Mnuchin Scams the Tax-Cuts, claims they pay for themselves

MTAtech · Dec 12, 2017

Treasury released a one-pay document, that says that the tax-cuts will pay for themselves, contrary to every analysis of the tax bill.

How did he do it? It's easy, make unfounded assumptions about economic growth. By the way, this report, such as it is, wasn't done by the over 100 people in Treasury “working around the clock on running scenarios for us.” It just seems to be made up and there wasn't any staff assigned to any major analysis.

[h=1]Mr. Mnuchin’s Magical Math on Taxes[/h]

It [the report] projects a budget surplus created by 2.9 percent annual growth in gross domestic product over 10 years — that’s more than 50 percent faster than the most recent forecast by the nonpartisan Congressional Budget Office. Half of that growth would come from corporate tax cuts, the other half from other tax cuts and regulatory reform and from “infrastructure development and welfare reform,” neither of which has advanced past the talking stage.

Scott Greenberg, a tax analyst at the conservative Tax Foundation, called the one-pager “a thought experiment on how federal revenues would vary under different economic effects of overall government policies. Which is, needless to say, an odd way to analyze a tax bill.”

No other analysis — not from Congress, bipartisan tax policy groups, economists, past Republican Treasury secretaries — supports these claims. Instead, most experts say the bill would add at least $1 trillion to the debt.

Paul Krugman weighed in too:

[h=1]Steve Mnuchin Pulls a Paul Ryan[/h]

Even reporters hardened to Trump administration lies seemed shocked by the brazenness of this bait-and-switch. What made Steve Mnuchin, the Treasury secretary, think he could get away with it?

Well, one answer is that similar scams on the part of congressional Republicans, Paul Ryan in particular, have generally received highly respectful treatment from the news media. Why shouldn’t Mnuchin imagine he can pull off the same trick?

...
About that Treasury report: The department has an Office of Tax Policy, or O.T.P., which provides “economic and legal policy analysis” for tax policy decisions. Normally we’d expect this office to carry out a full analysis of the effects of Republican tax bills, similar to those conducted by Congress’s Joint Committee on Taxation and by independent, nonpartisan organizations like the Tax Policy Center.

But either O.T.P. didn’t do that, or it did an analysis that Mnuchin is suppressing. (The department’s inspector general is investigating what actually happened, because Mnuchin repeatedly claimed to have such an analysis in hand.) If the experts actually did do an analysis, they probably found what everyone else has found — namely, that tax cuts come nowhere near to paying for themselves.

ludin · Dec 12, 2017

To my knowledge the CBO doesn't predict economic growth.
And a 2.9% growth rate is like low level for a healthy economy.

It should be in he 3-4% range.
So their calculation is not far off.

We will have to see what happens.

MTAtech · Dec 12, 2017

ludin said:
To my knowledge the CBO doesn't predict economic growth.
And a 2.9% growth rate is like low level for a healthy economy.

It should be in he 3-4% range.
So their calculation is not far off.

We will have to see what happens.

Actually, the post-war annual real GDP growth rate is 2.9% -- factoring in the growth after the war, the baby boom, etc. In modern times, a 3.0% 10-year sustained growth in unheard of -- the closest coming under Clinton. Thus, to rely upon a 3% 10-year growth to make the tax-plan pay for itself is not only fantasy but gives us an indication about how the number was derived. They simply backed into the number to give them the p% needed to make the calculation work.

ludin · Dec 12, 2017

MTAtech said:
Actually, the post-war annual real GDP growth rate is 2.9% -- factoring in the growth after the war, the baby boom, etc. In modern times, a 3.0% 10-year sustained growth in unheard of -- the closest coming under Clinton. Thus, to rely upon a 3% 10-year growth to make the tax-plan pay for itself is not only fantasy but gives us an indication about how the number was derived. They simply backed into the number to give them the p% needed to make the calculation work.

your graph shows that it can be done and it has been done.
again the CBO doesn't predict economic growth it can't. In fact no one can.

If people could predict the market and the economy we could easily avoid recessions.

MrPeanut · Dec 12, 2017

ludin said:
your graph shows that it can be done and it has been done.
again the CBO doesn't predict economic growth it can't. In fact no one can.

If people could predict the market and the economy we could easily avoid recessions.

Which is exactly why it shouldn't be factored in.

MTAtech · Dec 12, 2017

ludin said:
your graph shows that it can be done and it has been done.
again the CBO doesn't predict economic growth it can't. In fact no one can.

