Will The GOP Tax Scam Crash The Economy?

The countries of the world that have the most stable economies and that suffer from the smallest boom and bust cycles are the countries with the highest tax rates on the very, very wealthy. The reason for that is that the government is functioning essentially as a stabilizer, so capitalist economies, there's just a fundamental truth about them. This is not a knock on capitalism, it's just the way it is.

Capitalist economies go in cycles of boom and bust. There are big cycles - what's referred to as the 80-year cycle of major boom and bust - and then there are smaller cycles which are sometimes referred to as the eight to ten year cycle of recession. Every roughly eight to ten years there's a consequential recession.

And so when those depressions and recessions happen, a government that is well-funded - in other words it has a broad enough and high enough tax base that the government has resources - that government can spend money into the recession. They could build new roads, they can do new construction projects, they can build new sewer systems, they can build out high-speed Internet infrastructure.

Whatever it may be, that government can spend or for that matter they can in an extreme case like in the Republican Great Depression, what Franklin Roosevelt did was he even hired people to do basically scutwork - to plant trees, to sweep streets - literally. The WPA was hiring people to paint murals, hired poets to write poetry and do public readings. Not that that's scutwork, but it's not the kind of thing that traditionally you think of as government functions.

The reason our government was doing that was because capitalism was in one of its cyclical failures, one of its cyclical crash modes. And government at that point needs to step in and stimulate the economy by putting as much money as possible at the bottom of the economy into the pockets of working people, which is exactly what FDR did, and it's how we got out of the Great Depression, between that and World War Two which was the largest government stimulus in the history of the United States.

Wars are stimulative. It's not a good way to stimulate the economy because it's not long-term. If you build a hospital it stimulates the economy and continues for the next 50 years as a great revenue source and healing source. You build a bomb and it might cost the same as the hospital, but once you drop that bomb it's gone. The money is gone and the bomb is gone.

So anyhow these cycles of boom and bust are best handled by nations like the Scandinavian countries, the northern European countries. Germany during the Great Crash of 2008/2009, one of the biggest institutions in Germany that got hit was Deutsche Bank but it was mostly because they were loaning and they were gambling on American derivatives in the American housing market.

But my point is that those high tax rates - and we haven't seen high tax rates since the 1980s - I'm talking about over 50% on income over three million dollars a year, which is what we had in 1920. It's what we had in 1940, 1950, 1960, 1970 and 1980 and we no longer had after 1982.

Top tax rates over 50 percent stabilize the economy. They reduce the impact of recessions. And sure enough, in 1921 Warren Harding ran on a campaign of dropping the top tax rate on the richest in America from 91% down to 25%. He won the election and he dropped the top tax rate.

And what did it do? It started a bubble. It kicked off what we refer to as the roaring 20s which was pure bubble fueled by rich people. It was a speculative stock and real estate bubble and that bubble burst. It started bursting in Florida in early 1928 and by the end of 1929 that property bubble had reached all the way to New York City and it took down the stock market.

And it was all fueled by the tax cut of 1921. So we saw that happening and for the next 30 years, literally for the next 30 years - arguably the next 40 years - no Republican was stupid enough to say, "we need to do what Harding did, let's create another Great Depression" until Reagan came along.

And Reagan passed two big tax cuts in '82 and '86 - the first one dropped the top tax rate from 74% to 50%, the second one dropped it from 50% down to 25% and those two tax cuts then led to, in 1987, the biggest crash in the history of the stock market with the single exception of 1929.

Now the crash didn't last more than a few days - the really severe part of it - and the consequences of it, it was about a year long pain. But it wasn't just the crash.

The other thing that happened was that the growth of the middle class - the bottom 60 percent of Americans in terms of wages and wealth - was faster in the 40s, 50s, 60s and 70s than any time in the history of America, and the growth of the middle class was growing in wealth and income faster in the 50s 60s 70s up until the 1980s than the top 40%.

And this is no secret. Any economist can tell you this. High tax rates, high economic growth. Low tax rates, what happens? The country encounters a rough patch and what do we do? We have to stimulate the economy with debt. So now we're 20 trillion dollars in debt.

