Wednesday, December 20, 2017

Trump's forgotten people

The President has now delivered his tremendous, beautiful, tax cut Christmas present to the American people.

Now he and the Republicans have to sell the tax bill to Trump's forgotten people.

In the campaign, Trump championed America's forgotten men and women to the hilt. Trump ran as a Republican, competed in the Republican primaries, and focused his attention on the forgotten people on the Republican side.

Bernie Sanders championed America's forgotten people on the Democratic side, but Hillary Clinton became the Democratic nominee, and Bernie Sanders could not carry on his fight as a Presidential candidate.

Many of Bernie Sanders' forgotten people decided to take a chance and voted for Trump.

After being elected President, Trump could have dedicated himself to championing all the forgotten people, Republican, Democrat and independent.

There was, however, a big problem for Trump to do that. Not only was Trump's win a surprise, it was also a surprise that the Republicans won the Senate and the House.

Now, everyone knows the Republicans in control of the Senate and House do not champion America's forgotten men and women, and those Republicans are not going to pass a health care law or a tax cut bill that looks out for the forgotten men and women in the country.

Trump knows that the Republicans are not champions of his forgotten men and women, but he allied with the Republicans in his quest to show he can "get things done."

Trump could not tell his forgotten men and women that the Republicans he was going in with would not be be championing them and would not be looking out for them.

To the contrary, and true to form, Trump lied to his forgotten people that the health care law he was pushing with the Republicans, and the tax cut bill he and the Republicans passed, do look out for Trump's forgotten people.

The Republicans are hardly going to contradict the lies that Trump is telling his forgotten people that he  is looking after them.

So, Trump and the Republicans are locked arm in arm to purvey and defend the Trumpian lies.

Will Trump's forgotten men and women continue to believe Trump cares about them and is looking out for them and other things Trump tells them during the next 11 months?

If Trump's forgotten people conclude that Trump conned them, they will surely take it out on the Republicans in November.

Keep tuned.

Thursday, December 14, 2017

Gary Palmer review

Doug Jones won in Alabama Tuesday night. Full attention for those interested will now be turned to the 2018 mid-term elections. I am in #al06, and this blog entry shall serve as my review and critique of my representative Congressman Gary Palmer.

(For what Rep Palmer has to say about what he has done in Congress, see his press releases at https://palmer.house.gov/media-center/press-releases.)

Regulatory reform
I will start my review on a positive note of a leading active role that Rep. Palmer has taken on  regulatory reform.
Part of the "Swamp" is the bureaucratic regulatory apparatus in Washington DC that has its own conflict of interest between serving its own sense of self-importance through over-regulation and a lesser amount of fair and balanced regulation which better serves the interests of the American people.
Regarding Rep. Palmer's town hall this past February, I commented how most Americans had similar countervailing considerations that were in need of balancing in the regulatory regime but that the "system" failed Americans in that regard. See Town hall questions. In that blog entry, I asked Rep. Palmer these questions:
1. To what extent do you agree with the above analysis that most Americans are similarly situated and have similar interests relative to many important issues for the country, and that there is a political polarization that is not warranted in light of how most Americans are similarly situated on the important issues?
2. Do you believe there has been political polarization in recent years that has impaired Congress in doing its job properly for the American people?
3. Do you think the way Donald Trump conducted his campaign, and the way he has conducted his Presidency in the first month, if the same is continued going forward, will deepen the political polarization in the country? Or do you think the way Donald Trump has conducted his Presidency in the first month, if continued, will work towards lessening the hyperpartisanship in the country?
4. [added 2/23] Does the second set of Donald Trump's immigration executive orders unnecessarily exacerbate partisan division that will make the job of Congress harder, and could Congress help the situation by doing its job and passing comprehensive immigration reform (as should have been done during the Obama years)?
I did not hear answers from Rep. Palmer to my questions. Until he answers the questions, I would say that Rep. Palmer's constituents should count that as a negative against him in their voting decisions in 2018.

Taxes [added 12/16]
Taxes have been covered at length in three prior blog entries, to wit, AL experts re tax cuts (posted 12/1/17 with updates 12/13/17 and 12/15/17); Repubs all in with Trump (11/27/17); and Deciphering taxes (11/19/17). The takeaways from those blog entries about the Trump/Republican tax bill are:
1. the tax bill is another case of Wall Street doing a number on Main Street;
2. Wall Street ("capital") has much of its tax cut benefits already deposited in its stock market bank account, with more to be deposited shortly once the tax bill is enacted into law;
3. Main Street ("labor") must wait for uncertain benefits and bears much risk of deficits and higher national debt;
4. economic inequality has been a growing problem for the country since the 2008 financial crisis as Wall Street fared spectacularly and Main Street lagged, and that economic inequality has already increased and will be further increased by what Trump and the Republicans have done with the tax cuts bill;
5. Congress had other choices that could have been pursued regarding taxes and tax cuts for helping the middle class and increasing economic growth, but the Republicans' donors (Wall Street; capital) would have gotten a lot less deposited in the stock market bank account, which they told their Republicans was not acceptable;
6. out of political desperation, the Republicans have rushed through the tax bill, have refused to give any thoughtful consideration to the growing economic inequality problem of the country, and have gone wholeheartedly in with Trumpian type lying about the tax bill; and
7. Rep. Gary Palmer has been knowingly and purposefully complicit in the foregoing regarding the tax bill.
Accordingly, on taxes alone, voters in the Alabama 6th Congressional district should vote Rep. Palmer out of office in 2018.

