Tag: Trickle Down Economics

Saturday Soother – October 22, 2022

The Daily Escape:

Sunset, Cranberry bog, Yarmouth, MA – October 2022 photo by Jean Burns

Wrongo and Ms. Right are leaving on Sunday for a week in London. We’re arriving there just as the horse race for whoever will become the UK’s next prime minister will be clear to all. We’re expecting it to dominate the British news while we’re there.

On September 10, Wrongo said he wasn’t a fan of the now departed Liz Truss. He also said it was hard to believe her effort to revive the zombie concept that is trickle-down economics would go well with the UK already in a recession. She lasted just 44 days in office. Here’s a hot take from England:

Seems like a lot of turmoil for a small, low growth, densely populated country.

Truss’s sin was simple. Her economic plan was designed to satisfy libertarian think tanks and fans of Ronald Reagan and Margret Thatcher rather than to be something workable. Republicans in America do this kind of thing because we can, since the dollar is the world’s reserve currency. That means we can go almost as far into debt as we want without the markets panicking.

But the UK doesn’t have that luxury. So there’s a limit to how many favors they can do to their own fabulously rich citizens.

The policy that got Truss thrown out of No. 10 Downing Street was a copy of the foundational Republican US domestic agenda, as practiced from Reagan to Trump. That is, cut taxes for the rich and corporations, then hope it eventually creates tax revenue before it forces spending cuts.

And the British financial markets seem to actually care about the well-being of their country’s economy. However, American markets seem to care only about maximizing share prices and the after-tax compensation of top-level executives.

US Conservatives were delighted when Truss became PM. On September 23, Larry Kudlow said on FOX:

“The new British prime minister, Liz Truss, has laid out a terrific supply-side economic growth plan which looks a lot like the basic thrust of Kevin McCarthy’s Commitment to America plan.”

Needless to say, like Truss, Republicans are also willing to do unfunded tax cuts and call it a growth agenda. They’re also willing to fail to extend America’s borrowing limit, in order to make their agenda happen. The GOP would try to hold the Democratic president hostage in order to share some political responsibility for that action, never mind that an American debt default would also hold a gun to the global economy.

That isn’t possible in the country that brought you Maggie Thatcher. They toss out their incompetent supply-siders. The elephant in the room of the UK’s chaos and crisis is 2016’s Brexit. Even though Brexit has brought about low GDP growth, it remains a hard right political project rooted in a mythical British past.

Brexit’s Tory supporters didn’t care about the hard economic evidence that Brexit would be an act of economic self-harm. And the political divisions Brexit caused in the Tory party remain a problem as they now seek to unite behind another sacrificial PM. From David Frum:

“The problem is that you’re not eligible for the captaincy unless you agree it was a brilliant idea to scupper the ship in 2016 – and can convincingly act baffled why it has been sinking ever since,”

If America still has the ability to learn, it would be great if they studied this Tory disaster.

It would be nice if American voters would really punish Republicans when they fuck up and tank the economy again. And not just by electing a Democratic president, as they did in 1992 and 2008 when the economy went south.

OTOH, if anything can get Joe Biden reelected, it’s a Republican-led Congress in 2023 and 2024. They will screw things up just as thoroughly as Liz Truss has screwed the pooch in Britain. Then, we’ll have to see if they’ll ever be blamed for it.

Enough foreign politics for today. It’s time for our Saturday Soother, where we consider raking the leaves that are suddenly carpeting the Fields of Wrong but decide to put it off until we return.

Let’s start by brewing up a big mug of Costa Rica Cerro Dragon Geisha Honey ($12.00/4oz.) from RamsHead Coffee Roasters of Bozeman, Montana. It is said to be an invitingly complex Costa Rica honey-processed cup with notes of tropical fruit, sweet herbs, and crisp cocoa.

Now grab a seat by a south-facing window and listen to Khatia Buniatishvili play Schubert’s “Impromptu No. 3 in G-Flat Major, Op. 90, D. 899”. It isn’t played in front of a live audience, so no coughing, etc.