So you had the big tax cut of '21 led to the crash of '29, the big tax cuts of '81 and '86 led to the Great Crash of '87, the big cut of 2002 - George W Bush's - led to the crash of 2007. Another bubble economy. It was a real estate bubble just like the one in the roaring 20s.

And so now we get a giant cut tax cut in 2017. What's next?

I'd say another crash.

It just seems like this is what Republicans do. They suck up as much money as they can for themselves and the donors who own them - the wealthy clients, the top 1%, the top one thousandth of 1%. Republicans take as much money out of the economy as they can to give to those people, the morbidly rich, and then the morbidly rich direct their media empires to tell us that that stuff falling on our heads is actually rain. It's a golden shower!

Yes, trickle is trickling down on us. And we know that we're just peons.

So they're playing this game again, right? The Republicans they played this game in '21, it led to '29, it led to a disaster. They played this game in 1980 and it led to a disaster. And it flattened the wages of working people for literally 35 years to this day. And then they played this game when George W Bush came in and it led to a disaster 2008-2009.

They're doing it again. It is said, "the definition of insanity is doing the same thing over and over again and expecting a different result." There is going to be a reckoning.

Economically you can ask any rational economist, there will be a reckoning. But the political question is, who's going to take the blame? And there is a theory suggesting that what the Republicans are doing is they're setting up the next crash in anticipation of the Democrats having political power when the crash happens so that they can blame the whole thing on the Democrats. They can say, "see?"

Because if the crash happens right after the 2018 election or in 2019 or right after the 2020 election - and frankly I don't think it's going to take that long - if the crash happens after that and Democrats have seized power, the Republicans are going to be saying, "see, look at what the Democrats did to you!"

We'll see how that works out but I'm just giving you advance warning.

Comments

Kend's picture
Kend 1 year 49 weeks ago
#1

Jeff thank you for the education on religion. So it would be correct to say Liberals hate Christians but are ok with Muslims.

Ou812 yes so true.

stopgap's picture
stopgap 1 year 49 weeks ago
#2

That'a troll Ou..2, get that nose way up there in Trump's ass. Smells good to you doesn't it? Better watch it though…you're making Pence jealous and giving Kend a big corn dog. Maybe Disney Reynolds can put some mustard on it?

jefflisse's picture
jefflisse 1 year 49 weeks ago
#3

@ OU812

Nothing to say to me?? Whats wrong... " cat got your tongue"? Oops... Maybe l should say "dog got your tongue?

jefflisse's picture
jefflisse 1 year 49 weeks ago
#4

@ Kend

Jezz Kend. Are you really that ignorant?
To conflate two totally different things...
Wow, there probably isn't any way to have a reasoned discussion with you?

jefflisse's picture
jefflisse 1 year 49 weeks ago
#5

Spelling correction..."chuckling"

Jeez Kend...

Legend 1 year 49 weeks ago
#6

Back when Thom had the Forum, there was a lot of discussion about what should be posted. Generally it was agreed that one should not just post baseless opinion. Like Kend does and many others. But fact should be posted. Fact that could be backed with reference. From now on I will reply to Kend (and all should) as NofactKend. You can go to the "COMMENTS" sections of Fox News (a bunch of total wacko's) or Yahoo (Not much better) if you just want to post crazy unsubstantiated opinion.

Legend 1 year 49 weeks ago
#7

Has anyone heard if Turbotax and the others will be updated in time to complete 2017 taxes. Because (his highness) Trump has signed it, it went into effect in 2017. So Dianes 4% Medicare cut also takes affect in 2017. That is 4% per year for 10 years. That is more than a 60% cut compounded.