If people could predict the market and the economy we could easily avoid recessions.

As MrPeanut said, that's why it's presumptuous to factor it in. It's clear what they did: 'Let's see, how much economic growth will we need in a 10 year period to make this massive tax-cut on the rich pay for itself.' 1%? No; 2%? No; 3%?, ah, that's it. We're going to have 3% growth for 10 years straight and that proves that the tax-cuts pay for themselves." Really, how stupid does Munchkin think we are?

They provide no methodology as to how they derived 3%, no analysis at all. They are merely asserting. If this was an ECON 101 paper, they'd get an F.

ludin · Dec 12, 2017

MrPeanut said:
Which is exactly why it shouldn't be factored in.

yet that is exactly what he is doing when he says that it won't pay for himself.
the fact is we need a new tax structure that promotes growth and gives more money to people.

i have run the numbers on myself. i do pretty well under the new tax structure and better under the senate plan.
my federal taxes drop by quite a bit from where they are now.

MTAtech · Dec 12, 2017

ludin said:
yet that is exactly what he is doing when he says that it won't pay for himself.
the fact is we need a new tax structure that promotes growth and gives more money to people.

i have run the numbers on myself. i do pretty well under the new tax structure and better under the senate plan.
my federal taxes drop by quite a bit from where they are now.

Why do we need a new tax structure that lavishes the wealthy with tax-cuts and raises taxes on the middle class? Oh, I know -- because Republican donors demanded it. It has nothing to do with economic growth. Every other analysis said that this will do little for economic growth. It's merely a Robin Hood in reverse wealth transfer.

Moreover, the Senate version throws millions off of health insurance.

Medical doctors will tell you that the first thing you do is No Harm. The current tax system is superior to the proposed one.

I seem to remember that Trump promised that the carried interest deduction would be eliminated and that loopholes would be closed. The carried interest rule remains and there are more loopholes.

I'll save lots of money flying my private jet to my golf course under this bill.

MrPeanut · Dec 12, 2017

ludin said:
yet that is exactly what he is doing when he says that it won't pay for himself.
the fact is we need a new tax structure that promotes growth and gives more money to people.

i have run the numbers on myself. i do pretty well under the new tax structure and better under the senate plan.
my federal taxes drop by quite a bit from where they are now.

Who are you talking about? I'm fine with the idea of a middle class tax cut. I don't support the tax cuts on the wealthy as I think that will lead to cuts in programs that will negatively impact people from the poor to the middle class.

ludin · Dec 12, 2017

MTAtech said:
As MrPeanut said, that's why it's presumptuous to factor it in. It's clear what they did: 'Let's see, how much economic growth will we need in a 10 year period to make this massive tax-cut on the rich pay for itself.' 1%? No; 2%? No; 3%?, ah, that's it. We're going to have 3% growth for 10 years straight and that proves that the tax-cuts pay for themselves." Really, how stupid does Munchkin think we are?

your using the same argument to say it won't work. that is double speak. You can't say that it is valid here but not valid there.
either both are valid arguments or they both are not.

more than likely they took the optimistic value vs the pessimistic value. really to be better off they should have taken the 3 point estimation.
which is (Optimistic+ 4(most likely) + pessimistic)/6

that would give them a value then the SD for this would be (pessimistic-optimistic)/6 or in this case (optimistic - pessimisctic)/6

so lets say that 3 is their optimistic value and 2.0 is the most likely and that 1.5 is the pessimistic.
so the SD is about +- .25

this is based on PMP PERT analysis

(3+4(2)+1.5)/6= is about 2.08
with a SD of

MTAtech · Dec 12, 2017

ludin said:
your using the same argument to say it won't work. that is double speak. You can't say that it is valid here but not valid there.
either both are valid arguments or they both are not.

more than likely they took the optimistic value vs the pessimistic value. really to be better off they should have taken the 3 point estimation.
which is (Optimistic+ 4(most likely) + pessimistic)/6

that would give them a value then the SD for this would be (pessimistic-optimistic)/6 or in this case (optimistic - pessimisctic)/6

so lets say that 3 is their optimistic value and 2.0 is the most likely and that 1.5 is the pessimistic.
so the SD is about +- .25

this is based on PMP PERT analysis

(3+4(2)+1.5)/6= is about 2.08
with a SD of

Let me remind you that YOU are the one that said that GDP growth can't be predicted. I didn't sign onto that belief. I think it can be and very smart people do that for a living. However, if you believe that GDP growth can't be predicted, then you shouldn't buy into this one-page assertion.