Schubert wrote eight solo piano pieces called impromptus. An impromptu is a musical work, usually for a solo instrument, in this case, piano. Schubert composed this work the year before he died:

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Sunday Cartoon Blogging – September 25, 2022

Liz Truss’s big bet since taking over as UK prime minister is to lower taxes just like St. Ronnie and Trump did in the US. Said Truss:

“Lower taxes lead to economic growth, there is no doubt in my mind about that,”

Trickle down will work this time, we promise, say UK Conservatives.

The tax reductions will require the UK government to borrow bigly to balance their budget. They hope that there will be so much growth that the UK will make it all back in future tax payments. Just like in the US, the lie is that these tax cuts will pay for themselves! Something that has never happened.

The UK Treasury said that the top personal rate will be cut from 45% to 40%. That will be more beneficial for the wealthy than the majority of British society. Shortly after the cuts were announced on Friday, the pound sank almost 2.6% to its lowest level against the US dollar since 1985. Wrongo hates to quote Larry Summers, but he said this:

“The UK is behaving a bit like an emerging market turning itself into a submerging market…it is pursuing the worst macroeconomic policies of any major country in a long time.”

Bloomberg’s Mark Gongloff tweeted:

“Liz Truss just announced the UK’s biggest giveaway to the rich since 1972, which resulted in an IMF bailout. Now the pound is crashing in the middle of the worst inflation since the 70s. Bold strategy….Let’s see if it pays off.”

It’s hard to believe this will go well with the UK already in a recession. On to cartoons.

Russian men are facing tough choices:

Ukrainian ballot:

Reserves get their orders:

Trump’s building something new in NY:

He says witch hunt a LOT:

The coming election may surprise some people:

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Monday Wake Up Call – April 3, 2022

The Daily Escape:

Makapu’u Lookout, Oahu, HI – January 2022 photo by TwoBongs on Tour

Let’s talk about the “Wealth Effect”. It’s the notion that when households become richer as a result of a rise in asset values, such as stock prices or home values, they spend more and stimulate the broader economy. The idea is that consumers feel more financially secure and confident about their wealth, even if their income and costs are the same as before.

This concept has been endorsed by two recent former Fed Chairs, Janet Yellen and Ben Bernanke. It’s simply another term for trickle-down economics.

In 2019, after nearly 11 years of the Fed’s policy of adding money to the economy, by “Quantitative Easing” (QE), the National Bureau of Economic Research (NBER) did a study on the Wealth Effect, to quantify how much richer the rich would have had to become to have x% impact on the overall economy, and how long this boost lasts before it fades.

They found that QE makes 10% of the population a lot richer, producing immense concentration of wealth at the top 1%, and mind-boggling concentrations of wealth at the billionaire level. After which, there were some very muted trickle-down effects on the economy.

Wolf Richter used the Fed’s wealth distribution data to create a chart he calls the Wealth Effect Monitor. The Fed divides the US population into four groups by wealth: The “Top 1%,” the “2% to 9%,” the “next 40%,” and the “bottom 50%” to report on wealth.

Richter divides this data by the number of households in each category, to obtain the average wealth per household in each category. Here’s his chart for the past 21 years:

Note the immense increase in the wealth for the 1% households after the Fed’s latest QE effort that began in March 2020. They have been the primary beneficiaries of the Fed’s policies since 2020.

True to the Wealth Effect’s concepts, the Fed’s policies helped to inflate asset prices, and thus only asset owners benefited: The more assets held, the stronger the benefit. Here’s Richter’s analysis of average wealth (assets minus debts) per household, by category in the 4th quarter, 2021:

  • “Top “1%” household (red): $36.2 million
  • The “2% to 9%” household (yellow): $4.68 million
  • The “next 40%” household (purple): $775,000
  • The “bottom 50%” household (green): $59,000

The Fed doesn’t provide separate data on the 0.01% and the Billionaire class, but they were the biggest beneficiaries of the Fed’s monetary policies. The top 30 US billionaires have a total wealth of $2.12 trillion, sliced into 30 slices for a wealth of $70.8 billion per billionaire, according to the Bloomberg Billionaires Index.

Compare that to the bottom half of the US population (the “bottom 50%”) who have a combined wealth of just $3.7 trillion, divided into 165 million slices for each individual. The way percentages work, you would think that households in the bottom 50% would have the largest percentage gains since they start from a lower base. But because they own fewer assets, when adjusted by population, they stay mired in last place. From Richter:

“When the wealth of the bottom 50% increases by 5%, they gain about $3,000. And when the average wealth of the top 30 billionaires increases by 5%, they on average gain $3,500,000,000.”

More from Richter:

“In 1990, the wealth disparity between the average top 1% household and the average “bottom 50%” household was $5 million.”

Since March 2020, the wealth disparity between the average top 1% household and the average bottom 50% household has grown by $11.2 million per household.

The bottom 50% of Americans spend all or nearly all their income on housing, transportation, food, healthcare, etc. They hold few stocks and very little real estate. Add that to our current round of inflation, and in order to get by, the bottom 50% are spending nearly all of their income.

They’re the ones paying for the Fed’s policy of enriching asset holders.

We know that average wages and salaries have gone up a lot. Ben Casselman of the NYT says that the wages of low-wage workers have gone up by nearly 12% in the last year; but remember, that’s on a low base. So the worker bees in our economy have a long way to go, while the richest asset holders got vastly wealthier, thanks to the Fed’s policies.

Time to wake up America! The phony trickle-down theory has amazing persistence among US policy makers, despite being amazingly damaging to most of us.

To help you wake up watch an American icon, Taj Mahal perform “Good Morning Ms. Brown” in 2014 while riding in a mule-drawn carriage in the French Quarter in New Orleans:

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Fed Study Shows Rising Financial Desperation in Poorer Zip Codes

The Daily Escape:

Aliso Creek State Beach, near Laguna Beach, CA – 2019 photo via

Simon Johnson observes at Project Syndicate: (emphasis by Wrongo)

“To defeat populism requires coming to grips with a fundamental reality: bad economic policies no longer necessarily result in a government losing power. In fact, it is now entirely possible that irresponsible populists may actually strengthen their chances of being re-elected by making wilder and more impossible promises – and by causing more economic damage.”

Johnson, former chief economist for the IMF, believes that structural economic factors, including automation, trade, and the financial crisis have left many people feeling neglected by those who control economic policy.

When politicians back policies that add economic uncertainty, or that discourage investment, we see lower economic growth, and fewer good jobs. Ordinarily, dissatisfaction shows up at the ballot box, holding that government accountable at election time.

But this is no longer reliable, because politicians wiggle out of the trap by saying that the media are biased, that the experts are wrong, and that the facts are not the facts. And the angrier people become, the easier it is to persuade them to accept that no one is to blame, and vote again for those who helped to cause their economic distress in the first place.

A new study by the St. Louis Federal Reserve Bank examined American financial distress by Zip Codes. It sheds light on a topic we regularly debate: Why are there so many signs of distress in a supposedly robust economy? And this time, will politicians be held to account?

Since 2015, the lowest income households have been taking on more debt. Their wealth has become even more concentrated in home ownership. The level of distress in lower-income households has also increased, despite the official story of increasing prosperity.

The study drills into Zip-Code level data to show that even adjacent Zips show striking divergence in wealth accumulation (or erosion). For instance, they looked at the percentage of people within a Zip Code that have reached at least 80%t of their credit limit on their bank-issued credit cards.

That is believed to be a good proxy for financial distress.

Before the 2008 crisis, analysts missed the rising levels of household debt. That debt was often funded by borrowing against home equity. Rapidly falling home prices after 2008 showed how fragile many of those borrowers were.

The contrast between national averages and Zip Code households is stark. Looking at averages, the recovery appears to be quite broad.  But zooming in by Zip Code showed a bifurcated economy still suffering from the 2008 crisis. The researchers found that looking at the value of assets and reliance on debt shows a clearer picture: (emphasis by Wrongo)

“…the poor and high-leverage ZIP codes that are more affected by wealth shocks may still be vulnerable. What’s more, trends in less affluent groups are masked in nationally aggregated statistics by groups with more wealth.”

“May be vulnerable”? They will certainly be vulnerable when the next downturn begins.

