Response to Bill Gale at TPC: Tax Cuts Won't Make America Great Again

http://www.taxpolicycenter.org/taxvox/tax-cuts-wont-make-america-great-again

The myth that tax cuts cause growth is purely due to the donor class wanting tax cuts for themselves, some of which they turn around to fund organizations who are light on real economic education who claim that these cuts cause growth.

My analysis shows very clearly that Reagan's deficits (less net interest) cause growth the next year (it takes time to get to outlays and multiplier effects) and that when the budget was cut, growth was reduced. For the first six years of the term the coefficient of determination was 1.0, perfect association. Looks like proof to me. The independent variable represents the true impact of the injection from or leakage to the bond sector from federal borrowing.

This is why Reagan was different than Bush II, as the prior ran huge deficits and the latter ran the middle eastern wars on the cheap. Indeed, it could be argued that Reagan broke the back on inflation, not Volker, because Reagan gave CEOs an incentive, through lower taxes, to cut wage demand inflation.

Clinton raised taxes to take some of that incentive away and was rewarded with an economy that had less incentive to fight wage gains. Things only went south for him (or rather for Bush) when cutting the capital gains rate spurred the tech boom/bust as everyone wanted to be an Internet Billionaire on the cheap (workers were paid with capital gains rather than salary in many cases - it was all a scam and all due to Gingrich and Clinton).

Bush's tax cuts were like Reagan's and Clinton's on steroids. Because no one was getting higher wages, Greenspan helped everyone mortgage their savings, leading to 2008. The 2010 tax deadline was renewed and growth stayed anemic until 2013 and the ATRA. Proof again that higher taxes on the rich HELP workers, although the donor class does not like them. Corporate cuts will also make it more profitable to cut worker pay and have more money through tax savings than higher tax rates will allow.

There is nothing for non-donors in the Trump Framework. Unless we can get more money to families with higher minimum wages and extreme Child Tax Credits of $1000 per month per child paid with wages, the only thing the Democrats should do is obstruct this tax bill. Of course, that would call for someone who was willing to buck the donor class and loudly call out the Emperor as having no clothes. Publicly accepting this analysis would go a long way in doing that. So would getting others to endorse it.