The Trump Economy

[Buffalo_Gal]

9 minutes ago, Degenerate Mike in HHDS said:

Dad pay for that too??

 

I would hope so. I know I paid for my son's (many) college degrees, and while we are comfortable,  we do not have the kind of money Fred Trump did. I cannot imagine someone with the means to do so not paying for their children's schooling. 

[SlimShady'sSpaceForce]

On 3/1/2019 at 8:01 PM, Buffalo_Gal said:

 

I gotta say, you've really covered yourself in glory down here in PPP. ?

 

Have a good evening.

is that the new term for shite?  (glory) 

[Buffalo_Gal]

39 minutes ago, ShadyBillsFan said:

is that the new term for shite?  (glory) 

I am not certain if you are really asking, but just in case you are - it usually means you did something very successfully, and someone admires you for it. So, combined with the eye-roll, I said it as sarcasm.

And, I guess you now know what happened down here that translated to the leakage up in OTW.  *heavy sigh*

[GG]

Premier XI knows he's on a path to a major economic crisis.  To stem the risk, he's opening up a tried and true playbook (hint, it wasn't written by Bernie or AOC).  Imagine that, communists who don't believe that more communism is the answer.

 

 

Quote

 

China’s premier said on Tuesday that his government would respond to an economic slowdown by cutting taxes, easing burdens on the private sector and giving markets a bigger role — diluting the heavily pro-state pronouncements and policies that critics have warned were scaring investors.

 

Calling 2019 a “crucial year” for China’s economy, Premier Li Keqiang, the second-ranking official in China after President Xi Jinping, laid out measures long supported by private businesses. Mr. Li’s annual report to the national legislature revived rhetoric about market solutions after the government faced growing criticism for favoring government initiatives and state-owned companies, squeezing out private enterprise.

 

 

[TPS]

Trump's tax and spending policies continue to add fuel to the economy.  For the first four months of the fiscal year (which starts in Oct), the deficit is 77% higher than last year ($310 billion vs $176 billion).  While individual and corporate taxes are down almost $50 billion in total, revenues are boosted by SS taxes, excise and tariffs which are up $35 billion.  This fiscal year's deficit is now projected to exceed $1 trillion.

 

That Trump is a good Keynesian....

Deficit

[GG]

16 hours ago, TPS said:

Trump's tax and spending policies continue to add fuel to the economy.  For the first four months of the fiscal year (which starts in Oct), the deficit is 77% higher than last year ($310 billion vs $176 billion).  While individual and corporate taxes are down almost $50 billion in total, revenues are boosted by SS taxes, excise and tariffs which are up $35 billion.  This fiscal year's deficit is now projected to exceed $1 trillion.

 

That Trump is a good Keynesian....

Deficit

Are you trying to raise my blood pressure on purpose?

 

The deficit and economy are growing because people get to keep more of their earnings, not because govt is ballooning its spending in a cocamamie scheme to boost the economy.    That's a huge difference.  

 

Obama was a Keynesian.  

[plenzmd1]

31 minutes ago, GG said:

Are you trying to raise my blood pressure on purpose?

 

The deficit and economy are growing because people get to keep more of their earnings, not because govt is ballooning its spending in a cocamamie scheme to boost the economy.    That's a huge difference.  

 

Obama was a Keynesian.  

ya lost me here..the government did not reduce spending correct? Is this not akin to a person saying I have more money to spend cause I got a new credit card?

[GG]

9 minutes ago, plenzmd1 said:

ya lost me here..the government did not reduce spending correct? Is this not akin to a person saying I have more money to spend cause I got a new credit card?

 

Always look at the root cause of the deficit, first.  Government spending increased at roughly the same rate as before.  The deficit is growing faster because tax revenues are down, as expected in first year following a big tax cut.  But that's a good thing.

 

This is almost a two decade debate between the professor and me.   I'll allow @TPS to frame his opinion, but he almost always discusses a deficit from a government expansion standpoint (such as above).  I usually correct him by differentiating the cause of the deficit - was it from government expansion or reduced revenues (taxes).   