Since 2015, debt and financial distress have been rising the fastest in these low-wealth areas, while it rose the slowest since 2015 for the wealthiest households. We already see softness in economic indicators like retail sales, home sales and housing construction. It’s reasonable to expect that the next recession isn’t far away.

We’ve had a long economic recovery, but its gains were not distributed as broadly as they had been in previous downturns. What we got was an uneven economic recovery, with most gains going to an increasingly narrow group.

More people are left out of this supposedly robust economy than the politicians and most economists think. The Fed study shows that the averages conceal plenty of pain. Maybe this isn’t an earthshaking idea. We all see income and wealth disparities in our communities, it’s not that unusual. But the fact that the differences are now extreme enough to show up in ZIP Code level data seem significant, and worrying.

So, will politicians pay any price in 2020 for the continuing maldistribution of gains since the 2008 recession? Or, will politicians tell the people that no one’s to blame, that the Laffer curve will surely work this time?

The miracle of modern Republican economic theory allows for both the Laffer curve, and “pulling oneself up by the bootstraps” not only to be truths, but to be the desired outcome.

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Monday Wake Up Call – June 3, 2019

The Daily Escape:

Mont Rotui, Moorea, French Polynesia – 2019 iPhone photo by mystackhasoverflowed

Time to wake up America! Donald Trump has proven once again that he has no understanding of economics. From the Wall Street Journal:

“President Trump will award the Presidential Medal of Freedom to economist Arthur Laffer, one of the pioneers of the idea that tax cuts can boost government revenue, the White House said Friday.

Mr. Laffer is one of the founding theorists of supply-side economics, a school of public economics that rose to prominence during the Reagan administration and returned to the fore in the run-up to the 2017 package of tax cuts that Mr. Trump signed into law.

The White House described Mr. Laffer as “one of the most influential economists in American history,” and said his “public service and contributions to economic policy have helped spur prosperity for our Nation.”

Laffer is famous for his drawing his Laffer curve on a napkin, illustrating his idea to Dick Cheney and Donald Rumsfeld at a dinner in 1974. His curve showed that increases in tax rates will eventually cause government tax revenue to decrease, because people will begin to work and earn less. This was then taken to its theoretical limit, saying that tax cuts could pay for themselves by spurring economic growth.

The WSJ calls Laffer “one of the pioneers of the idea that tax cuts can boost government revenue”. Isn’t it weird that the fact that his “idea” has been completely disproven in the real world, doesn’t seem to matter?

Conservative economics is not a branch of economics, it’s a branch of Conservatism.

The Laffer curve was successful at its real purpose, providing a basis to funnel more money to corporations and the rich. Republicans traffic in propaganda, not knowledge.

Last year, Laffer co-wrote a book titled “Trumponomics: Inside the America First Plan to Revive Our Economy.” Laffer’s co-author was Stephen Moore, another conservative who styles himself as an economist. Earlier this year Trump nominated Moore to serve on the Federal Reserve Board of Governors. Moore had to withdraw, amid bipartisan opposition from Senators.

Laffer was the advisor behind the notorious Kansas state income tax plan that ruined the state’s finances. In 2012, Then-Kansas Gov. Sam Brownback passed a package of tax cuts based on Laffer’s ideas. The result was that Kansas lagged behind neighboring states with similar economies in nearly every major category: job creation, unemployment, gross domestic product, and taxes collected.

In 2017, the Kansas legislature repealed the Laffer/Brownback tax cuts. After the repeal, state taxes were boosted by $1.2 billion.

Laffer has spent years preaching his idea that almost any tax cut for businesses and the rich could potentially pay for itself. That idea has become the bankrupt conceptual backbone of the Republican Party’s entire economic theology.

For the 2017 Trump tax cuts, his administration also borrowed Laffer’s idea. Treasury Secretary Steven Mnuchin and National Economic Council Director Larry Kudlow, have repeatedly claimed that the Trump tax cuts will pay for themselves. But, a new report finds that the tax cuts were responsible for less than five percent of the growth that is needed to offset the revenue loss from the Trump tax cuts.