Paul Krugman had a point a few minutes ago:

Jonathan Chait raises a good point, which many of us were already thinking about: for all the debate about whether the tax bill will partially pay for itself, it’s actually more likely that it will end up worsening the deficit by far more than most estimates suggest. The reason is simple: the bill is junk, hastily drafted and full of exploitable loopholes. Once the tax lawyers and accountants get to work, they will probably find ways for their clients to avoid hundreds of billions in taxes that even the JCT estimates still assume will be paid.

Manc Skipper · Dec 12, 2017

It's long past time the "create jobs by cutting taxes to the rich" was called out. Jobs are created when the work grows beyond the capacity of the existing workforce, and extra staff are needed to cope. Such tax cuts merely go to increased shareholdings, buy-backs or bonuses, not jobs. Better to cut taxes for the middle or lower classes to stoke demand, and create jobs.

MTAtech · Dec 12, 2017

ludin said:
your using the same argument to say it won't work. that is double speak. You can't say that it is valid here but not valid there.
either both are valid arguments or they both are not.

more than likely they took the optimistic value vs the pessimistic value. really to be better off they should have taken the 3 point estimation.
which is (Optimistic+ 4(most likely) + pessimistic)/6

that would give them a value then the SD for this would be (pessimistic-optimistic)/6 or in this case (optimistic - pessimisctic)/6

so lets say that 3 is their optimistic value and 2.0 is the most likely and that 1.5 is the pessimistic.
so the SD is about +- .25

this is based on PMP PERT analysis

(3+4(2)+1.5)/6= is about 2.08
with a SD of

The JCT said the entire economic boost, from the tax-cut, would be 0.8% for the entire 10-yr period.

Absentglare · Dec 12, 2017

ludin said:
To my knowledge the CBO doesn't predict economic growth.
And a 2.9% growth rate is like low level for a healthy economy.

It should be in he 3-4% range.
So their calculation is not far off.

We will have to see what happens.

Great, so why are we rigging the system to dramatically increase the consolidation of wealth, preventing us from having a "healthy economy" that can sustain 3% growth?

Rogue Valley · Dec 12, 2017

ludin said:
It should be in he 3-4% range. So their calculation is not far off.

Economists say 4-5% economic growth/decade for the GOP reconciled tax plan to pay for itself ('revenue neutral'). That's never happened over a decade since WWII.

As of now, the GOP tax plans are 'revenue-negative'.

JasperL · Dec 12, 2017

ludin said:
To my knowledge the CBO doesn't predict economic growth.
And a 2.9% growth rate is like low level for a healthy economy.

It should be in he 3-4% range.
So their calculation is not far off.

We will have to see what happens.

But that sort of side steps the issue. The laughable "analysis" by OTP just pulls out the Paul Ryan Magic Asterisk:

OTP has modeled the revenue impact of higher growth effects, using the Administration projections of approximately a 2.9% real GDP growth rate over 10 years contained in the Administration’s Fiscal Year 2018 budget.

So the White House releases a budget, and then assumes, pulls from thin air as far as we know, a growth rate of 2.9%, IF (and this is key) the budget is adopted in full. But the WH budget is DOA - even the Republicans say this. But even if it's not DOA, he's pulled a switcheroo, and claimed this is an analysis of the tax bill, which it's not, but of the tax bill plus the assumption that all of the WH budget is adopted as proposed, which is just not going to happen.

Bottom line is there is no possible way to spin this as a good faith effort. In other words, Mnuchin is straight up lying to the public with this charade.

Besides, releasing a one-page summary of the actual analysis is an obvious attempt to bury the actual report. It can't be a good time to be employed by OTP who normally produce good work. This makes a mockery of what they do because it's so obviously an attempt to use them and their reputation to perpetrate a fraud on the public.

ludin · Dec 12, 2017

MTAtech said:
Why do we need a new tax structure that lavishes the wealthy with tax-cuts and raises taxes on the middle class? Oh, I know -- because Republican donors demanded it. It has nothing to do with economic growth. Every other analysis said that this will do little for economic growth. It's merely a Robin Hood in reverse wealth transfer.

Moreover, the Senate version throws millions off of health insurance.

Medical doctors will tell you that the first thing you do is No Harm. The current tax system is superior to the proposed one.

I seem to remember that Trump promised that the carried interest deduction would be eliminated and that loopholes would be closed. The carried interest rule remains and there are more loopholes.

I'll save lots of money flying my private jet to my golf course under this bill.