 

Even in that, the cause is important.  Why did gov't expenditures rise?  Stimulous?  Military spending? Entitlements?  Same on the revenue side - a smaller tax take from lowered tax rate is a lot different than reduced tax revenues from a recession.

 

TPS keeps discussing Trump's policies in the expansionary realm because deficits are expanding, citing the phantom term "deficit spending,"  which is totally misleading because it depends on the causes outlined above.  

 

The last 10 years is the perfect illustration why TPS and Keynesians are historically wrong.  If the theory was correct, Obama's unprecedented government intervention and stimuli should have resulted in spectacular growth following a massive collapse.  Instead we got eight Summers of Recovery that never happened. 

 

This definitively proves that government cannot force economic growth, no matter how much money it pours into the problem, without freeing private enterprise to actually drive that growth.   That's the biggest difference in the philosophies, and I'm still waiting for TPS to admit the obvious.   

 

That's not to say that Keynesianism is totally useless.  It is a great tool to prevent total meltdowns, like where we were in 2009.  But nobody should be deluding themselves that preventing a meltdown is the same thing as driving true economic growth.   

 

I've beat my head on the wall forever about this - look no further than EU economies.   If people are content with 0% economic growth and persistent double digit unemployment, go at it elect AOC and Bernie.  BTW, those numbers are overly optimistic, because at that point you also wouldn't have US propping up the global economies anymore.  Then take it one step further and imagine what happens in a world where there's a protracted economic downturn?  Yeay, Socialism!!

 

 

[3rdnlng]

27 minutes ago, GG said:

 

Always look at the root cause of the deficit, first.  Government spending increased at roughly the same rate as before.  The deficit is growing faster because tax revenues are down, as expected in first year following a big tax cut.  But that's a good thing.

 

This is almost a two decade debate between the professor and me.   I'll allow @TPS to frame his opinion, but he almost always discusses a deficit from a government expansion standpoint (such as above).  I usually correct him by differentiating the cause of the deficit - was it from government expansion or reduced revenues (taxes).   

 

Even in that, the cause is important.  Why did gov't expenditures rise?  Stimulous?  Military spending? Entitlements?  Same on the revenue side - a smaller tax take from lowered tax rate is a lot different than reduced tax revenues from a recession.

 

TPS keeps discussing Trump's policies in the expansionary realm because deficits are expanding, citing the phantom term "deficit spending,"  which is totally misleading because it depends on the causes outlined above.  

 

The last 10 years is the perfect illustration why TPS and Keynesians are historically wrong.  If the theory was correct, Obama's unprecedented government intervention and stimuli should have resulted in spectacular growth following a massive collapse.  Instead we got eight Summers of Recovery that never happened. 

 

This definitively proves that government cannot force economic growth, no matter how much money it pours into the problem, without freeing private enterprise to actually drive that growth.   That's the biggest difference in the philosophies, and I'm still waiting for TPS to admit the obvious.   

 

That's not to say that Keynesianism is totally useless.  It is a great tool to prevent total meltdowns, like where we were in 2009.  But nobody should be deluding themselves that preventing a meltdown is the same thing as driving true economic growth.   

 

I've beat my head on the wall forever about this - look no further than EU economies.   If people are content with 0% economic growth and persistent double digit unemployment, go at it elect AOC and Bernie.  BTW, those numbers are overly optimistic, because at that point you also wouldn't have US propping up the global economies anymore.  Then take it one step further and imagine what happens in a world where there's a protracted economic downturn?  Yeay, Socialism!!

 

 

This, above. Think back to late 2016 and beyond. Just a whiff of what Trump would do for the economy was enough to send it soaring well before he was actually able to do anything.

[TPS]

20 minutes ago, GG said:

 

Always look at the root cause of the deficit, first.  Government spending increased at roughly the same rate as before.  The deficit is growing faster because tax revenues are down, as expected in first year following a big tax cut.  But that's a good thing.

Your second sentence is false (see below). Federal Government spending has risen faster under Trump than Obama (after the stimulus ended in 2010).

I think this is the first time you've admitted that cutting taxes does not boost revenue in the first year of a tax cut. It's taken 20 years....

 

This is almost a two decade debate between the professor and me.   I'll allow @TPS to frame his opinion, but he almost always discusses a deficit from a government expansion standpoint (such as above).  I usually correct him by differentiating the cause of the deficit - was it from government expansion or reduced revenues (taxes).   

I've never denied the obvious definition, a deficit can expand from either spending increases or tax cuts.  Trump did both, hence the dramatic rise in deficits near the end of a cycle when they should be falling (as they were prior to Trump's Keynesian policies)

 

Even in that, the cause is important.  Why did gov't expenditures rise?  Stimulous?  Military spending? Entitlements?  Same on the revenue side - a smaller tax take from lowered tax rate is a lot different than reduced tax revenues from a recession. No disagreement here.

 

TPS keeps discussing Trump's policies in the expansionary realm because deficits are expanding, citing the phantom term "deficit spending,"  which is totally misleading because it depends on the causes outlined above.  Deficits, regardless of the cause, are expansionary. I'd be happy to make sure I say expansionary deficits going forward, assuming I said deficit spending somewhere...

 

The last 10 years is the perfect illustration why TPS and Keynesians are historically wrong.  If the theory was correct, Obama's unprecedented government intervention and stimuli should have resulted in spectacular growth following a massive collapse.  Instead we got eight Summers of Recovery that never happened. 

This is where your view is too superficial.  As you mention above, one needs to look at why spending is going up as well as tax changes related to rising deficits. It's the same with the economy in general, there are 4 components of demand, and the federal government is just one. For example, 2/3s of the trillion $ deficits in 2009-10 were due to lower tax revenues as the economy crashed and higher transfer payments in the form of unemployment payments.  Obama's spending stimulus was relatively small overall, and only about half was actually increased spending. There were tax credits for autos and houses, and importantly revenue sharing to the states facing large deficits in those years which allowed them to put off deflationary policies (spending cuts and tax increases because they have to balance their budgets). In fact, federal spending changes from 2008 to 2014 in nominal dollars  was +$68 bl (08-09), +$80 bi (09-10), $0 (10-11), -$14 bil (11-12), -$60 bil (12-13), and -$12 bil (13-14). If you cared to actually look at data, there was no great stimulus spending program.

 

In addition, if you also cared to learn that not all recessions are similar, it takes much longer to recover when the expansion is associated with a significant rise private sector debt. The Great Depression was preceded by a private sector debt-gdp ratio of 240% and the Great Recession was even higher, hitting 300%.  The aftermath of a debt-financed expansion is characterized by the private sector deleveraging, paying off debt which means less spending. Household consumption did not surpass the level from 2007 until 2012; Business investment took until 2013 to surpass the 2007 value.  

To see who the real Keynesian is, here are the spending changes for 2015 -2018: +$7 (14-15), +$11 (15-16 Obama's last year), +$32 (16-17), +$55 (17-18).  Again, with the exception of the first 2 years of the crisis, Obama's fiscal policy was contractionary in the 4 years after 2010. 

 

20 minutes ago, GG said:

 

 

This definitively proves that government cannot force economic growth, no matter how much money it pours into the problem, without freeing private enterprise to actually drive that growth.   That's the biggest difference in the philosophies, and I'm still waiting for TPS to admit the obvious.   

As I predicted for 2018, Trump's deficits caused faster growth. And just as you admonish, the impact of deficits depend on what is happening with the other sectors. Trillion dollar deficits when the private sector is in meltdown are meant to provide a steeper fall; trillion dollar deficits when the private sector is also expanding simply adds more fuel to the economy, 3% growth in 2018.

 

That's not to say that Keynesianism is totally useless.  It is a great tool to prevent total meltdowns, like where we were in 2009.  But nobody should be deluding themselves that preventing a meltdown is the same thing as driving true economic growth.   

 

I've beat my head on the wall forever about this - look no further than EU economies.   If people are content with 0% economic growth and persistent double digit unemployment, go at it elect AOC and Bernie.  BTW, those numbers are overly optimistic, because at that point you also wouldn't have US propping up the global economies anymore.  Then take it one step further and imagine what happens in a world where there's a protracted economic downturn?  Yeay, Socialism!!