We must point out here that Larry Kudlow does not hold a degree in economics. He was once fired from an investment bank for doing cocaine. Imagine just how much cocaine you’d have to do to get fired on Wall Street in the 1980s.

Trump’s now added the Presidential Medal of Freedom to the American traditions he’s debasing. Other economists awarded the Medal of Freedom include Gary Becker, Milton Friedman, John Kenneth Galbraith and Robert Solow. Laffer can’t carry their briefcases.

There may be no man alive who has done more damage to America’s understanding of taxes and their effect on economic growth than Art Laffer.

Evidently, Trump is grading him on a curve.

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The Long Battle to Reform Capitalism

The Daily Escape:

Poppies in bloom, Southern California – March 2019 photo by Leslie Simis. This annual explosion of color is enhanced this year by extraordinary rainfall

You can call the period in US history from FDR to Nixon “America’s social democratic era”.  A collection of politicians had hammered out the policies and regulations that became FDR’s New Deal in America. It became a period of post-war prosperity during which inequality narrowed, economic growth boomed, and optimism reigned.

The characteristics these policies shared were reciprocity and generosity. For the citizen, there was some form of social support that grew from Social Security in 1935 through the 1960’s with Medicare and Medicaid. In 1970, Nixon implemented the Environmental Protection Agency. There was also a willingness to care for the disadvantaged. Our Marshall Plan and our commitment to foreign aid are both great examples. The success of social democracy in the postwar era weakened the market’s power to act independently within our society.

But then things changed. Our government’s role became a helpmate for corporations, financial institutions, and their lobbyists. The result has been growing inequality between suppliers of capital and the suppliers of labor, even of highly educated labor, like teachers and professors. Economic growth slowed, and we have developed a permanent underclass that seems impervious to repair.

Yesterday, we talked about Economic Dignity, and how focusing on it might help solve inequality. Today’s market economics is partly based on the ideas of Jeremy Bentham and John Stuart Mill, economists who viewed human beings as supreme over the state. As individuals who would make rational decisions to maximize utility. It turned out to be incomplete, since it left out key dimensions of human psychology, like the individual’s need for social esteem or respect. In other words, they ignored economic dignity.

Couple that with Milton Friedman’s idea, that the mission of the firm is to solely maximize profits, that any responsibilities to its employees, consumers, or society should be ignored. Profit maximization at all costs has done great damage to American society. And conservatives and free marketers have married the ideas of these three economists, making the removal of government from markets their primary mission.

But what they call “the market” is really a bundle of regulatory (and non-regulatory) rules by which market activities operate. The mix of free and regulated market activities can be changed, even though capitalists say we shouldn’t change the rules, because it adds uncertainty to markets.

Just because in baseball, three strikes and the batter is out, or with four balls, there is a free pass to first base, doesn’t mean it has to be that way. It could be five strikes and you’re out, or three balls is a walk.

As an example, we tend to fight unemployment with “trickle-down” solutions. That means we bribe the rich and corporations to hire more. But, the bribe is always bigger than the payrolls that are generated.

We could fight unemployment with fiscal policy, such as infrastructure spending by the government. It would employ many, possibly hundreds of thousands, and there would be no need to pay any entity more than was warranted by the tasks at hand.

America needs a return to what economist Paul Collier calls the “cornerstones of belonging”— family, workplace, and nation, all of which are threatened by today’s market driven capitalism. That means capitalism has to return to the ethics of the New Deal. Joseph Stiglitz, Nobel laureate in economics, says: (parenthesis and emphasis by Wrongo)

Over the past half-century, Chicago School economists, (including Milton Friedman) acting on the assumption that markets are generally competitive, narrowed the focus of competition policy solely to economic efficiency, rather than broader concerns about power and inequality. The irony is that this assumption became dominant in policymaking circles just when economists were beginning to reveal its flaws.

Stiglitz says we need the same resolve fighting for an increase in corporate competition that the corporations have demonstrated in their fight against it. We’ll need new policies to manage capitalism.

It means higher taxes on profits.

It means paying workers more.

It means rebuilding public assets like roads.

It means teaching students to be both technically capable, and grounded in their values.

