Taxes

In Their Own Words

JM Ashby
Written by JM Ashby

Conservative economic theory is generally referred to and acknowledged as "trickle down economics" but you don't often see them use those words themselves.

Trump's top economic adviser Gary Cohn sat down for an interview with CNBC at American University where he was asked a series of very tough questions by host John Harwood.

I recommend reading the full interview yourself to fully appreciate just how full of shit Gary Cohn is, but it can be summed up in this way: Gary Cohn "vehemently" disagrees with empirical reality.

Harwood: Look at the components of the plan: big corporate reductions, big pass-through reductions for business, much more tax cuts for businesses than for individuals. You've got the elimination of the estate tax, you've got the preservation of the step-up basis, you've got the elimination of the alternative minimum tax. What you have is a bunch of people, including you, including the president, who think 'What I do is good for the economy, therefore, taxing the things that I do less will be good for the economy and good for other people' instead of giving direct benefits to those people. Because middle-class people in this tax cut do not get very much in direct benefit.

Cohn: I just completely disagree with you.

Harwood: Look at the numbers.

Cohn: I've done nothing but look at the numbers for the last 90 days.

[...]

Harwood: If you look at the center of gravity of the economics profession, what they will say is that the deficit will go up more than you guys say, growth will increase less than you guys say, and that workers will get less than you guys are projecting.

Cohn: We vehemently don't agree. When you take a corporate tax rate at 35 percent and move it to 20 percent, and you see what's happened over the last two decades to businesses migrating out of the United States, migrating profits out of the United States, migrating domicile out of the United States, and hiring workers out of the United States, it's hard for me to not imagine that they're not going to bring businesses back to the United States.

We create wage inflation, which means the workers get paid more; the workers have more disposable income, the workers spend more. And we see the whole trickle-down through the economy, and that's good for the economy.

Average workers are not going to get paid more. It's not going the trickle down.

Ironically, the upper middle-class families with modest investments who may see some returns from the coming buy-back bonanza are going to see their taxes go up in the loss of state and local tax deductions to pay for tax cuts for the super-rich.

In other words, the one group of people whose spending habits actually have the power to shift the economy are going to see their taxes go up. The true benefits of the GOP tax cut plan will be distributed to the idle rich who will simply sit on it and accrue even more wealth.

  • muselet

    There are only two possibilities I can see: either Gary Cohn really believes in the Tax Cut Fairy and magic asterisks (in which case he’s a high-functioning moron) or he doesn’t (in which case he’s a shameless liar).

    Both possibilities are unsettling, to say the least.

    –alopecia

  • Badgerite

    He is kidding. “Wage inflation?” Whatever money is “brought back” will not be to invest in labor intensive manufacturing.
    That ship has sailed. That money will be used to fund investment in automation. Of all kinds. And that assumes that companies that have domiciled abroad to avoid taxation will bother to bring their business headquarters or their manufacturing back to the US.
    I don’t think that is a safe assumption. This will just increase the income inequality gap even more. Depress consumer spending at home. And shoulder the US taxpayer with an enormous increase in the national debt.
    It’s like they are trying to dream up any way they can to justify this draining of the public treasury into the pockets of their ultra rich donors. It’s fiction and they know it. Like their claim of “death panels” under the ACA.
    A few of the GOP have even spilled the beans as the reason for this tax cut. It is not economic necessity or benefit to the country. It is that their ultra rich donors told them to do this or they would cut off the campaign funding spigot that gushes into their party from those expecting to reap enormous amounts of money from this legislation.
    “Best government money can buy.”

  • Dread_Pirate_Mathius

    Absolute fantasy.

    • Tony Lavely

      There you go, giving fantasy a bad name.

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