Will USA President Trump and Republican party's tax cuts proposal grow the economy, raise wages and create jobs in the USA?
Given below are some views of mine about the above question and related matters.
Trump rather openly views himself as a 'killer' businessman who has hired 'killer' business guys to bring good paying jobs to manufacturing heartlands of the USA which are in steep economic decline. He did not run on a 'nice guy' ticket. He ran on a tough guy who will deliver good paying jobs ticket. And WON b'cos enough people who were hurting on jobs front in the USA believed his claims.
Right now I think it is too early to judge whether he is delivering on those jobs claims. He has completely rattled and shaken up the international trade agreement world by withdrawing USA from at least one of these multi-lateral agreements, and has publicly said that he will do bilateral deals with individual nations.
I think it will take a year or two more for the international trade deals situ to settle down and to know whether Trump will get "win"s on this for the USA or not.
I think that is the biggest thing of the Trump presidency for USA as well as the rest of the world, as the impact can be big and decades long, whether positive, negative or neutral impact. [By neutral impact I mean no big loss or gain for the USA but which could still involve a lot of change in how trade is done with the USA.]
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I think Trump proudly claims that as a businessman he can run the country better than politicians who are experienced at government. He attacked the political establishment, both Democratic and Republican, in his campaign, in a manner that I think nobody thought any serious USA presidential candidate would ever do! And he got away with it!
For people like me in India, it is unthinkable that a person with zero elected representative experience or government service experience, can become the head of state with extraordinary powers (USA president post). But that's what Trump did by winning the 2016 USA presidential elections!
Many commentators have said it is a unique presidency in this regard. We need to see how he, his cabinet and USA Congress with Republicans having majority in both the House and Senate, can deliver on his and the Republican agendas.
Some Democratic party supporters and elected representatives, are very, very worried about Trump's and the Republican party's plans for USA healthcare, taxes, education etc. fields. But Republican supporting media outlets present a different story. It is quite confusing for a neutral third-party onlooker like me to understand.
------
I am exposed to the views of USA conservative think tanks and the conservative movement which formed the core base and core thinking of the Republican party prior to the Trump phenomenon. The 2016 Republican primary for president showed that candidates like Ted Cruz and Marco Rubio clearly had this pro-business, anti-regulation and very small government model as part of their campaign platform.
I play a politically neutral observer role in these comments and posts I put up related to USA politics. My interest comes from a goal of trying to understanding the political environment within which top-level policies in areas like business & economy (including the vital aspect of jobs), education and healthcare, get adopted and implemented.
I do not know enough to take a stand on whether Republican conservative policies are good for USA people in general (including the poor and the middle class) or not. I am still observing how this plays out.
One thing that has emerged from whatever I read and viewed about the recent past policy making efforts of Republicans in USA Congress in healthcare (which did not pass through Congress) is that there seems to be a lack of clear understanding of what they want to do. They all wanted to repeal and replace Obamacare and that was a big part of their campaign platform. But they did not seem to know what exactly they should replace it with!!! That was a very scary and terrifying thing for me to observe. I mean, lives of significant number of poor and lower middle class USA citizens were on the line on this healthcare thing. I certainly did not get the confidence that the Republicans had a clear idea of what they were proposing and how that will help improve USA healthcare and health insurance system.
I very much hope that USA Congress does better on the tax policy front.
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I think one of the major impacts of Republican policies is privatization of what would typically be viewed as government run agencies in the materially advanced democratic countries of Western Europe. Privatized prison systems, for example. I find that very strange as I wonder how privately run prisons will follow government rules and be accountable to the government. But I have not studied these issues about private prisons and so simply don't know much about them.
-----
Now I should also say this. My view is that USA must put its financial and economic house in order. The 2007-08 USA financial crisis which became a global crisis, was utterly terrifying. That the USA and the world came out of that crisis without a major disaster like the 1930s Great Depression (which created a horrible economic crisis in Germany which contributed to the rise of Hitler and the Nazis, and then the worst war in human history so far - World War II), was, IMHO, a major achievement of all the people who worked to stabilize the system.
So if there are financial challenges to fund welfare schemes due to which Republican policy is to reduce expenses of welfare schemes thereby balancing the budget, then I would view such policies as tough but necessary austerity measures to put the USA in good economic and financial state. But then austerity is something that should not be faced only by the poor and lower middle class. It seems to me that the upper middle class and the rich should also face it via a higher burden of taxes to help the country out. I think this is what most materially developed Western European democratic countries do.