Culture war [added 12/16/17]
On November 28th, I sent the below tweet to Rep. Palmer asking whether he wishes to reduce culture war or make it rage hotter
Given Charlottesville and other signs that the President of the United States wishes to stoke culture war, Rep. Palmer needs to tell his constituents whether Rep. Palmer wants to reduce culture war or whether he is in with Trump and wants to stoke culture war. If Rep. Palmer is so lacking in courage that he cannot answer that question to his constituents, Rep. Palmer should be voted out of office in 2018 for his spinelessness.

If Rep. Palmer answers the question, his constituents can decide how they want to take Rep. Palmer's answer into account in the 2018 elections.

Health care [added 12/16]
First, I will quote in full Rep. Palmer's May 4, 2017 press release
“Today the House of Representatives took the first step toward repealing and replacing the misnamed Affordable Care Act and restoring access to affordable healthcare for all Americans,” said Palmer. “The amendment that I authored on invisible risk sharing will drive down the cost of health insurance premiums and helps ensure that those with preexisting conditions have affordable coverage. The option for states to choose to receive Medicaid funding as a per-capita cap or a block grant will provide states with more flexibility to meet the needs of their Medicaid eligible people and will reduce the waste of billions of Medicaid dollars to fraud, inefficiencies and mismanagement. The AHCA also gives states the option to establish work requirements for able-bodied adults without small children. Together, these additions to the AHCA are the most substantial entitlement reform in 50 years.  Although states, as they should be, are provided the option to seek waivers from certain federal mandates, states must certify that pursuing a waiver is for the purpose of expanding coverage or reducing the cost of healthcare.  There is no underlying intention to exclude people from coverage, including those who have been previously sick, and it is important to note that this bill will not exclude people from coverage. There is a little known provision in the bill which defunds Planned Parenthood for one year and will protect this lives of the unborn. This bill is not the end of our efforts to dismantle Obamacare and repair the damage done to our healthcare system. It is the first major step forward.”

In this blog, I have discussed health care in numerous entries. In the blog entry Alabama expertise re health care, I give the below statement of my own views.
The provision of health care in the United States is a monstrously difficult problem.
The existing system is badly fragmented, and that contributes greatly to difficulty in solving the country's health care problem. Obamacare has done little for lessening the fragmentation. The American Health Care Act is not going to do much either.
The United States system is hugely expensive compared to what other countries pay for their health care. In the United States, health care is in the range of 20% of the total economy, whereas other countries do with much less, in the range of 9% to 14%. This disparity in national health care costs is in dire need of attention and is a large component of the difficult problem the United States faces regarding its health care.
Cost is not the sole consideration, but getting health care for less cost should be in the fore of what Congress is doing. In reducing cost, attention should still be paid to what is needed to provide adequate health care. With that in mind, consider the following:
A. Things that can reduce cost
1. If medical malpractice is reformed, and defensive medicine is reduced, that will help reduce the country's health care costs. An estimate of the amount of reduction is something that responders can usefully inform Alabama voters about.
2. The government can play a role in reducing health care costs by exerting control over prices. The biggest impact could be regarding drug prices, which might start with Medicare negotiating drug prices with the pharmaceutical companies. This is a controversial step, which may be part of steps 2 or 3 of the Republican plan. Any such control will have ramifications, including reducing availability of some drugs and lessening the development of new drugs.
3. If there is a reduction in total demand for health care, prices will fall and premiums and deductibles should fall. The American Health Care Act will reduce government funds for health care by means Medicaid cutbacks and replacing higher subsidies with lower tax credits, and this will translate to a reduction of demand. Under principles of supply and demand, the reduced demand should result a reduction of prices but the amount of such reduction is very problematic and may be negligible. It is probably the wildest of imagining by the Trump team that this reduction in demand by cutting back Medicaid and people dropping coverage will result in more than a small fraction of what is in their minds for reduced premiums and deductibles. Further the reduction in prices, premiums and deductible is not due to increased plan choice, but due reduced spending and reduced health services, drugs and medical equipment being obtained.
B. Increasing plan choice is chimera for reducing cost
If there is more choice in insurance plans, people may plan they don't want certain services, drugs and equipment to be covered under their plan. and that can allow the insurance company to charge them less in premiums and deductibles.
That creates a problem, however, that, if those people are allowed to do that, the people who need the services, drugs and equipment that the first set of people forego will have to pay higher premiums and deductibles to have the services, drugs and equipment covered by their plan. In other words, plan choice can reduce premiums and deductibles for some people but increase them for other people.
The same applies as regards the Obamacare mandate and what happens if it is eliminated.The elimination of the mandate will reduce premiums for those who choose not to have insurance coverage. As is well known, under Obamacare, the mandate results in healthier people having to buy insurance and pay premiums. If healthier people do not buy insurance, that will result in higher premiums and deductibles for the unhealthier people who buy insurance.
It should also be pointed out that consumers are unaware of the substance of their plan choice and and ostensible competition in premiums and deductibles. Under Obamacare, where there are standard benefits, insurance companies have competed on premiums and deductibles by reducing their "networks." Consumers cannot make a meaningful comparison of slightly higher or lower premiums compared to the "value" of a larger or smaller network. If there is more plan choice, comparison of premiums and deductibles will prevent genuine competition from happening.
[Ed. 6/5/17 For further discussion of the "chimera" of increased plan choice, see Maine and this discussion:
There is an argument to be put forth that Rep. Palmer's proposal will result in increased plan choice and increased competition among plans, and that such increased competition will get translated into reduced provider charges.
It is submitted that this is a chimera, and the insurance companies best understand why it is a chimera. The insurance companies are most informed about provider charges, and the contracts they negotiate with providers about charges, and consumers are without information or ability to make meaningful marketplace choices about insurance plans that will filter through to impacting provider charges. Further, insurance companies are practiced in navigating the provider marketplace, out of sight of consumers, with a view to higher insurer profitability, and with little concern about consumer plan choice translating into reduced charges.]
In connection with the Alabama Senate election, I thought a public symposium would be useful as a means to educate Alabamians about health care. See Health care symposium.

