit-financed tax cut weighted toward corporations and the wealthy. Unfortunately, on this birthday — like the first one — our toddler is way behind on nearly all its developmental milestones.

Americans were promised, for instance, that the tax cuts wouldn’t add a penny to federal deficits. In fact, they would more than pay for themselves, reducing government debt.

When virtually every single independent analyst predicted the opposite, Republicans attacked the refs.

But the refs were right.

In the fiscal year that recently ended, the deficit once again widened, to nearly $1 trillion. That is 26 percent higher than the deficit in fiscal 2018 and an astounding 48 percent higher relative to 2017, the last full year before the tax cuts were in place.

Yes, the deficit went up partly because spending did. But it has also increased because tax revenue isn’t coming in nearly as strongly as you’d expect during an economic expansion. In fact, thanks to Trump’s tax overhaul, corporate tax revenue is down more than a fifth since fiscal 2017. The Congressional Budget Office has predicted that the legislation overall will end up adding nearly $2 trillion in red ink over a decade.

As you may recall, the tax law’s boosters promised it would pay for itself by supercharging the economy. Just two weeks before signing the bill, Trump foresaw “6 percent growth.” If true, that would have been quite an achievement — roughly triple what independent forecasters predicted for the upcoming decade.

...in reality the economy is on track to grow slightly more than 2 percent this year. That’s respectable, sure, especially given the country’s demographic challenges. But it’s below the average during the postwar period (about 3 percent) and well below the rate when Bill Clinton was impeached (4.5 percent).

It’s also pretty close to that long-run trend predicted before these tax cuts.

Dig a little deeper, and the GOP’s pro-growth claims look even worse. The mechanism by which these tax cuts were supposed to goose growth, after all, was by stimulating business investment. But business investment has shrunk each of the past two quarters.

Apparently, whatever modest boost the tax cuts gave to investment was not sufficient to overcome the drag from Trump’s trade wars (which Trump also insists are helping the economy).

This illusory investment bonanza was also supposed to fuel higher wages. As the tax bill was working its way through Congress, Trump’s Council of Economic Advisers published an analysis promising that corporate tax cuts alone would “increase average household income in the United States by, very conservatively, $4,000 annually.”

Yet in the most recently available data, inflation-adjusted wages are rising at about the same year-over-year pace as they were in the couple of years before Trump took office.

Those big raises apparently got lost in the mail. Perhaps they were accidentally routed to fund record share buybacks.

[...]

I haven't read this whole op-ed -- mostly because I don't care. But the case made in the tweet is ABSOLUTELY, incontrovertibly, 100% true. The tax cut wasn't a disaster, necessarily, but it didn't do anything like what we were told it would do, and it ABSOLUTELY, incontrovertibly, 100% is benefiting a sub-population of the wealthy.

Needs fixing. Good thing we have the executive and Congressional leaders we need to get this done!

[Leawood]

I’m moving everything to gold and bonds tomorrow. I have a bad feeling.

[Deleted User 89]

hole in my mattress

[Mjl]

From the "both sides do it!" perspective - what's the equivalent of this? As in, the CBO and all other non-partisan economists saying that this wouldn't at all do what the Republicans were saying it would, and they just keep saying it, the economists of course end up being right, and nobody is held accountable.

Is "you can keep your doctor" it? Or no because that was true for the vast, vast, vast majority?

[DCHawk1]

No equivalent.

On the one hand, conservative politicians continue to misconstrue -- purposefully and unabashedly -- the impact of tax cuts. They do NOT pay for themselves. They know this. Even under the most optimistic presumptions of classic supply-side theory, tax cuts could only be expected to come close to recouping lost revenue in a vanishingly small number of situations (e.g. lowering the cap gains rate from an excessively high %-age).

On the other hand, this is a case of the unintended consequences of only thinking a policy through half-way. When you provide corporations with access to greater capital but provide them no incentive whatsoever to reinvest that capital, then corporations are NOT going to reinvest that capital. They are going to find something else to do with that capital, something the tax code DOES incentivize. In this case, we've incentivized returning capital to shareholders (primarily in the form of buybacks). This is fine, generally, but it has also permitted management and directors to make themselves very wealthy, since they are premier shareholders who reward themselves through stock grants and options.

[ousdahl]

POTDChawk1

[Shirley]