Ou812's picture
Ou812 1 year 49 weeks ago
#8

@7 Legend:

Sources please on the alleged Medicare cuts.

deepspace's picture
deepspace 1 year 49 weeks ago
#9

One thing is for sure; the Republican tax scam certainly won't fit on a postcard. In fact, the Congressional cheap whores who service the donor-class managed to increase the complexity so much (in favor of the rich, naturally, who can afford to pay top-notch accountants and sleazy lawyers to tear it all apart and dig out all the loopholes and other hidden goodies for the one-percenters) that the IRS is facing a steep uphill climb to rejigger their systems, almost from ground up, before the 2018 tax season kicks in. Only a couple of changes are meant for the 2017 season.

http://thehill.com/policy/finance/366252-trumps-tax-law-creates-new-challenges-for-irs

deepspace's picture
deepspace 1 year 49 weeks ago
#10

"The law limits Medicare cuts to 4% of its budget per year, or $25 billion of its $625-billion budget. Because the tax cut proposals the Senate was preparing to vote on late Friday would expand the deficit by about $1.5 trillion over 10 years, it’s likely to trigger the cuts." --Michael Hiltzik, business columinist.

http://www.latimes.com/business/hiltzik/la-fi-hiltzik-gop-social-security-20171130-story.html

https://www.nytimes.com/2017/12/20/opinion/republican-tax-bill-senate-house.html

Legend 1 year 49 weeks ago
#11

http://www.businessinsider.com/when-will-trump-sign-tax-reform-bill-payg...

Since nobody bothered to read the bill very little is actually known at this point what takes affect and what does not. This was supposed to be a simplified plan, but is far from that. This article says they waived the PAYGO cuts. Must have been stealth bill. Very little about it. Of course that means that you ballon the deficit which Republicans scream about. Thats all right, my grandkids do not mind paying for the 1% tax cut.

https://www.bondbuyer.com/news/trump-signs-tax-bill-after-congress-waive...

This is about the best I found on it.

http://www.factcheck.org/2017/12/guide-tax-changes/

PAYGO was axed. Wish that I could be as fiscally responsible with my money.

http://www.wagmtv.com/content/news/Congress-Averts-25-Billion-Cut-to-Med...

http://thehill.com/opinion/finance/365997-republicans-in-congress-are-co...

Ou812's picture
Ou812 1 year 49 weeks ago
#12

The following quote is from factcheck.org

McConnell and Ryan issued a joint statement on Dec. 1, saying Congress would waive the pay-go requirement.

McConnell and Ryan statement, Dec. 1: Critics of tax reform are claiming the legislation would lead to massive, across-the-board spending cuts in vital programs—including a four percent reduction in Medicare—due to the Pay-Go law enacted in 2010. This will not happen. Congress has readily available methods to waive this law, which has never been enforced since its enactment. There is no reason to believe that Congress would not act again to prevent a sequester, and we will work to ensure these spending cuts are prevented.

http://www.factcheck.org/2017/12/medicare-cancer-tax-bill/

Dianereynolds's picture
Dianereynolds 1 year 49 weeks ago
#13

@ rick steves #6

Instead of getting your pink pussy hat all balled up in a knot worrying about Kend or other posters,

How about just following this sage advice direct from the horses mouth,

Mr. Ed sez, “You're not Mommy the Monitor. This is a free-speech zone, so post as much or as little as your black heart desires. If you can't handle my politically incorrect posts, then don't read them and don't respond.”

Thanks for the daily Christmas presents and please take note the world is still turning, Al Gores internet is still running, so you all will have yet a few more months to complain and push divisiveness and hatred for anything you don't personally subscribe to.

To you all I say, Merry Christmas, Ramadan, Chanukah, Kwanzaa, Winter Solstice, Tet, Festivus, whatever...

To the few sane and happy among us, Merry Christmas!! Rest assured, you will be recieving your daily gifts until Al's internet disappears and we go back to reading newspapers and magazines.

mohit90's picture
mohit90 1 year 49 weeks ago
#14

Kend, it doesn't seem you have any un derstanding of basic economics.

Legend 1 year 49 weeks ago
#15

So basically you agree to $1.5 trillion in debt so that the 1% can have more money to stash away. That is not fiscally responsible. They were going to cut it out of SS, Medicare and Medicaid then they had their meeting on the election in 2008. This is going to get worse. They still want massive increases in military spending, infrastructure and the wall that Mexico is going to pay for.