In this Facebook video, https://www.facebook.com/DonaldTrump/videos/10160190086585725/, 1 min 25 secs, dated (Indian Standard Time) 22-Nov-2017, President Trump says, "We're going to give the American people a huge tax cut for Christmas." Some other quotes from this video: "Our tax plan will bring urgent relief to hardworking families. We'll reduce rates, increase the amount of income taxed at a rate of zero, expand the Child Tax Credit" .. "And simplify taxes as most families will be able to file on a single sheet of paper. We will restore America's competitive edge so we can bring back our jobs. We want to bring our jobs back to our country. We were decimated over the last 40 years." .. "We'll go from being one of the highest-taxed nations in the world to one of the lowest-taxed nations in the world. Corporate rates will be reduced from 35% all the way down to 20% which will make us competitive again and companies won't be leaving our country. Finally, our tax plan will return trillions of dollars in wealth to our shores so that companies can invest in America again."
Ravi: The core of Trump's tax plan/reform message is simple to understand. However, the big question is whether it is based on truth and realistic expectations. The "one of the highest-taxed nations" part has been challenged as untrue. But it seems to me that the bottom line of Trump's tax plan is the cutting of corporate taxes from 35% to 20%, which he says will make USA competitive and bring back jobs to the USA. It will also stop companies from leaving the USA. That seems to be the core of the tax plan as well as economy growth and jobs growth plan. The very, very, very big question is whether this plan will result in economy growth and jobs growth or not. And then there is the very big concern about such a pretty drastic plan having the danger of significantly increasing the USA debt whose current size itself is a matter of concern to at least some economists.
These tax proposals are being attacked by people like Senator Bernie Sanders as giving tax breaks to the wealthy and not helping the poor and the middle (working) classes. From his recent post (21-Nov), https://www.facebook.com/senatorsanders/posts/10156514098937908, "How in a civilized society could we possibly be debating giving over $1 trillion in tax breaks to the richest people and most profitable corporations in America when we have 28 million people without health insurance, 40 million people living in poverty and 4 million young people who sleep on the streets? We must be a better country than this."
Contrast this with what Republican Congressman and former economics Professor Dave Brat says about the Republican tax plan. From http://dailysignal.com/2017/11/03/rep-dave-brat-explains-how-the-tax-reform-plan-will-help-the-middle-class/, 3rd Nov. 2017, ".. you know, the average family income in Virginia is $60,000 for a family of four. They’re getting 1,200 bucks back. Right? That’s pretty good. Average family of four, two kids, $1,200 bucks. You can do a lot with $1,200 a year, and then there’s more coming in terms of when we get economic growth going. You know, $4,000 additional of savings for the middle-class workers as well."
and
"[John F. Kennedy] was a great Democrat. He dropped tax rates, and boom, it took off. And then [President Ronald] Reagan, boom, it took off. And then we’ve been told, you guys a year ago, the mainstream press for [President Donald] Trump, the economy would tank. The stock market would tank. It’s at all-time highs. The market’s up. We’re growing at 3 percent. Last quarter, this quarter.
And today the Atlanta Fed, which is nonpartisan, good economics, they have us growing at 4.6 percent this quarter, on real time basis. So if we can hit anywhere near 4 percent, I doubt we’ll get to 4.6 for a year, but if you get anywhere 3.5 to 4, this thing breaks even. The tax cuts pay for themselves, and it’s great news. Wage rates have been flat for 30 years. Wage rates will go up. No one even knows what pro-growth is anymore. We don’t even remember what it looks like, so I think we’re in for a good burst."
Ravi: Now what I don't know is whether the predictions of (former) Economics Prof. Dave Brat (Republican-Virginia) are going to be true or not. Is he having a realistic view of the power of tax cuts to grow the economy, raise wages and create new jobs? Or is it wildly optimistic and, to take some Democratic leaders' views, failed trickle-down economics?
That is the big question for me. So I hope to watch what happens on this tax cuts/tax reform front, and learn from it.
In the article, Lies, Incoherence and Rage on Tax Cuts, https://www.nytimes.com/2017/11/20/opinion/lies-incoherence-and-rage-on-tax-cuts.html, 20th Nov. 2017, Nobel prize winner in Economics, Prof. Paul Krugman of Princeton University disputes the view that these tax proposals will reduce taxes for the middle class.
Krugman also says that this plan is adding trillions to the debt because of the tax cuts to the corporations and the wealthy!
And finally Krugman says something very, very harsh:
"The very incoherence of the arguments Republicans are making for their plans shows that it’s not about helping the economy, let alone ordinary families. It really is about making the rich richer, at everyone else’s expense."
Ravi: Now who is speaking the truth here? And why is there so much confusion about what the truth about the tax proposal is? I mean, it is as if there is a Republican truth about the tax proposal and a Democratic truth about it. That is so desperately confusing for people like me, which I think will be the case for many USA citizens too.
[I thank USA President Trump, USA Senator Bernie Sanders, USA Congressman Dave Brat & dailysignal.com and Prof. Paul Krugman & nytimes.com, and have presumed that they will not have any objections to me sharing their quotes from their posts/articles, on this post which is freely viewable by all, and does not have any financial profit motive whatsoever.]
