Thursday, December 14, 2017

The Republican Tax Cut—An Unconsidered Danger

There has been a lot of discussion about the wisdom of the huge tax cut that Republicans have planned at a time when the stock market is performing at record levels, corporate revenues are at similar record levels, and the country is at or near full employment.  Without a doubt, the Republican tax cut will lead to higher deficits, perhaps amounting to an additional $2 trillion even by their own estimates.  Additionally, most of the benefits will flow to large corporations and wealthy individuals.  Republican wildly optimistic claims about their tax cuts helping the middle class are just that-wildly optimistic.

What few are discussing is a real unconsidered danger.  Many economists are worried that the U.S. and world economies are on track for a 2008-type recession.  Many of the conditions that led to that recession exist today.  In 2009, the Obama administration responded to the great Recession with a $831 billion stimulus package designed to get the economy moving again and to prevent the Great Recession from becoming a second Great Depression which it was on track to become.  The stimulus is widely credited with preventing an economic disaster.  The only criticism is that it was much less than the economic conditions of the time demanded.  With a larger stimulus or second stimulus the recovery with have been much faster and the suffering of most Americans would have been much less.

The Republican tax cut package will make a future stimulus even of the “less than adequate” size of the Obama stimulus next to impossible.  Thanks to the unnecessary Republican tax cut, the next time our economy goes south—which it very likely will—Americans can expect little relief.  The next Great Recession this time may become a decade-long Depression like that of the 1930s.  All because Republicans wanted to pass a foolish and risky tax cut that helps the few and puts the many at great risk.

You read it here.  You were warned.

No comments: