Instant Inflation of National Debt Estimate from Trump’s Tax Cuts

Instant Inflation of National Debt Estimate from Trump’s Tax Cuts

 
Today was the day of the announcement of Goldman Sach’s, er, I mean Trump’s tax cut. As news reports and interviews progressed during the day, here are the estimates that I heard, in the order given.

 
First, $2 trillion deficit over 10 years, for the business tax cut from 35% to 15%. On average, businesses only pay 14% anyway. By the end of the program, they took in the small business tax with another $2 trillion in debt, for a total of $4 trillion.

 
Then that progressed to $5 billion. Then $5.5 billion. Then $6 billion. I think it ended at $7 billion.

 
These were on the fly. A full tax plan was not given to OMB or the CBO (Congressional Budget Office) to give a well studied, accurate deficit. I guess that Trump did not want to mention the deficit, and therefore didn’t have it studied. Or, the plan was so off the cuff, that there was no time to make an accurate estimate.

 
The reduction of the number of tax levels to three is, I think, a dodge so that the average tax payer cannot compare the new taxes at the same level to the present tax plan. Usually, this is so that the maximum tax level can be lowered, as in this case, from 39.5% to 35%. Please note, that Trump has a predilection for numbers that end in 5, but, if needed, he will settle for one ending in a 0. Just part of Trump branding. So the new income tax levels are at 10%, 25%, and 35%. The corporate tax cut is from 35% to 15%. The tax on repatriated funds will be only 10%. The estate tax will be completely cut to 0%. The military increase and domestic budget cuts were close to 10%.

 
The Goldman-Sach’s men have used old fashioned Reaganesqe Supply Side, Laffer Curve, Trickle Down, or Voodoo economics, and a growth rate of 3% to argue that the deficit will not suffer that much. This is enhanced by the new “dynamic scoring”, or cutting taxes for the rich, to be so cheerful. Manuchin is working with arbitrary “models” to get estimates of the debt. (Voodoo?) It’s funny that only Republican administrations use the method of rewarding the rich to stimulate the economy. If it really worked to help all, why wouldn’t Democrats use it also?

 
Steve Manuchin, Trump’s Treasury Secretary, started at Goldman Sachs and became a hedge fund founder and manager. He is a half-billionaire. When he was asked what effect the tax plan would have on Trump’s taxes, he grinned and said that he did not know what Trump’s tax situation was. Nobody bothered to ask what effect this would have on Mnuchin himself, or on his hedge funds.

 
Just by accident, the Congress’ richest person is our California coastal neighbor, Darrel Issa, who’s district runs from Dana Point to La Jolla. His district is 50-50 right now. Since his business is high tech, I had hopes he might become a believer in climate science.
Well, I am not an economist, so we will have to hear from the experts, who don’t agree anyway.

About Dennis SILVERMAN

I am a retired Professor of Physics and Astronomy at U C Irvine. For two decades I have been active in learning about energy and the environment, and in reporting on those topics for a decade. For the last four years I have added science policy. Lately, I have been reporting on the Covid-19 pandemic of our times.
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