In some form or fashion, Rep. Palmer, in connection with 2018 elections, needs to expand his engagement with Alabama health care experts and with his constituents about health care and decide whether his May 17 press release should be revised or expanded for the consideration of his constituents in how they vote in the 2018 elections.

Fears of Cong'l Republicans re Trump [added 12/16]
The Congressional Republicans, including Rep. Palmer, are currently all in with Trump. See Repubs all in with Trump. The Republicans are fraught with worry about what is going to happen to them in the 2018 elections.

The root of the worry should be the nature of Trump and the extent to which Trump cares only about himself and will wrongfully attack, damage, seek to destroy, and lie about, anything that threatens or opposes Trump, no matter what the legitimacy for the country. Or, in other words, the extent to which he is an autocrat or would be autocrat who wishes he had the power and control of a Vladimir Putin to do whatever he wants to do. Or, in further other words, the extent to which Trump does not wish to be subject to the rule of law.

Things are playing out and things are getting exposed. Let's describe what Congressional Republicans have to fear.

Trump ran for President championing the cause of a large segment of the population on the Republican side which thought they had been ignored by the establishment for a long time. (Bernie Sanders appealed to a similar segment on the Democratic side.) Trump promised many things, including more and better health care for everyone for less cost, and no cuts to Social Security, Medicare and Medicaid, and jobs, jobs, jobs.

Trump has done much since becoming President showing that he was not genuine and he was conning those who voted for him. The two best examples are what Trump was prepared to do about health care and what he is about to do concerning taxes.

The con man Trump who cares only about himself has no problem lying to his voters that Trump's health care and tax cut ideas are in furtherance of what he promised to them in the campaign.

Republicans in Congress, on the other hand, believe in Trump's health care and tax cut ideas, even though they are contrary to what Trump espoused to his voters in the campaign.

That puts Congressional Republicans in a terrible box.

Congressional Republicans have seen that Trump cares only about Trump, that Trump conned his voters during the campaign, that Trump's health care and tax cut ideas and actions, among other things, expose Trump's con of his voters, and that Trump lies as President in telling his voters that his health care and tax cut ideas further what Trump promised to them in the campaign.

The Republicans great fear is that, prior to November 2018, Trump's voters are going to come to a realization about Trump's con and his lies to them, they will turn against Trump, and, in turning against Trump, the voters will exact terrible retribution on the Republicans in November 2018.

That is a terrible box for the Republicans. They can't tell Trump's voters that Trump conned them and he is continuing to lie to them to try to keep them conned. The Republicans are going all in with Trump's lies. The more the Republicans are complicit in Trump's con and lies, the greater the retaliation will be if and when Trump's voters wise up.

The eleven months until November 2018 are going to have a lot of sleepless nights for Congressional Republicans. They will be thinking about how long it will take for those  who believed in Trump and voted for Trump to come to the realization Trump cares only about Trump, does not care about them, lied to them in running for President, and has lied to them for 11 months as President.

The foregoing is what Congressional Republicans have most to fear about Trump. They should be more fearing about the damage Trump is doing to the country, and what the country should be most fearing about Trump. That will be covered next.

Trump's harming of country [added 12/17/17]
Many believe that Trump has greatly damaged the country and its institutions in how Trump ran for the Presidency and how he has conducted the Presidency for eleven months. For these people, it is a manifestation of how Trump cares only about himself and Trump will wrongfully attack, damage, seek to destroy, and lie about, anything that threatens or opposes Trump and his personal interests.

If and to the extent Rep. Palmer agrees Trump is wrongfully damaging the country and its institutions, Rep. Palmer should say so publicly. If Rep. Palmer disagrees, and he does not think Trump has done such things that warrant criticizing by Rep. Palmer, Rep. Palmer should publicly and specifically address the things, one at a time, that others say Trump has done and is doing that wrongfully harm the country.

Trump's conduct extends over two years that include his Presidential campaign and eleven months of his being President. While millions of people were appalled by things Trump said and did during his election campaign, there was a possibility that Trump would change when he became President. Their view is that Trump did not change, Trump became worse, and, as President, what Trump has said and done is inflicting real damage, and it must stop or ways must be found to hold Trump accountable.

Below is a list of things as to which many believe Trump is wrongfully inflicting harm and damage on the country, and as to which great effort needs to be made to stop Trump from great damage to the country.
1. Trump's attacks on the free press as an enemy of the people, including Trump's lying and impairing of truth and facts;
2. Trump's attacks on the intell community;
3. Trump's attacks on the Russia investigation;
4. Trump's attacks on the FBI;
5. Trump's position that "conflicts of interest" do not apply to him as President, and he can personally profit from the Presidency; and
6. Trump's stoking of culture war and division in the country.