#13 I prefer to keep it an intelligent Comment blog. If you go to Yahoo or especially Fox News comment sections you get the kind of posts that Kend does. mindless, baseless opinion. I will continue to call him NofactsKend. It worked on the other blog to get rid of Tomnofactsdorr. Deepspace has very intelligent posts with some good humor.

Legend 1 year 49 weeks ago
#16
jefflisse's picture
jefflisse 1 year 49 weeks ago
#17

Happy holidays.
And salad days.
And days of moldy mayonnaise...

Frank zappa. Circa: 1969

I know it was yesterday... But...
Its not too late for us to...
Air all our grievances.
And perform acts of strength.

All we need is an aluminum pole.

Seinfeld. Circa: 1997

Legend 1 year 49 weeks ago
#18

https://www.google.com/search?source=hp&ei=wNc_WsLYGurNjwSqwL_4CA&q=ineq...

First time that I went to Brazil the 1% were extremely wealthy and the rest extremely poor. The inflation rate was 3000%. Prices for most everything was on chalkboards and changed daily. I exchanged money with the workers on a daily basis. They wanted the dollars that were not subject to such inflation. I stayed on the coast where i worked. A nearby resort on Friday and Sunday evenings was incredibly noisy with all of the helicopters bringing the banksters from Sao Paulo to their beach homes and yachts. Yet very few at the plant that I worked at could even afford a car. Even I rode a bus to work. That was the early 90's and it certainly has changed for the better. Still a lot of poverty in Rio but not nearly as much in the coastal resort areas. It is a beautiful area now.

deepspace's picture
deepspace 1 year 49 weeks ago
#19

Oh how DianeyWorld loves to quote me. I'm honored. There is just one little problem, however; the quote she used in #13 above (which must have deeply wounded her fragile ego, since she seems obsessed by it) was a fragment of conversation that she deliberately lifted out of context of another, different discussion, which was, if memory serves correctly, in response to her very specific (and untrue) critique of what I had then written. The original author, which is his right, has counseled her strongly before about this shameless intellectual theft. Alas, she has once again proven that she has no honor.

Continuing to use it for her own purposes as a bludgeon to wield against others with whom she disagrees, and without proper accreditation of authorship and reference, is flat-out plagiarism of the worst kind. Instead of shamelessly misconstruing what others have said (a common Fux News debate tactic), why doesn't Diane use her own brain to formulate her own thoughts as she responds to ongoing posts? Or does that question also contain the answer?

Ou812's picture
Ou812 1 year 49 weeks ago
#20

@15 Legend:

Did your tax obligation increase or decrease as a result of the new tax law? I'm guessing the rest of the post about debt, the 1% and fiscal responsibility is your opinion since you furnished no references. Also I don't care what you say (your opinion again) was going to be done in 2008. It's 2017 and none of us own a time machine. The remainder of the paragraph is again your opinion. I see it as your attempt to create another issue. Nice try, but I deal with reality, not make believe.

deepspace's picture
deepspace 1 year 49 weeks ago
#21

@#12, page 2: You mean like the promises McTurtle made to Susan Collins? Alas, the corndog "lady" is relying on the word of McTurtle and puppy-eyed Ryan?!!! Facepalm.

Meanwhile -- contrary to mere promises made for political expediency, the type of promises repeatedly broken by Trump and his lying congressional cohorts (How many times will Charlie Brown let Lucy hold the football?) -- a 2018 voter would be wise to focus strictly on what is still already on the books and on the extremely complicated details of what is actually in this so-called tax "reform" (hahahahaha).

So far, most independent assessments have concluded that, as written, the Republican tax bill (a bill for which the poor and middle-class workers far into the future will be liable) is a 10-year, slow motion transfer of America's wealth to the one percenters. (Since such cold-eyed assessments are ubiquitous, I'll let the gentle reader chase down the appropriate links.)

IOW, it would behoove all of us to start paying attention to the expert analyses of independent scholars, objective tax professionals, and credible economists rather than the endless, self-serving spin emanating from the primary beneficiaries (the obscenely wealthy) of the Republicans' "reform" (hahahahaha) package, haphazardly slapped together mostly behind closed doors and then quickly, quickly, quickly (Crack the whip!) rammed through Congress without any public hearings or bipartisan input or support.