The EU has stagnated since the crisis because they pursued the same austerity policies that Obama did post-2010. Austerity reduces potential output growth. I can point you to an IMF study if you wish...

 

 

 

 

[TPS]

Here's the % change in REAL federal spending from 2007 to 2018 (the #s above are nominal $s). After the stimulus ended in 2010, Obama was a good conservative president....

But don't let the facts get in the way of a good argument....

2007  08     09     10     11      12     13      14      15     16    17    18

2.0

6.3

6.1

4.1

-2.6

-1.9

-5.5

-2.6

0.0

0.4

0.7

2.6

 

 

 

 

[GG]

6 minutes ago, TPS said:

Here's the % change in REAL federal spending from 2007 to 2018 (the #s above are nominal $s). After the stimulus ended in 2010, Obama was a good conservative president....

But don't let the facts get in the way of a good argument....

2007  08     09     10     11      12     13      14      15     16    17    18

2.0

6.3

6.1

4.1

-2.6

-1.9

-5.5

-2.6

0.0

0.4

0.7

2.6

 

 

 

 

 

Will respond fully later on, but do I like how you position the results from a forced sequestration in 2013 as evidence of Obama's conservative nature.   That's why there can't be an honest dialogue.

 

 

[TPS]

Just now, GG said:

 

Will respond fully later on, but do I like how you position the results from a forced sequestration in 2013 as evidence of Obama's conservative nature.   That's why there can't be an honest dialogue.

 

 

Darn, I almost added that Obama was faced with a Republican congress after 2012, but that is less relevant to the point you are trying to make, and spending declined in 2011 and 2012 before the Reps took control. 

 

The point: Almost the entirety of the post-2010 Obama years saw federal spending reduced or stagnant. There was NO big Keynesian policy that failed as you claim, because there was no big Keynesian spending policy in place after 2010. However, Obama did provide your type of "stimulus" after 2010 via tax cuts through 2012.  He extended most of the Bush tax cuts after they lapsed, and he cut the payroll tax (one of the things I advocated at the time). Other than that, his recovery efforts were mainly directed at saving the banks, thanks to Summers and Geithner.  

 

I am not arguing in support of Obama. I am addressing your claim that "Keynesian spending policy is a failure" by showing you there was NO spending increase after 2010; in fact, federal spending fell. So please try to stick with this issue.

[plenzmd1]

to both @TPS and @GG, i enjoy the debate and appreciate you guys putting in the time and effort. Helps me understand this stuff better.

 

And not to overcomplicate things, but we now learn we have the largest trade deficit in history. Is that something to be concerned with?

https://www.washingtonpost.com/business/economy/trump-promised-to-shrink-the-trade-deficit-instead-it-exploded/2019/03/05/35d3b1e0-3f8f-11e9-a0d3-1210e58a94cf_story.html?utm_term=.5571fa90607d

[Tiberius]

33 minutes ago, TPS said:

Darn, I almost added that Obama was faced with a Republican congress after 2012, but that is less relevant to the point you are trying to make, and spending declined in 2011 and 2012 before the Reps took control. 

 

The point: Almost the entirety of the post-2010 Obama years saw federal spending reduced or stagnant. There was NO big Keynesian policy that failed as you claim, because there was no big Keynesian spending policy in place after 2010. However, Obama did provide your type of "stimulus" after 2010 via tax cuts through 2012.  He extended most of the Bush tax cuts after they lapsed, and he cut the payroll tax (one of the things I advocated at the time). Other than that, his recovery efforts were mainly directed at saving the banks, thanks to Summers and Geithner.  

 

I am not arguing in support of Obama. I am addressing your claim that "Keynesian spending policy is a failure" by showing you there was NO spending increase after 2010; in fact, federal spending fell. So please try to stick with this issue.

And correct me if I am wrong, you are also pointing out how Trump's tax cuts are Keynesian because they provide a fiscal stimulus. 