Rep. Palmer needs to address publicly each of the above and say either, yes, Trump is acting wrongfully and Trump needs to stop doing it, or, no, Trump is not acting wrongfully and he, Gary Palmer, does not call on Trump to stop it and change what he is doing. Rep. Palmer should feel at liberty to give such explanations, reasons, and qualifications regarding his "yes" or "no" answers as he chooses.

If Rep. Palmer declines to say anything, that should be a reason to vote him out of office in 2018.

If Rep. Palmer gives answers, the voters can take the answers into such account as they choose in casting their votes in 2018.

The Swamp - Manafort; Flynn [added 12/17]
There has been a ton about the Swamp during the past two years. I have blogged a lot about the Swamp.

There is something current to say about the Swamp that Rep. Palmer should comment on.

I think most Americans, even cynical ones, were blown away by what they learned  Manafort and Flynn were charged with having done, a reaction of "my God, did they do that? Is that true?"

Reasonably followed by, "and to think those things may have never come to light if there was not the happenstance of involvement with Donald Trump and the Russia investigation that got started. Otherwise  Manafort and Flynn could have gotten away with it."

And further followed by, "and God, are Manafort and Flynn just business as usual in Washington DC? Are they the tip of an iceberg of horrors?"

And where has Trump been for the American people on this? Was Trump shocked by what he learned what Manafort and Flynn were charged with doing? Or was Trump not shocked because he knows a lot of similar things go on all the time in Washington DC?

Trump ran on draining the Swamp.

But Trump has made no comment to the American people, either that Manafort and Flynn are indeed shocking, but, based on in his personal knowledge and experience, and on advice from the Justice Department and the FBI, Americans should not view Manafort and Flynn as the tip of an iceberg of horrors, or, alternatively, Trump thinks that the American people should have concerns that Manafort and Flynn may be the tip of an iceberg, and that the Justice Department and the FBI need to bolster their efforts and resources to try to find out just how bad things may be.

But Trump has said nothing.

Rep. Palmer, can you say anything about the above to your constituents? Were you shocked by what Manafort and Flynn were charged with doing? Do you think Manafort and Flynn are a possible tip of an iceberg of horrors in Washington DC? Do you think the Justice Department and the FBI need to be bolstered to try to protect the American people against the likes of Manafort and Flynn?

Has Trump said nothing because he has skeletons lurking in his closet? Trump has been a wheeler dealer businessman for decades, who has done a lot of business in foreign countries. Who knows what all shenanigans he has engaged in.

Rep. Palmer, would you be shocked if, for example, Mueller came upon money laundering by Trump organizations? Foreign bribery? Other illegalities.

Frankly, it would not shock me one bit.

The country has no idea. Trump presumably knows if there are skeletons in his closet, but he is sure as hell going to do his best to keep them secret.

Millions of Americans don't believe a thing that comes out of Trump's mouth and would not trust Trump as far as they can throw him.

And so the country is mired in Russia.

What are you going to do about it, Rep. Palmer? Get the country more mired with more investigations going off in additional directions?

Speak to your constituents, please, Rep. Palmer.

Improper governmental payments [added 12/24]
I listened to the 12/20/17 podcast of Matt Murphy with Rep. Palmer, which podcast can be found at http://www.talk995.com/podcasts/ Rep. Palmer variously mentioned $140 billion and $500 to $700 billion of improper governmental payments, which add to national debt and should be stopped. I think the first figure was an annual figure that Rep. Palmer thought could be cut in half, and the latter was possibly what could be saved over a 10 year period. Working on stopping improper payments by the government would seem to be something that Republicans and Democrats can do together. I would request that Rep. Palmer discuss this with Rep. Sewell, and see if they can report agreement to Alabamians. This matter can go on the plus side for Rep. Palmer if there is progress in 2018.

Guns [added 2/12/18]
On December 6, 2017 Rep. Palmer voted for the Concealed Carry Reciprocity Act. He reported this in press release Palmer Votes to Defend 2nd Amendment Rights.
I think the United States would be a safer country if guns were outlawed.
While guns are not the only source of happiness in life, it would appear that many Americans receive psychological sustenance from owning gun. This needs to be weighed in the balance of what the United States should do about guns.
Here's what I advocate: Amend the Second Amendment so individual States could pass gun control restrictions as they chose, and a State may prohibit guns from being brought into the state that would violate its restrictions.
Those persons for whom gun ownership was an important source of happiness and well being could live in states that had no gun restrictions.
Those persons for whom gun ownership was unimportant and who thought they would be safer where guns were restricted could live in states with tight gun controls.
Whether a state had tight gun controls or not could affect company decisions about where they wanted to be located. States with lax gun control laws could suffer economically because companies would not locate their facilities in those states in the belief that their employees preferred states with tighter gun controls.
Let that play out as it may, and let people make their choices about how important gun ownership was to them and which states they decided to live in.
For more discussion, see Let's talk guns.








