Friday, December 15, 2017

Deficits? What Are Those?

      The tax bill working its way into completion in Congress with the unqualified support of South Dakota's congressional delegation continues to look like a venture in legislative
Noem, Rounds, Thune
Deficits?  What Are Those?
surrealism. 
First off I keep wondering if this silly notion of filing our tax returns on a postcard has ever made any sense.   Who in their right minds would send personal information--especially Social Security numbers--into the mails on a post card?  Not only does the nonpartisan Tax Policy Center think the idea is ludicrous, the center notes that the equivalent of a one-page postcard already exists.  It's called  Form 1040EZ.  TPC thinks the number of taxpayers who will be able to simplify their returns into a single-page format created by the tax bill will grow to 29 million, a 12% slice of the 240 million returns that are filed each year.  How many of those are likely to use a tax-preparation service is impossible to determine, but Turbotax and Jackson-Hewitt, among other such services, court short-form filers, so they must be a market of some consequence.  Indeed, the IRS estimates that 90% of Americans use tax-prep services, many of them short-formers.  I doubt that number will change much under the new code, simplification or no simplification.  Meantime, 210 million filers will still have to do it the hard way.  Thanks for not much, tax reformers.
     more unnerving embrace of surrealism is the casual manner in which deficit hawks have waved off the specter of increasing federal debt built into this bill.  South Dakota Senators John Thune and Mike Rounds have both called existing deficits "unsustainable," but enthusiastically embrace this bill just the same.  Congress' Joint Committee On Taxation says that the $1.4 trillion in revenues lost by the tax cuts will only be partially offset by $458 billion in revenues gained by its boost to the economy.  That leaves a $1 trillion dollar hole in the federal balance sheet in 10 years.  Thune, Rounds and their equally indifferent counterpart in the House of Representatives, SD Congresswoman Kristi Noem, have built their careers on complaints about federal deficits, yet here they are, cheering on the addition of another trillion bucks to our federal ocean of red ink.  Their collective admiration for the notion that tax cuts will stimulate enough economic growth to pay for the deficit has been pooh-poohed by history so many times that you wonder if our elected reps go catatonic when confronted by this type of analysis.  Moody's Analytics says the economic stimulus argument is baloney, as does the track record of tax-cutting itself.  Reagan, George W. Bush, Kansas Governor Sam Brownback--all have tried this gambit and failed. Sharp increases in debt followed their much-ballyhooed tax cuts.
     Adding to this Salvador Dali-esque dreamscape is the sudden appearance of the flaws in Congresswoman Noem's tale of tax-devastation to her family in 1994 when her father died.  An examination of it last week in USA Today headlines that Noem's "family saga doesn't add up." The piece concludes that the story "does not line up with some very basic tenets of the tax code." The bit about not "adding up" seems appropo.  Not much in this tax bill adds up.
   

7 comments:

  1. Will the wide-spread unpopularity (according to most polls) of this tax bill call Ms. Noem's credibility to serve as governor into question? Film at 11:00?

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  2. Is not deficit spending one of the pillars of inflation? And is not inflation one way to help pay off the deficit by using inflationary (cheaper) dollars to pay off the debt? Easy on everyone except retirees living on Social Security and pensions and wage-earners whose wages do not increase with inflation!! I ask this as a question because it has been many years (54) since I had a college course in economics.

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  3. Keep it up, John! Good stuff...

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  4. That's another in the bag of tricks that pseudo economists use to cut taxes, Mr Fisher. If that theory worked, then with the two Bush tax cuts of 2001 and 2003, we should have the national debt paid off and be adding to the surplus, But instead, the national debt has gone from roughly 6 trillion (that's with a tr) at the start of 2001, to roughly 20 trillion today.

    It's amazing to me that during the Greenspan years, when working people and retirees were actually getting raises in pay, the Fed would raise interest rates in order to slow inflation. But now we have very low interest rates while workers pay and seniors retirement is stagnant, with the government giving money to the banks at 0% for most of the past 10 years to keep interest rates low so that people will keep building houses and buying cars and doing what consumers do. (Just watch the Christmas ads).

    If the lowest interest rate ever goes back to what was the low rate for the first 60 years of my life, 5%, we will be paying 1 trillion dollars a year in interest on our national debt, to say nothing about increasing the debt by cutting taxes again. But sure all of you politicians give the country another tax cut, especially those who sure don't need it.

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  5. No one should believe that this is nothing more than shrinking government down to a size small enough to drown in a bathtub. Everything else stated is BS.

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  6. John,
    Kowgirl Kristi has one-upped herself with her crybaby comments about how the evil inheritance tax impacted her family. She was lying as her tears were falling. (gee, that might be the making's of a country song?)

    The Huff Post did a nice job of exposing her for what she is, a lying sack of cattle dung. I posted a link to the Huff Post article on the BZOF and asked DSC to forward it to you. DSC replied that you were already on it. Good!

    You're a pinpoint of light in a room that just keeps darker and darker. Keep at it. I should bookmark your blog.

    Simple/SagoBob

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  7. Yup. For the last 20 years Republicans whined and cried foul about the big huge government deficit killing America. Now that they have doubled it in support of the rich it's no big deal.

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