Trump rather openly views himself as a 'killer' businessman who has hired 'killer' business guys to bring good paying jobs to manufacturing heartlands of the USA which are in steep economic decline. He did not run on a 'nice guy' ticket. He ran on a tough guy who will deliver good paying jobs ticket. And WON b'cos enough people who were hurting on jobs front in the USA believed his claims.
Right now I think it is too early to judge whether he is delivering on those jobs claims. He has completely rattled and shaken up the international trade agreement world by withdrawing USA from at least one of these multi-lateral agreements, and has publicly said that he will do bilateral deals with individual nations.
I think it will take a year or two more for the international trade deals situ to settle down and to know whether Trump will get "win"s on this for the USA or not.
I think that is the biggest thing of the Trump presidency for USA as well as the rest of the world, as the impact can be big and decades long, whether positive, negative or neutral impact. [By neutral impact I mean no big loss or gain for the USA but which could still involve a lot of change in how trade is done with the USA.]
----------
I think Trump proudly claims that as a businessman he can run the country better than politicians who are experienced at government. He attacked the political establishment, both Democratic and Republican, in his campaign, in a manner that I think nobody thought any serious USA presidential candidate would ever do! And he got away with it!
For people like me in India, it is unthinkable that a person with zero elected representative experience or government service experience, can become the head of state with extraordinary powers (USA president post). But that's what Trump did by winning the 2016 USA presidential elections!
Many commentators have said it is a unique presidency in this regard. We need to see how he, his cabinet and USA Congress with Republicans having majority in both the House and Senate, can deliver on his and the Republican agendas.
Some Democratic party supporters and elected representatives, are very, very worried about Trump's and the Republican party's plans for USA healthcare, taxes, education etc. fields. But Republican supporting media outlets present a different story. It is quite confusing for a neutral third-party onlooker like me to understand.
------
I am exposed to the views of USA conservative think tanks and the conservative movement which formed the core base and core thinking of the Republican party prior to the Trump phenomenon. The 2016 Republican primary for president showed that candidates like Ted Cruz and Marco Rubio clearly had this pro-business, anti-regulation and very small government model as part of their campaign platform.
I play a politically neutral observer role in these comments and posts I put up related to USA politics. My interest comes from a goal of trying to understanding the political environment within which top-level policies in areas like business & economy (including the vital aspect of jobs), education and healthcare, get adopted and implemented.
I do not know enough to take a stand on whether Republican conservative policies are good for USA people in general (including the poor and the middle class) or not. I am still observing how this plays out.
One thing that has emerged from whatever I read and viewed about the recent past policy making efforts of Republicans in USA Congress in healthcare (which did not pass through Congress) is that there seems to be a lack of clear understanding of what they want to do. They all wanted to repeal and replace Obamacare and that was a big part of their campaign platform. But they did not seem to know what exactly they should replace it with!!! That was a very scary and terrifying thing for me to observe. I mean, lives of significant number of poor and lower middle class USA citizens were on the line on this healthcare thing. I certainly did not get the confidence that the Republicans had a clear idea of what they were proposing and how that will help improve USA healthcare and health insurance system.
I very much hope that USA Congress does better on the tax policy front.
-----
I think one of the major impacts of Republican policies is privatization of what would typically be viewed as government run agencies in the materially advanced democratic countries of Western Europe. Privatized prison systems, for example. I find that very strange as I wonder how privately run prisons will follow government rules and be accountable to the government. But I have not studied these issues about private prisons and so simply don't know much about them.
-----
Now I should also say this. My view is that USA must put its financial and economic house in order. The 2007-08 USA financial crisis which became a global crisis, was utterly terrifying. That the USA and the world came out of that crisis without a major disaster like the 1930s Great Depression (which created a horrible economic crisis in Germany which contributed to the rise of Hitler and the Nazis, and then the worst war in human history so far - World War II), was, IMHO, a major achievement of all the people who worked to stabilize the system.
So if there are financial challenges to fund welfare schemes due to which Republican policy is to reduce expenses of welfare schemes thereby balancing the budget, then I would view such policies as tough but necessary austerity measures to put the USA in good economic and financial state. But then austerity is something that should not be faced only by the poor and lower middle class. It seems to me that the upper middle class and the rich should also face it via a higher burden of taxes to help the country out. I think this is what most materially developed Western European democratic countries do.