[to be continued]

Friday, December 1, 2017

AL experts re tax cuts

Update 12/15/17
Here are some things to think about as the Trump/Republican tax plan barrels towards passage and signing before Christmas:
Do you think Wall Street knows best how to take care of itself first and take advantage of the rest of us? Does Wall Street seize on opportunities when the stock market can be "goosed up", ride the market up during the "goosing," suck little people in towards the end of the run up, and either neatly bail out before a plunge happens or else have the cushion that Wall Street folks bought early in the run up and have limited losses, compared to Main Street types, who bought in at the peak and took the maximum whacking in the plunge?
Did you take a whacking in the crazy, multi-year dotcom bubble that crashed in 2000 after you bought in towards the end of the bubble?
In the lead up to the 2008 financial crisis, did Wall Street make billions of dollars in virtually criminal activity in the mortgage markets? How much culpability did that behavior of Wall Street have in bringing the financial system near collapse? Did Wall Street have the rest of the country over the barrel that Wall Street had to be bailed out, or the country would go into a depression? After that, did Wall Street manage to take care of itself and build its wealth fantastically, while the rest of the country is still trying to fully recover?
And now the Trump/Republican tax plan:
As between "capital" and "labor," "capital" already has a big part of its benefits from the tax plan deposited in capital's stock market bank account. Nothing is in the bank for "labor," and "labor" has to await uncertain benefits of wage growth and job creation and be exposed to the risk of deficits and higher national debt.
Wall Street has the best sense of how much the stock market has been "goosed up" since the election of Trump. Hordes of little people are probably being sucked into the stock market now having watched the run up since Trump's election. After the tax cuts are signed into law, some Wall Street types may choose to cash out (sell their stock) in the belief that this "goose up" has done as much as it can. Other Wall Street types may hang in for more.
Wall Street can be well satisfied with the current fantastic stock market run up and that Wall Street has done as well as possible. Things may pan out ok for the rest of the country, or not. Wall Street is not going to worry.

Update 12/13/17
Today's news is that the Republicans are are at peak excitement about passing their tax plan. Rep. Gary Palmer is presumably ecstatic along with his Republican colleagues. As set out below, it seems the only certain thing is that "capital" has already gotten put into its stock market bank account an untold amount of its expected benefits from the tax cut plan, and more of "capital's" tax cut benefits may get quickly added into capital's bank account. "Labor" will have to wait to see how much wage growth and job creation will result from the tax cuts. "Capital," with its tax cut benefits in the bank, finds acceptable the risk of increased government deficits and higher national debt if the tax plan doesn't "pay for itself" and if the promised wage growth and job creation for "labor" does not occur. "Labor," with nothing certain and nothing in any bank for "labor," is badly at risk of not getting the promised wage growth and job creation and of being burdened with increased governmental deficits and higher national debt. It is  important, in holding Rep. Palmer accountable in 2018, that he cannot claim ignorance or lack of understanding about the foregoing great deal for "capital" and the risky, bad deal for "labor" in the tax plan the Republicans are hellbent to pass for their and Trump's political survival. It needs to be "on the record" that Rep. Palmer is acting in a deliberate and premeditated way in giving the Republicans' gift to "capital" and sticking it to "labor." The situation with the Republicans' tax plan is particularly reprehensible in light of how "capital" has done fine and dandy since the 2008 financial crisis, how "labor" has lagged, how economic inequality has grown since 2008, how the multi-trillion dollar stock market gains Trumps brags about since his election are partly from "capital" getting is tax cut benefits already in the stock market bank, how those tremendous stock market gains have further worsened the economic inequality between "capital" and "labor," and how even more inequality may come in the future as a result of the tax plan. The rush with which Republicans are pushing their tax plan to save themselves politically, and the Republicans' lack of thoughtful consideration of whether there are other better ways to help the economy and "labor," are highly deserving of electoral retribution in 2018. I have previously endeavored to communicate the foregoing to Rep. Palmer, but he has not acknowledged anything. My purpose now is to get Rep. Palmer's acknowledgement before the tax plan passes, so Rep. Palmer cannot claim ignorance or lack of understanding later on, and to have on the record that Rep. Palmer proceeded purposely with understanding in what he is doing. To get Rep. Palmer "on notice,"  I will tweet to him and to other appropriate persons in Alabama links to this blog entry, including requesting to be advised if anyone thinks I am wrong in what I say.
____________________________

How should tax plan be analyzed
The purpose of this blog entry is to seek opinion from economists and other experts in Alabama about the Trump/Republican tax cut plan.

To do this, I will set forth my analysis as a point of reference for expression of opinion by others.

A. "Capital" and "labor"

My starting point is how the corporate tax cuts and related benefits of the tax cuts will pass through to "capital" and to "labor," respectively.

For "capital" the tax cuts and related benefits pass through in the form of increased dividends, stock buy backs and higher stock prices. For "labor" they pass through in the form of wage boosts and job creation.

The "benefits related to the corporate tax cuts" are higher corporate revenues from business growth  that results from the corporate tax cuts. Both the tax cuts and such related benefits need to be considered as to how much of such benefits will be received by "capital" and how much will be received by "labor."

How corporations will spend their tax cuts and the revenue from business growth is affected by a number of factors and particular circumstances, As a result there is significant disagreement among economists  in trying to project how much "labor" will get in the form of wage growth and job creation.

This disagreement and uncertainty means "labor" has to wait to see how much  wage growth and jobs creation will happen from the tax cuts.

Before touching on factors and circumstances, and uncertainties related to what "labor" will get, the significance of the stock market for "capital" needs to be indicated.


B. Stock market measure of what "capital" will get

In the investment universe, investors do their own projecting about what "capital" will get, and those projections (expectations) get reflected in stock market prices in advance of tax cuts going into effect and in advance of business growth actually taking place. Different investors may have different projections (expectations). Based on their respective projections (expectations), investors buy and sell shares of stock, and stock market prices are affected in an averaged way about those differing projections (expectations).

The full amount of what investors and their "capital" will get from the corporate tax cuts and increased corporate revenues resulting from business growth by reason of the tax cuts may not get immediately reflected in stock prices, and stock prices can continue to rise after the tax cuts go into effect and after there is business growth resulting from the tax cuts, and it becomes clearer what amounts "capital" will receive from the same.

