what people used to say about former Senator Phil Gramm .. “Even his friends don’t like him.”
.. the Senate version, which would
raise taxes on most individuals, especially in the middle and working classes, and
add around 13 million Americans to the ranks of the uninsured,
all to pay for big cuts in corporate taxes.
.. After all, if we’re talking about a big increase in capital expenditure, where does the money for that expenditure come from? Nothing in the bill would make Americans consume less and save more. So the money would have to come from abroad — from selling stocks, bonds and other assets to foreigners, on a massive scale.
.. And this inflow of foreign money would drive up the value of the dollar and lead to huge trade deficits: according to my analysis of the most optimistic forecast out there, more than $6 trillion in deficits over the next decade. These trade deficits would have a devastating effect on manufacturing — remember those jobs Trump promised to bring back? — to the likely tune of more than two million jobs lost.
.. Nor does it take account of what would inevitably come next: tax-cut-induced deficits would, by law, trigger cuts in Medicare, and this would just be the start of a G.O.P. assault on programs like disability insurance
.. “My donors are basically saying get it done or don’t ever call me again.”
The Tax Foundation Has Some Explaining To Do
If corporate tax cuts raise GDP by 30%, and the rate of return is 10%, this means cumulative current account deficits of 30% of GDP over the adjustment period. Say we’re talking about a decade: then we’re talking about adding an average of 3% of GDP to the trade deficit each year — around $600 billion a year, doubling the current deficit.
.. Second, all that foreign capital will earn a return — foreigners aren’t investing in America for their health. As I’ve tried to point out, this probably means that most of any gain in GDP accrues to foreigners, not U.S. national income.
.. they’re peddling an analysis that implicitly predicts huge trade deficits and a large jump in income payments to foreigners, they’re using a model that has no way to assess these effects or take them into account.
Everything you need to know about trade economics, in 70 words
If a country consumes more than it produces, it must import more than it exports. That’s not a rip-off; that’s arithmetic.
If we manage to negotiate a reduction in the Chinese trade surplus with the United States, we will have an increased trade deficit with some other country.
Federal deficit spending, a massive and continuing act of dissaving, is the culprit. Control that spending and you will control trade deficits.
Trump Administration Considers Change in Calculating U.S. Trade Deficit
Tweak in counting exports could bolster president’s case for redoing Nafta, other trade deals
The Trump administration is considering changing the way it calculates U.S. trade deficits, a shift that would make the country’s trade gap appear larger than it had in past years, according to people involved in the discussions.
.. The leading idea under consideration would exclude from U.S. exports any goods first imported into the country, such as cars, and then transferred to a third country like Canada or Mexico unchanged
Economists say that approach would inflate trade deficit numbers because it would typically count goods as imports when they come into the country but not count the same goods when they go back out, known as re-exports.
.. these employees at the U.S. Trade Representative’s office complied with the instructions, but included their views as to why they believe the new calculation wasn’t accurate... A spokeswoman for the Census Bureau, which calculates the trade deficit numbers, said she wasn’t aware of discussions about changing the data.
.. With their focus on domestic manufacturing, Trump administration officials want to measure exports of American-made products, not items shipped from abroad and re-exported... “As a statistician, you generally want symmetry,” said Steve Landefeld, former BEA director. “If you’re going to begin to exclude re-exports from the U.S. export figures, you probably for reasons of symmetry” would want to adjust import figures as well... He has repeatedly cited the $63.1 billion U.S. trade deficit with Mexico last year. Under the new approach the trade deficit with Mexico would be nearly twice as high, at $115.4 billion. The difference is mostly due to the treatment of re-exports.