Monday, December 26, 2016

Monday Morning Links

Miscellaneous material for your Monday reading.

- Jared Bernstein argues that the limited stimulus provided by tax cuts for the rich is far from worth the overall costs of exacerbating inequality and damaging public revenues:
I’m encountering progressives who are compelled to be at least somewhat supportive of wasteful, regressive tax cuts, like those proposed by Trump, or the ones I just wrote about in Kansas, that happen to spin off some positive fiscal impulse. While we’re closing in on full employment, there’s still slack in the job market, such FI could help absorb remaining slack.

That’s true, but there are two relevant questions: bang for the buck (multipliers), and the impacts of the cost of the tax cuts.

The Kansas cuts–particularly the zeroing out of the pass-through income–are instructive as these cuts have very low bang-for-buck in terms of jobs or incomes for middle and lower income folks. They just lower taxes for those who are already “highly liquid,” i.e., they’ve got a bunch of money already and giving them more shouldn’t be expected to boost spending (C) or investment (I) much. And since states must balance their budgets, they constrain G as well.

In terms of poor targeting, Trump-style cuts are similarly lame in terms of growth effects, as I discussed recently re the GW Bush tax cuts in the early 2000s. However, because they involve deficit spending–as I’m sure you’ve seen, the federal gov’t can run deficits–they will generate some positive FI, which we could use.

But at what cost? The opportunity costs are twofold. First, there’s the cost of tapping small versus larger multipliers: were team Trump to spend the money on infrastructure or target those with high consumption propensities, the FI would be stronger (btw, it should be noted that multipliers are smaller when the Fed’s raising rates, albeit slowly and by small increments, than when they’re lowering them).

Second, “permanent” tax cuts will mean a worsening of the revenue shortfall I’ve long worried about (the scare quotes are there because the R’s may build some BS cliff into their tax plan to accommodate arcane budget rules, but the intention is permanence). That will provide an excuse for whacking Medicaid, Medicare, Social Sec, and much other spending that’s important to the poor and middle-class. And yes, those folks are income constrained, so that part of ‘G’ gets spent and feeds back into growth.
- Danielle Ivory, Ben Protess and Griff Palmer point out how the public interest suffers when necessary infrastructure is turned into a corporate profit centre.

- Judith Lavoie discusses how the secrecy around the tar sands has made it nearly impossible for communities to plan for effective spill responses. And Genesee Keevil explores the truly unmitigated disaster that is the Yukon's Faro mine site as an example of what's left behind when a poorly-regulated resource extraction industry leaves the public with the bill to clean up behind it.

- Craig Offman and Nathan Vanderklippe report that the Libs' cash-for-access schemes look to include massive profits for the bundlers involved, as the asking price for face time with Justin Trudeau far exceeds the individual donation limit. And Dermod Travis discusses the big-money politics which the Clark Libs want to continue in British Columbia.

- Finally, Lana Payne writes about the need to push back against bullying politics in order to change them.

[Edit: fixed typo.]

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