The stock market is a form of a bank into which investors and "capital" can receive an early deposit of the value of the tax cuts and associated benefits, and investors and "capital" can cash out whenever they want by selling their stock.


C. "Labor" must wait to see what it will get

Stock market valuations are based on earnings, expectations about future earnings and about future growth that will contribute to future earnings, and which will flow to "capital" in the form of higher dividends, stock buy backs, and rising stock prices.

Wages, increased wages, and wages that are paid to new employees if there is job growth, are dollars that go to labor and not to capital. Expectations about increased wages or wages to be paid to new hires will not themselves be reflected in stock prices, although investors may project that there will be an association of the same with more going to capital. If the stock market valuation goes up, it is not measuring the increased amounts going to labor but only increased profits that happen along with the increased amounts going to labor and that gets received by capital.

While there may be an association between more amounts going to "labor" and more going to "capital," it is not possible to deduce from a stock market rise what the expectations are about the amount of the increase going to labor.


D. What "capital" has already gotten

Trump keeps bragging about the great stock market rise that has taken place since his election (about $4 trillion). What Trump doesn't say is that all of that belongs to capital, and it is uncertain what  labor will get associated with the stock market rise.

The $4 trillion or so run up in the stock market since election day may be attributable to a number of factors affecting investor expectations about what "capital" will get. These factors include (i) Trump's loosening of regulations contributing to expectations business will be able to be more profitable, (ii) expectations that corporate taxes will be reduced and part of the tax cuts will be payable as dividends, and (iii) expectations of increased economic growth attributable to tax cuts, and of such growth further increasing corporate earnings which will redound to the benefit of "capital."

No one can say for sure how much of the $4 trillion or so run up in the stock market since election day is attributable to expectations of tax cuts and how much "capital" will receive from the tax cuts.

Further no one can say how much further run up there will be if the tax cuts are passed (or how much the stock market will fall if, for some reason, it appears that there will not be corporate tax cuts), and how much more will go to "capital."

All that being said, some of the benefits to capital of the tax cuts is already in the stock market bank for capital, and more may still get deposited in the stock market bank for capital.

What labor will get associated with the stock market rise is not in any bank for labor, it is very uncertain,, and labor must await the passage of time to see how much wage growth and job creation takes place.


E. Uncertainties about what "labor" will get; economic inequality

Since the 2008 financial crisis, much attention has been paid to growing economic inequality in the United States.

Kevin Hassett, Trump''s Chairman of the Council of Economic Advisors, recently recently made this comment, which sheds light on how that increasing economic inequality shows up in the stock market:
Over the course of the Obama administration, U.S. corporate profits rose by a healthy 11 percent per year. But workers’ pay didn’t keep pace, and median wage growth was a paltry 0.6 percent per year. This disconnect between profits and wages is a radical departure from previous economic norms. Workers used to get a 1.1 percent raise for a 1 percent increase in corporate profits. Now the passthrough to workers is closer to 0.4 percent. Why did it change so much? Because the profits are offshore, benefiting other nations’ workers. In 2016, U.S. firms kept 71 percent of foreign-earned profits abroad. What would happen if they didn't do that? A simple back-of-the envelope calculation suggests U.S. workers in 2016 would have received a raise of nearly 1 percent. What if these firms didn't do that for the next 8 years? The median U.S. household would get a $4,000 real income raise.

At this juncture of, in Trump's words, a "once in a generation opportunity" regarding tax reform, it would seem extremely important that the country get it right in diagnosing the reason for the "radical departure from previous economic norms". If that is diagnosed incorrectly, and the "radical departure from previous economic norms" continues, the tax cuts may indeed increase corporate profits but wages will continue to lag, and economic inequality will grow even greater.

With the rush through of the Trump/Republicans tax plan, it is fair to say that the American people have been deprived by the Republicans of thoughtful consideration by Congress of the very serious problem of economic inequality and what the government should do to address the same.

There are factors and evidence related to this that the Republican rush through has failed the American people on.

For example, automation and robotics may have contributed the "radical departure from previous economic norms" and the lagging of wages behind profits since the 2008 financial crisis. Before the Republicans rush through tax cuts which may well further increase economic inequality, the American people deserve to know that Congress turned attention to the effects of automation and robotics and whether "labor" may fail to get what the Republicans are promising because of automation and robotics.

In the rush through, the Republicans do not show the American people that the Republicans are aware of information and evidence such as corporations saying they will not use the tax cuts to expand their business and but will pay dividends or do stock buybacks with the tax cuts.


F. Some numbers

It is instructive to use Kevins Hassett's $4,000 real income raise for the median household that is referred to in the above quotation. (The $4,000 figure is at the high end of disagreement among economists, and Larry Summers argues for a number closer to $1,000.).

There are about 125,000,000 households in the United States, which, times $4000, yields $500 billion to labor.

That can be compared to the $4 trillion run up in the stock market since Trump's election, which belongs to capital. The $4 trillion is not due only to tax cuts, but is cited to be a measure of how much more economic inequality has increased under Trump.


G. Deficits and the national debt

There is a great unknown risk about the effect of the tax cuts on Federal government deficit and the national debt, and the looming threat of the havoc that rising interest rates could have on Federal government finances.