In this Facebook video, https://www.facebook.com/DonaldTrump/videos/10160190086585725/, 1 min 25 secs, dated (Indian Standard Time) 22-Nov-2017, President Trump says, "We're going to give the American people a huge tax cut for Christmas." Some other quotes from this video: "Our tax plan will bring urgent relief to hardworking families. We'll reduce rates, increase the amount of income taxed at a rate of zero, expand the Child Tax Credit" .. "And simplify taxes as most families will be able to file on a single sheet of paper. We will restore America's competitive edge so we can bring back our jobs. We want to bring our jobs back to our country. We were decimated over the last 40 years." .. "We'll go from being one of the highest-taxed nations in the world to one of the lowest-taxed nations in the world. Corporate rates will be reduced from 35% all the way down to 20% which will make us competitive again and companies won't be leaving our country. Finally, our tax plan will return trillions of dollars in wealth to our shores so that companies can invest in America again."
Ravi: The core of Trump's tax plan/reform message is simple to understand. However, the big question is whether it is based on truth and realistic expectations. The "one of the highest-taxed nations" part has been challenged as untrue. But it seems to me that the bottom line of Trump's tax plan is the cutting of corporate taxes from 35% to 20%, which he says will make USA competitive and bring back jobs to the USA. It will also stop companies from leaving the USA. That seems to be the core of the tax plan as well as economy growth and jobs growth plan. The very, very, very big question is whether this plan will result in economy growth and jobs growth or not. And then there is the very big concern about such a pretty drastic plan having the danger of significantly increasing the USA debt whose current size itself is a matter of concern to at least some economists.
These tax proposals are being attacked by people like Senator Bernie Sanders as giving tax breaks to the wealthy and not helping the poor and the middle (working) classes. From his recent post (21-Nov), https://www.facebook.com/senatorsanders/posts/10156514098937908, "How in a civilized society could we possibly be debating giving over $1 trillion in tax breaks to the richest people and most profitable corporations in America when we have 28 million people without health insurance, 40 million people living in poverty and 4 million young people who sleep on the streets? We must be a better country than this."
Contrast this with what Republican Congressman and former economics Professor Dave Brat says about the Republican tax plan. From http://dailysignal.com/2017/11/03/rep-dave-brat-explains-how-the-tax-reform-plan-will-help-the-middle-class/, 3rd Nov. 2017, ".. you know, the average family income in Virginia is $60,000 for a family of four. They’re getting 1,200 bucks back. Right? That’s pretty good. Average family of four, two kids, $1,200 bucks. You can do a lot with $1,200 a year, and then there’s more coming in terms of when we get economic growth going. You know, $4,000 additional of savings for the middle-class workers as well."
and
"[John F. Kennedy] was a great Democrat. He dropped tax rates, and boom, it took off. And then [President Ronald] Reagan, boom, it took off. And then we’ve been told, you guys a year ago, the mainstream press for [President Donald] Trump, the economy would tank. The stock market would tank. It’s at all-time highs. The market’s up. We’re growing at 3 percent. Last quarter, this quarter.
And today the Atlanta Fed, which is nonpartisan, good economics, they have us growing at 4.6 percent this quarter, on real time basis. So if we can hit anywhere near 4 percent, I doubt we’ll get to 4.6 for a year, but if you get anywhere 3.5 to 4, this thing breaks even. The tax cuts pay for themselves, and it’s great news. Wage rates have been flat for 30 years. Wage rates will go up. No one even knows what pro-growth is anymore. We don’t even remember what it looks like, so I think we’re in for a good burst."
Ravi: Now what I don't know is whether the predictions of (former) Economics Prof. Dave Brat (Republican-Virginia) are going to be true or not. Is he having a realistic view of the power of tax cuts to grow the economy, raise wages and create new jobs? Or is it wildly optimistic and, to take some Democratic leaders' views, failed trickle-down economics?
That is the big question for me. So I hope to watch what happens on this tax cuts/tax reform front, and learn from it.
In the article, Lies, Incoherence and Rage on Tax Cuts, https://www.nytimes.com/2017/11/20/opinion/lies-incoherence-and-rage-on-tax-cuts.html, 20th Nov. 2017, Nobel prize winner in Economics, Prof. Paul Krugman of Princeton University disputes the view that these tax proposals will reduce taxes for the middle class.
Krugman also says that this plan is adding trillions to the debt because of the tax cuts to the corporations and the wealthy!
And finally Krugman says something very, very harsh:
"The very incoherence of the arguments Republicans are making for their plans shows that it’s not about helping the economy, let alone ordinary families. It really is about making the rich richer, at everyone else’s expense."
Ravi: Now who is speaking the truth here? And why is there so much confusion about what the truth about the tax proposal is? I mean, it is as if there is a Republican truth about the tax proposal and a Democratic truth about it. That is so desperately confusing for people like me, which I think will be the case for many USA citizens too.
[I thank USA President Trump, USA Senator Bernie Sanders, USA Congressman Dave Brat & dailysignal.com and Prof. Paul Krugman & nytimes.com, and have presumed that they will not have any objections to me sharing their quotes from their posts/articles, on this post which is freely viewable by all, and does not have any financial profit motive whatsoever.]
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