On a side note: the following puts the lie to what Granny Di and Corndog have glommed onto as one of their key winger talking points:

"Contrary to companies’ stated reasoning, many of those wage increases and bonuses would have happened anyway, it seems, given how low the unemployment rate is right now. Though wage growth has been in a long-term slump, paychecks are finally rising as the jobless rate has fallen below 5 percent and stayed there, with earnings growing the fastest for the lowest-wage workers. Plus, 18 states are raising their minimum wages in 2018, requiring businesses to pay out an estimated $5 billion more to 4.5 million workers.
"Given those dynamics, businesses are likely using the tax cuts in part as a way to advertise pay increases that were already planned and to curry favor with the Trump administration and Republicans on the Hill.
" -- https://a.msn.com/r/2/BBHa6We?m=en-us

BTW, if overly partisan Republicans are trying to give Trump credit for our heated-up economy (a bubble about ready to burst), then why don't they also give Obama credit for steering the nation and the world out of the doldrums of the last Republican regime, which cut taxes on the wealthy, deregulated the financial markets, and tanked the world economy?

2950-10K's picture
2950-10K 1 year 49 weeks ago
#22

#62...There goes Bachmann again, in her alternative reality she dismisses Ryan's stated intent to voucherize/privatize medicare, which means massive cuts, simply because of a McConnell and Ryan joint statement about PAYGO. The Kochbaggers have already repeatedly stated their intent to "reform entitlements". Now that either means to cut or to increase entitlement spending Bachmann...seeing how McConnell and Ryan are so honorable and trustworthy, you figure it out genius. LMAO. You are one of the most illogical Trolls to ever post on this site.

2950-10K's picture
2950-10K 1 year 49 weeks ago
#23

You know after all is said and done regarding the Kochbaggers with their election fraud, trickle down lies, religious hypocrisy, second amendment bull, Citizens United, free trade, bigotry, anti-single payer, out of control military industrial spy complex spending, etc. .....the one thing that stands out as being by far the most dumbfounding of all is denial of climate change. If this one issue doesn't convince a citizen of which party is built upon lies and deceit I don't know what ever would.

I mean I guess if you're really an idiot you could still be against something like single-payer by arguing the rest of the world has it wrong because it's always better to pay twice as much as you have to for something. Climate Change however stands out from everything, nothing else is even close, not even how obvious it was about who was right and wrong during our Civil War. With Climate Change every living thing on this planet will lose.

So to all the Trolls, if it isn't obvious by now that you're on the wrong side of history in the most heinous manner by supporting the Kochbagger Party, I pray for your lost souls.

Legend 1 year 49 weeks ago
#24

Not sure yet how tax cut will affect me at present. This is my first full year of retirement with low income. What I object to is the Republican method of throwing a bone to the middle class and acting like it is huuuuuge. Then giving the 1% a huuuuuuge tax cut. Then on top of this driving the debt to new massive highs when they campaigned on lowering the debt in every election. This being a repeat of the Bush tax cuts which eventually caused a huuuuuge recession. On top of this is a lot of spending still on the plate. Military, Infrastructure and the Huuuuuuge Wall. All of this is fact and not just opinion. In post 15 2008 was typo for 2018.

https://www.cheatsheet.com/culture/trump-plans-kill-social-security.html...

changeX's picture
changeX 1 year 49 weeks ago
#25

Banks borrow money from you know who at who knows .25% then loan it out (if at 32%) a 6400% increase.

Banks get bailed out by the people after failing in their casino like environment.

This puts "who" enjoys "free stuff" into perspective.

changeX's picture
changeX 1 year 49 weeks ago
#27

oops, an online Percentage Increase Calculator shows it would be a 12,700 % increase from the original borrowing rate if it were 0.25% let's call it Prime to distract and sound fancy. Some banks loan out for more, some for less than 32%. Who knows.....anyone?

Legend 1 year 49 weeks ago
#28

Part 1 - Is Economic Disaster About to Hit & Are You Prepared?

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