May 27, 2018 — Democrats are gearing up for the November mid-term elections, in which they hope to take back the US House of Representatives. Candidates are finding that the voters are not necessarily paying close attention to foreign affairs or even Trump scandals, and are more concerned about “pocketbook issues.” The conventional wisdom still stands: underlying the shock election of Mr Trump was the worry by the median household that it has been left behind by globalization and technological change and that the gains have been going to the rich instead.
Category Archives: budget
Trump’s Tax Cut Will Worsen the Current Account Deficit
January 19, 2018 — President Trump and the Republicans succeeded last month in passing their big tax cut. It may not have many of the desirable attributes of true tax reform (equity, efficiency, bi-partisanship, revenue-neutrality, or cyclical timing); but it is major legislation, as promised. What about that other major Trump promise, to cut the US trade deficit? The tax cut is virtually certain to raise the budget deficit and in turn to raise – not lower – the current account deficit. Call it the Return of the Infamous Twin Deficits. As when Ronald Reagan cut taxes in 1981-83 or when George W. Bush cut taxes in 2001 and 2003.
Recap: What History Says about the New Tax Bill
December 13, 2017 — Evidently House and Senate Republicans today agreed on a tax bill. It is really awful. If you want to understand why economists are confident that the tax cuts will not pay for themselves and why Republicans are disingenuous to claim otherwise, I recommend what Jason Furman and Larry Summers have been writing, e.g., in this column in the Washington Post.
The angle I have focused on over the last two weeks is the light shed on the tax plan by the historical precedents of several decades. Here is a Table of Contents, with links for potential watching, listening or reading.