[TPS]

1 hour ago, Tiberius said:

And correct me if I am wrong, you are also pointing out how Trump's tax cuts are Keynesian because they provide a fiscal stimulus. 

Precisely.  I'm not sue why that's so hard for anyone to understand: bigger deficits arise from spending increases OR tax cuts, and bigger deficits provide a stimulus.

Even a caveman can understand this...?

1 hour ago, plenzmd1 said:

to both @TPS and @GG, i enjoy the debate and appreciate you guys putting in the time and effort. Helps me understand this stuff better.

 

And not to overcomplicate things, but we now learn we have the largest trade deficit in history. Is that something to be concerned with?

https://www.washingtonpost.com/business/economy/trump-promised-to-shrink-the-trade-deficit-instead-it-exploded/2019/03/05/35d3b1e0-3f8f-11e9-a0d3-1210e58a94cf_story.html?utm_term=.5571fa90607d

I mentioned this awhile back, that the effects of Trump's stimulus will be muted by a widening trade deficit. I've stated my support of what Trump is trying to do here, but it will take several years before it has a serious impact on the trade balance.

[GG]

4 hours ago, TPS said:

Darn, I almost added that Obama was faced with a Republican congress after 2012, but that is less relevant to the point you are trying to make, and spending declined in 2011 and 2012 before the Reps took control. 

 

The point: Almost the entirety of the post-2010 Obama years saw federal spending reduced or stagnant. There was NO big Keynesian policy that failed as you claim, because there was no big Keynesian spending policy in place after 2010. However, Obama did provide your type of "stimulus" after 2010 via tax cuts through 2012.  He extended most of the Bush tax cuts after they lapsed, and he cut the payroll tax (one of the things I advocated at the time). Other than that, his recovery efforts were mainly directed at saving the banks, thanks to Summers and Geithner.  

 

I am not arguing in support of Obama. I am addressing your claim that "Keynesian spending policy is a failure" by showing you there was NO spending increase after 2010; in fact, federal spending fell. So please try to stick with this issue.

 

The story lines up nicely when you cherry pick the data, such as totally ignoring the spending blowouts related to the financial collapse and Bush bringing the wars on budget.  So, yes, AFTER you ignore the nearly $800 billion budget buildup in FYs 2008-2009, Obama looks like a fiscal saint, especially as the war spending died down and interest rates plummeted.   There was a massive step up in spending, which was never reversed in Obama's terms.   

 

That also includes the $871 billion stimulous that is emblematic of socialist top down planning.  The money was allocated, spent and did nothing to grow the economy.  Although Obama signed laws that improved corporate profits, they were all below the operating profit (EBITDA) items that didn't aid in true economic growth.  The question you keep avoiding is why if Obama was such a champion of business, why did he preside over the worst economic recovery, when a dead cat bounce was bound to produce average returns?  Why did executive after executive proclaim between 2009 and 2011 that they'd be crazy to grow staff, unless they absolutely had to?  Why did that attitude suddenly change in November 2016, and the results prove it.

 

There's more to true economic growth than a government throwing money at the problem.  Your deficit spending argument doesn't work in all situations.  When government spends more in the aftermath of a crisis, it's a short term catalyst.  But that in itself does not create a sustainable environment for businesses to continue investing.  They'll sit as long as possible on depreciated assets and will not reinvest until it's absolutely necessary.

 

That's the whole point of the OP.  The entire business climate changed overnight.  

 

 

 

 

[row_33]

12 minutes ago, GG said:

That's the whole point of the OP.  The entire business climate changed overnight.  

 

 

 

 

 

Thank goodness.

[Chef Jim]

5 hours ago, Tiberius said:

And correct me if I am wrong

 

Do you really think ANY of us has time for that?  

 

Ok back under my Tibs Cone of Silence.  I just couldn't resist. 

[Tiberius]

America first! 

 

U.S. posts a record trade deficit in goods despite ‘America First’ policies

The 2018 figure shows that President Trump’s tariffs and tough policies have failed to shrink a trade gap that he argues represents a massive transfer of wealth from Americans to foreigners.

• By David J. Lynch