Speaking of needing to teach our students, if you think we’re not in a rigged game, think about one “USC student” who is part of the admissions fraud scandal, Olivia Jade Giannulli. She was on the yacht of the Chairman of USC’s Board of Trustees when she heard about it.

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Sunday Cartoon Blogging – December 10, 2017

(There will not be a Monday Wake Up Call this week. Blogging will resume on Tuesday 12/12)

Jerusalem, Roy Moore, Franken, Bears Ears. Quite the week, but let’s start with this: Walmart pulls controversial t-shirt that encourages violence toward journalists:

The t-shirt’s message is: “Rope. Tree. Journalist. SOME ASSEMBLY REQUIRED”. Walmart has now pulled it from its website. The shirt was also sold in the online store of a company called Teespring, who was the third-party seller for Walmart. The shirt was circulating well before that, though, as Jezebel found a tweet referencing the shirt from April of 2009.

Teespring allows users to design their own t-shirts and other merchandise. They sold a shirt with the words “Black women are trash”, and one that said “Eat Sleep Rape Repeat”. Wrongo fears that there will be no recovery from our slide to the lower reaches of hell.

Trump gave the Middle East a sign. Now he wrongly expects peace will break out:

Trump has success getting the world to change the subject:

Franken’s out. In with the new (giant) asshole:

The logical outcome of the religious freedom argument:

Waiting for the trickle down is like waiting for Godot:

 

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Monday Wake Up Call – November 20, 2017

The Daily Escape:

El Ateneo Grand Splendid bookstore in Buenos Aires, which has more bookstores per person than any other city in the world – photo by Alamy

One of the arguments that Republicans use to support their tax bill is that it will unleash investment, but the data say otherwise. Currently, most US economic sectors are operating far below maximum capacity utilization. Here is a Federal Reserve chart showing current industrial utilization/capacity:

The left axis shows the percentage of utilization across both durable and non-durable goods. The US is currently tracking at about 75% utilization, which is about as low as it gets in non-recession times. What that implies is corporations have no need to invest in additional capacity in the US. They have plenty of spare capacity to meet any spike in demand, should it arise. So, today, it makes far more sense for companies to bring unused capacity back online rather than to buy new equipment.

So, what would corporations do with a windfall tax cut that they didn’t need to invest in the US? Won’t they just invest it outside the US in order to keep expanding their global markets? There would be no increased revenues or jobs from investment at home, so why would they keep the windfall at home? That wouldn’t be smart, and those guys and their tax lawyers are pretty smart.

What corporations might do with increased after-tax income:

  • Buy back more of their own stock
  • Update their factories in Mexico, China or elsewhere around the world
  • Invest in companies working on artificial intelligence or robots with human-like dexterity. You know, something on the bleeding edge!

The corporates will ask the question: What do Americans need that they do not have? More self-driving cars?

American consumers simply do not earn enough money to purchase the products that are already available. Total household debt now exceeds the previous peak in the 3rd quarter of 2008. You know, the peak driven by the housing bubble and the accompanying refinancing of debt.

So if a corporation does come up with some product for which there is a genuine need, who will have the money to buy it? What products (or services) would Americans stop purchasing so that they could use their borrowed money to buy this new product?

And given that the tax cuts will not accrue to anyone who makes under $75k the way the GOP has designed their tax cuts, there won’t be any more money in the pockets of the middle class to add jobs and GDP growth here at home. Here is a chart from David Leonhardt in the Sunday NYT, showing what everyone who will gain from their discredited trickle down tax plan, once it is fully implemented:

Notice that it doesn’t go to the people who really need it.

The Republican’s belief in tax cuts and supply side economics is a cult religion. They just don’t care about evidence.

So, time to wake up! We have broken subways, broken bridges, and stagnant wages. Why not spend the money on infrastructure instead of giving it away in tax cuts to be used offshore?

That might actually do some good. This could be the final opportunity for the Senate (the House is a lost cause) to do the right thing and actually represent the interests of the middle class in the US. It is way past time for this 100-member body to set aside the petty complaints of their corporate benefactors and the rich, and offer something real to the ordinary tax-paying citizens who try to pay their bills and put a little aside for retirement.