The risk of this seems more on "labor." "Capital" has a lot of its tax cut benefits already in the stock market bank, and more may get deposited in the near future. "Labor" in the meantime has to wait on see what wage growth and job creation results. To the extent "labor" comes up short on wage growth and job creations, that will probably be associated with greater problems and risks on the deficit and national debt front.


H. What are the other choices

The country is not in a dire way in 2017 as it was in 2008. Things are going positively for the economy. It is not imperative that something be done in 2017 about taxes.

A good argument can be made that "capital" already has huge gains in the stock market bank resulting from expectations about the corporate tax cuts. With "capital" receiving such immense tax cut gains, and it may get more from the corporate tax cuts, and it could even be fair for a time to increase the individual tax rates of the rich to balance off the immense benefit to their wealth they have received and will receive from the corporate tax cuts (which they say are imperative to increase economic growth, boost wages, and create jobs for the rest of the country).

A different approach that would give more bona fides to the "good" intentions of Wall Street and the super rich would be doing tax cuts in the form of tax credits to corporations if there are increased payrolls (from wage boosts and new jobs). In other words, instead of guaranteeing their cash in to Wall Street and the super rich, the proposition to them would be, "Ok you say tax cuts will boost wages and create jobs. Show us. Here are tax cuts you will get if you proceed with expand business activities that increase your payroll." This could be extended to tax credits of education programs undertaken by corporations to educate and train workers with skills that can contribute to greater productivity, wage growth and job creation.

[I expect I will revise the above as my solicitation of Alabama expert opinion proceeds]

Will Slaughter
Will Slaughter is a native son of Alabama who lives in Milwaukee. He is with Northwest Passage Capital Advisors, an asset manager focused on emerging markets debt. Will has tweeted the following regarding the Trump/Republicans tax plan.






Monday, November 27, 2017

Repubs all in with Trump

As Alabama heads towards its special Senate election on December 12th, it is being well discussed that the country has big problems with its politics and governance. (See Joe Scarborough's Washington Post op-ed that is copied and pasted at Disastrous American politics.)

There are many ways to put it into words the country's political condition.

It is a messed up national situation with Donald Trump as President.

Donald Trump may not care about anything but himself.

There is disarray, if not crisis, for the Republican and Democratic parties, which are divided within themselves and struggling to define who and what they represent.

The Republicans' situation is particularly complicated by Donald Trump's true beliefs and motivations being unknown and by his unpredictability.

In winning the 2016 election, Trump saw and appealed to deep seated disaffection of a significant segment of the population.

It is unclear, however, the extent to which Trump cynically exploited that disaffection in making a run for the Presidency, and whether he made promises he did not  believe in and only craved the ultimate prize of the Presidency for his self-glorification and narcissism without ultimately caring  about what happened to those who elected him.

In his ten months as President, Trump has done and said a lot of things that have proven to many people that Trump cares only about himself.

Trump continues with a strong base of support that seems unwavering in its belief in Trump and unfazed by anything Trump does or says. That base of support seems nowhere near concluding that Trump conned them. Time will tell on that.

In the meantime, Republicans in Congress are fearful for their future and subservient to Trump. They should have doubts about Trump but they dare not speak any doubt or concern about Trump, out of fear of Trump and of consequences for the Republican party if there are breaks in the ranks about Trump.

No one knows how the story of Trump will play out. It could be Trump will succeed in the course he is on, no matter how damaging to the well being of the country that some are seeing. Alternatively, it may end very badly someway, somehow, for Trump, there may be great damage to the country that becomes clear and that will take years to repair, and  the Republicans may pay a big price for silence and complicity in not standing up against Trump.

Regardless, there is no getting out of the Republicans putting their bets on the table, and the Republicans right now are all in with Trump.

And the roulette wheel spins and spins.

Into what slot will the little ball fall when the current spin of the wheel stops in Alabama on December 12th?

The Republicans are holding their breath.


Keeping score against Rep. Gary Palmer
Rep. Gary Palmer has one of the safest House seats going, so, for him, going all in with Trump does not create a risk for his job personally and is perfectly supportive of his fellow Republicans. The only thing for Rep. Palmer is having to live with his conscience. The score should be kept against Rep. Palmer as a test for his conscience, and also the score against Rep. Palmer may be held out by challengers in other House districts in which there is a Republican incumbent whose conscience can be tested.

A lot is already on the record in this blog against Rep. Palmer. To my knowledge he has not deigned to reply to any of it.[If you interested, I have sent a very large number of tweets to Rep. Palmer, which can found here.]  I will recapitulate such matters after I take on what is front and center at the moment, to wit, taxes.

A. Taxes
Taxes are something that should be on Rep. Palmer's conscience.

Here is what Rep. Palmer's press release says on taxes:
Congressman Palmer Votes to Cut Taxes 
November 16, 2017
Press Release
For Immediate Release
Media Contact: Cate Cullen (202)225-4921
Palmer Votes to Cut TaxesWashington, DC – Today the House of Representatives passed the Tax Cuts and Jobs Act by a vote of 227-205. Congressman Gary Palmer (R-AL) released the following statement after voting in favor of the bill.
“My colleagues and I took a significant step towards providing American families much needed and meaningful tax relief,” said Palmer. “The Tax Cuts and Jobs Act lowers rates for individuals and families and makes much needed changes designed to spur the type of sustained economic growth that will benefit every American. The American people have been waiting over three decades for this kind of reform and I hope that my colleagues in the Senate will move quickly so that we can reconcile differences and make improvements in order to deliver on the promise of tax reform to the American people.”
“One of the primary reasons I ran for Congress was to have the opportunity to help make major reforms that help American families and that help make our nation more secure, more prosperous and on a path to fiscal stability. Throughout this process our focus has been on lowering rates for taxpayers, making sure American corporations can compete in  the world economy, cutting taxes and red tape to promote small business startups and help them grow and making our tax code simpler and predictable to promote more investment. These are the essentials that will lead to vibrant and sustainable economic growth and that will put more money in people’s paychecks.”
“While we are excited about what we are doing with this bill, our tax reform effort is not a ‘one and done’. We will continue to work year-after-year to ensure that our tax code works for the American economy and works for all Americans.”
Plenty has been said about how desperate the Republicans in Congress are for a win on taxes, how their donors are threatening to cut off the Republicans if they can't come through with a fantastic tax cut for the donors, and  that to sell that to the American people it is imperative to promise there will be a huge boost to wages and job creation and increased economic growth will produce revenues offsetting the tax cuts alone.

