Tax plan raises taxes on liberal states and lowers them for the rest.

[cassowary]

But as the blue states are richer that means they must be more efficient generators of wealth than the red states. Why penalise the efficient? For years you have been telling me that you are opposed to that cass? Am I to believe that you have now turned against your own proclaimed guiding principle?

They are not more efficient. It is just that they have the big cities in the blue states - NYC, LA, Chicago etc. Everybody knows that city incomes are higher than rural incomes.

Well of course they are cassowary. The higher real incomes reflect higher per capita productivity.

You are not wrong, Neverfail. But that is not the end of the story. It may look like they are more productive but they may not be so. That's because the per capita income figures do not take into account the cost of living. While city folks earn more money than rural folks, the cost of living is higher in cities than in rural places.

You need to see how long an average person has to work to buy a similar basket of goods. For example, how many hours does a city folk have to work to afford to pay the rent or purchase a house as compared to a rural person. We know that land is cheap in rural locations. So while the red state worker earns less, he needs to spend less.

The true measure of productivity is to compare how many hours a person needs to work to afford the same basket of goods. It seems that the tax plan gives a raw deal to city folks who vote mainly Democratic. In other words, instead of measuring how many $ you can earn in one hour, you should measure how many goods and services you can buy for one hour of work. In my view, that is a better measure of productivity.

They have to spend more money and have to pay more taxes. Why do cities spend more money than rural places? It could be partly because they have more crime and so need more police and jails! In small towns, where everybody knows everybody, crime is low. In the end, the quality of life may be better in rural places.

[Milo]

As a matter of fact it is greatly disputed whether this will cut taxes for anyone except the rich and many think it will create huge deficits.

So, again, likely not even wrong.

It depends on the growth rate. The higher the growth, the lower the deficit. Nobody knows how the economy will be doing in 5 to 10 years time. But Trump's policies of lower taxes, deregulation, fossil fuel promotion will boost growth.

Reagan increased deficits exponentially and there was economic growth, Clinton lowered them and there was economic growth. I don't see what evidence you have to support what you claim.

Reagan increased military spending to defeat the USSR - a worthy cause that unfortunately increased budget deficits. And he got spectacular economic growth. Thanks to Reagan's victory in the Cold War, Clinton can cut military spending, thus giving rise to surpluses. Clinton got lucky.

How is doing the right thing getting lucky?

[Jim the Moron]

Clinton "got lucky." Yes he did, on numerous occasions. Doing the "right thing" had nothing to do with it.

[neverfail]

Though every US President appoints a Secretary for the Treasury, I sometimes wonder just how much control this public official has over the shape and content of the Federal budget. Considering how much this seems to be in the hands of Congress - which need not have the same policy agenda as the executive wing of government. Does any reader have a clue about the respective powers?

[SteveFoerster]

Though every US President appoints a Secretary for the Treasury, I sometimes wonder just how much control this public official has over the shape and content of the Federal budget. Considering how much this seems to be in the hands of Congress - which need not have the same policy agenda as the executive wing of government. Does any reader have a clue about the respective powers?

The Secretary of the Treasury is much less important than the chairs of the House and Senate committees on appropriations, the chair of the House Ways and Means committee, or the chair of the Federal Reserve.

[neverfail]

Though every US President appoints a Secretary for the Treasury, I sometimes wonder just how much control this public official has over the shape and content of the Federal budget. Considering how much this seems to be in the hands of Congress - which need not have the same policy agenda as the executive wing of government. Does any reader have a clue about the respective powers?

The Secretary of the Treasury is much less important than the chairs of the House and Senate committees on appropriations, the chair of the House Ways and Means committee, or the chair of the Federal Reserve.

Thanks so much for that clarification Steve.

[cassowary]

A key report shows the final GOP tax bill will boost the US economy — but it'll also fall well short of Republican promises

Republicans revealed the final version of the Tax Cuts and Jobs Act on Friday.
According to an analysis by the Tax Foundation, the bill would boost US GDP by 1.7% over the long term and add $448 billion to the federal deficit.
While the report showed that the bill is "pro-growth," it falls short of Republican promises on growth and the deficit.

Only $448 billion added to the deficit? I thought it was $1.5 trillion.

I think the projected growth will be better than predicted. While the tax reform will boost growth, that is not all that will boost growth. Of equal importance is Trump's cutting of regulations, especially in the energy sector. That will add to growth. But this is not scored by the CBO who focused only on the tax bill.

[SteveFoerster]

I think the projected growth will be better than predicted. While the tax reform will boost growth, that is not all that will boost growth. Of equal importance is Trump's cutting of regulations, especially in the energy sector. That will add to growth. But this is not scored by the CBO who focused only on the tax bill.

I think the corporate tax cut will spur a little growth and cutting regulations (assuming that's done competently, which is an enormous assumption with this administration) would as well. But for the most part, economic growth is something that's beyond policymakers' control, especially since we're only considering executive policymakers in a single country that has a separate legislature and central bank.

[Doc]

I think the projected growth will be better than predicted. While the tax reform will boost growth, that is not all that will boost growth. Of equal importance is Trump's cutting of regulations, especially in the energy sector. That will add to growth. But this is not scored by the CBO who focused only on the tax bill.

I think the corporate tax cut will spur a little growth and cutting regulations (assuming that's done competently, which is an enormous assumption with this administration) would as well. But for the most part, economic growth is something that's beyond policymakers' control, especially since we're only considering executive policymakers in a single country that has a separate legislature and central bank.

The amount of taxes to be paid have a direct effect on private sector spending. The sole reason for companies to exist is to make money. Money has to be spent initially to make more. If more can be made or at least a better chance exists that more money can be made more money will be spent for the chance to make it.

[cassowary]

I think the projected growth will be better than predicted. While the tax reform will boost growth, that is not all that will boost growth. Of equal importance is Trump's cutting of regulations, especially in the energy sector. That will add to growth. But this is not scored by the CBO who focused only on the tax bill.

I think the corporate tax cut will spur a little growth and cutting regulations (assuming that's done competently, which is an enormous assumption with this administration) would as well. But for the most part, economic growth is something that's beyond policymakers' control, especially since we're only considering executive policymakers in a single country that has a separate legislature and central bank.

Yes, I agree. There are many factors that affect GDP growth that are not within government control. Interest rates, the price of oil, geopolitics, even the weather etc can affect growth. So CBO and CJT forecasts for 10 years are quite useless.

The most prudent way to do this correctly is to match tax cuts with spending cuts. But that is impossible in a democracy.