80% of middle class. And low income people will get a tax decrease.
Why do you keep not telling the truth?

It doesn't throw anyone off health insurance another lie. It simply repeals the individual mandate which means people
Aren't forced to buy a product not that they should be forced to buy a product in a free country anyway.

ludin · Dec 12, 2017

MrPeanut said:
Who are you talking about? I'm fine with the idea of a middle class tax cut. I don't support the tax cuts on the wealthy as I think that will lead to cuts in programs that will negatively impact people from the poor to the middle class.

Of course you don't they are the evil people that must be punished. They must have stolen it from someone and it is the governments job to take it back.

The rich already pretty much pay all of the income taxes collected.

MTAtech · Dec 12, 2017

Rogue Valley said:
Economists say 4-5% economic growth/decade for the GOP reconciled tax plan to pay for itself ('revenue neutral'). That's never happened over a decade since WWII.

As of now, the GOP tax plans are 'revenue-negative'.

Not only that, but a 4-5% growth rate is unhealthy. It leads to inflation and an overheating economy. Economists say a 2-3% growth rate is ideal.

ludin · Dec 12, 2017

Rogue Valley said:
Economists say 4-5% economic growth/decade for the GOP reconciled tax plan to pay for itself ('revenue neutral'). That's never happened over a decade since WWII.

As of now, the GOP tax plans are 'revenue-negative'.

We will see what happens to government receipts. I expect the first few years to be lower but should pick up after that.
It takes time. For them to work through the system.

MrPeanut · Dec 12, 2017

ludin said:
Of course you don't they are the evil people that must be punished. They must have stolen it from someone and it is the governments job to take it back.

The rich already pretty much pay all of the income taxes collected.

Nope, I believe that the most efficient consumers should be the most rewarded in a Capitalist society. The wealthy mostly hoard their wealth, and the middle class spend damn near every penny every year. The middle class should be given more money because they are better for the economy.

ludin · Dec 12, 2017

MrPeanut said:
Nope, I believe that the most efficient consumers should be the most rewarded in a Capitalist society. The wealthy mostly hoard their wealth, and the middle class spend damn near every penny every year. The middle class should be given more money because they are better for the economy.

No they don't hoarde their wealth. The. Only way to hoarde wealth is to shove it in a mattress.
That is not what they do.

Most of the rich got rich by saving and investing. Saving then buying.

Most middle class people would have a better financial outlook with a bit of financial discipline
And budget education.

People are too concerned with what is the monthly payment than the total cost of something.

Rogue Valley · Dec 12, 2017

ludin said:
We will see what happens to government receipts. I expect the first few years to be lower but should pick up after that.
It takes time. For them to work through the system.

The first few years is when growth (burst) would likely happen. After that, a pause and retrograde movement to recession. Perhaps severe.

Corporations are already sitting on trillions of dollars. Expansion/increased-employment is far down most CEO to-do list. Mgmt/shareholders always come first.

jonny5 · Dec 12, 2017

Manc Skipper said:
It's long past time the "create jobs by cutting taxes to the rich" was called out. Jobs are created when the work grows beyond the capacity of the existing workforce, and extra staff are needed to cope. Such tax cuts merely go to increased shareholdings, buy-backs or bonuses, not jobs. Better to cut taxes for the middle or lower classes to stoke demand, and create jobs.

Thats certainly ONE way jobs are created. Theyre also created when employers expand operations and innovate ways to turn idle labor into wealth and resources. Which can then be traded. Such tax cuts will partly go into production activities, and some will go to bonuses (to be spend in demand), buy backs (which puts the money in sellers hands to be used for demand), increased shareholdings (which means buying stock from someone who will then use the cash to demand), etc.

Since the alternative is everyone continuing to give trillions to the govt to waste, which doesnt create jobs, I think the choice is obvious here.

ludin · Dec 12, 2017

Rogue Valley said:
The first few years is when growth (burst) would likely happen. After that, a pause and retrograde movement to recession. Perhaps severe.

Corporations are already sitting on trillions of dollars. Expansion/increased-employment is far down most CEO to-do list. Mgmt/shareholders always come first.

Yes they are sitting on trillions that should be used to promote growth.
That is what this tax bill will do.

Next it will help promote small businesss to grow and expand.
That is the needed effect. Corporations are the the baseline saturated level.
What you need is the guy with 10 employees to go to 30-50-100 employees.

Mnuchin Scams the Tax-Cuts, claims they pay for themselves

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