Time to wake up Senators! We need you to escape your cognitive dissonance, and think about what you are doing. To help you wake up, here is U2 with “Stuck in a Moment” from their 2000 album, “All That You Can’t Leave Behind”:

Takeaway Lyric:

You’ve got to get yourself together

You’ve got stuck in a moment

And now you can’t get out of it

Don’t say that later will be better

Now you’re stuck in a moment

And you can’t get out of it

Those who read the Wrongologist in email can view the video here.

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Saturday Soother – November 18, 2017

The Daily Escape:

Sunrise at Mesa Arch, Canyonlands National Park, Utah

It’s Saturday, and the dominant issue should be the Republicans’ efforts to enact a tax cut, now that the House has passed its version of the legislation. The plan distills Republican economic philosophy perfectly: Take lots of money and give it to the people at the top, while pretending that doing so will help everyone else.

Speaker Paul Ryan said it’s a middle-class tax cut:

This plan is for the middle-class families in this country who deserve a break. It is for the families who are out there living paycheck to paycheck, who just keep getting squeezed… The Tax Cut and Jobs Act will deliver real relief for people in the middle, people who are also striving to get there.

David Leonhardt offered this view:

Amazingly, the bill…would increase taxes, on net, for families that have at least one child and make less than $100,000. That conclusion comes from a rigorous independent analysis of the bill, released yesterday afternoon by the Tax Policy Center.

The elevator version of the Republican plan is to add $1.5 trillion to the deficit in order to give permanent tax cuts to corporations. Since that sounds terrible, the GOP proposes holding down the bill’s total cost by raising taxes on middle-class and poor families. More from Leonhardt:

A big reason is that personal exemptions — the $4,000 in income, per person, that families can write off — would disappear. The bill would increase standard deductions that all taxpayers can take, but the increase isn’t large enough for many families to make up for the disappearance of per-person exemptions…

OTOH, households making at least $5 million would receive an ANNUAL tax cut of almost $300,000 once the bill is fully phased in.

The cynicism is spectacular: Congressional leaders want to raise taxes on most of the middle and lower classes, while claiming that the bill does just the opposite. Senate Leader Mitch McConnell, said:

At the end of the day, nobody in the middle class is going to get a tax increase.

Worse, if the GOP tax bill becomes law, and we look a few moves ahead, we know that Republicans will once again pose as deficit hawks and look to gut Medicare and Medicaid.

On our backs. Happy Thanksgiving!

Our Republican friends plan to fund a permanent tax cut for their beloved constituents, American corporations. For decades Americans have been against increased taxes. We bought the idea that cutting taxes would give people an incentive to work harder and thus make the American economy flourish. The GOP tells us this as they try to roll back corporate taxes, as they plan to eliminate the estate tax, and as they continually work to prevent the government from taking action against offshore tax havens.

We endure potholes, we live in fear of collapsing highway bridges because our leaders want their special constituents to have more. Our kids sit in underfunded schools so that a handful of wealthy individuals can sit in gated communities or on their own private beaches.

Think of what we might do with the sums we will lose to this GOP “tax reform” over our lifetimes. Think about the crumbling infrastructure that could be fixed. Think of all the young people saddled with student-loan debt: We could make that unnecessary, rather than give more to corporations by denying students the deductibility of the interest on their loans. Think of the drug-addicted people all over America: With these tax cuts, we will never help them.

Until the words “discredited trickle down tax plan” come out of the mouth of every single Democratic politician, we won’t have a great chance of killing the Republican’s tax plan.

Enough! It’s Saturday, and time to let the mind wander. So grab a Vente cup of Union’s Hand-Roasted Coffee, Brewer’s El Topacio Microlot, El Salvador (just £8 for 200g). Now sit near a big window and watch the last days of fall, while listening to Beethoven’s “Violin Concerto in D major Op, 61” here performed in 1959 by violinist David Oistrakh with the French National Radio Orchestra, directed by Andre Cluytens.

Listen to the sound of a Stradivarius played by one of the giants on 20th Century violin:

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