Politicians are suspect whenever they make promises, and the question is how suspect are the promises of Trump and the Republicans, and who is at risk regarding the promises.

Here are some things to be suspect about Trump and the Republicans (including Rep. Gary Palmer), and their donors.

First think back to the 2008 financial crisis and how the American people were told Wall Street had to be bailed out in order to save the financial system and avoid a financial collapse that would plunge the country into a severe recession if not a depression. Wall Street was bailed out, and it and the other super rich went on to spectacular fortunes during the next decade, whereas much of America was stagnant and left behind.

Next consider the debate and uncertainty about how corporations will spend their tax cuts and whether the funds will go to capital (such as in form of dividends or business expansion that increases earnings available for capital) or to labor (in form of wage boosts and new jobs). There are several factors that bear on this, and economists greatly disagree.

Further consider how the stock market and its gains have already put into the bank expectations about how much "capital" will get from the tax cuts and the revenues from increased economic growth. This amount that is already "in the bank" for capital is to be contrasted with how labor (the rest of us) is left in uncertainty and has to wait to see how much "labor" will ultimately get and how much there are increased revenues for the government that will offset the tax cuts.

Consider how corporate tax cuts might be tied directly to wage growth and job creation (such as tax credits for increased payroll) and give more guarantee of tax cut benefits going to labor, compared to the benefits that are already "in the bank" for capital because of expectations about how much "capital" will get from the Republican ideas about tax cuts.

Consider how Trump has made it clear that he considers himself entitled to profit from the Presidency and how his motivations about the tax plan are to benefit himself and his family and it rings false that his tax plan is not for the rich.

So, for Rep. Gary Palmer's conscience: There is plenty of reason regular Americans should not trust Trump and the Republicans about taxes. Rep. Gary Palmer needs to think it through and decide how clear a conscience he has about what he wants to do with taxes.

In all events, Rep. Gary Palmer should not be able to plead ignorance about what the Republicans are doing with taxes if the tax cuts are enacted and there is increased realization by Americans that Trump and the Republicans were not to be trusted on taxes.

For a lengthier discussion about taxes, please see Deciphering taxes.







B. Culture war
Will Rep. Gary Palmer answer whether he wants to lessen the culture war, or whether he is all in with Donald Trump and wants to stoke the culture war as hot as he can?



C. Health care
There are numerous questions to try to get Rep. Palmer to answer about health care. My bet is he won't answer, but let's get started with whether he thinks  he should expose his views and thinking to critical public scrutiny and questions from his constituents.

D. Fake news
At least one of your followers is keen on the subject of FAKE NEWS, which is a very good topic.
For starters, let's try an essay question for you. Please comment on Donald Trump's attack on FAKE NEWS that has been going on for more than a year, whether that attack has been beneficial or detrimental to the country, and the extent to which you support or oppose that attack  To answer that question, it may be necessary to give a definition of FAKE NEWS.


E. Silence and complicity
[to be completed; too much to set forth right now; possibly the most damning against Congressional Republicans]


F. Comey, Mueller, FBI
Can we stipulate some things, Rep. Palmer?
1. Can we stipulate that the last thing an FBI director wants to cross his desk is a criminal case bearing on national electoral politics, because of the immense pressures and attacks by outside partisan politics and enormous risk to FBI maintaining its independence and reputation for independence under those attacks?
2. Can we stipulate that Trump cares only about Trump, that he does not care about the FBI except to the extent the FBI is in a position to help or hurt Trump, and any opinion Trump expresses about the FBI is determined not by facts, truth and accuracy, but solely by whether the FBI is helping or threatens to hurt Trump (i.e., when FBI does something that helps Trump, FBI is "fantastic" and, if FBI threatens to hurt Trump, FBI is trash and its reputation is "in Tatters")?


[to be continued]

Sunday, November 19, 2017

Deciphering taxes

Blare over tax reform is assaulting the eyes and ears of Americans.  Hyperpartisanship is at peak pitch. Below is a sample.



Trump cannot stand being viewed as a failure for 10 months on the legislative front, and he is crazed for a win on taxes to prove he can "get things done." The Republicans think they are doomed in the 2018 elections if they don't get tax cuts passed. Trump and the Republicans have huge political self-interest to pull out all the stops in selling to the country that it absolutely needs their tax cut plan to stimulate the economy, boost wages and create millions of jobs.

The Democrats have equal political self-interest in their heart in not wanting Trump to get a legislative win that will prop him up, and in wanting to take back the House in 2018. The Democrats are hot on the case that Trump and the Republicans are seeking an outrageous giveaway to business and the rich that has very little promise for the rest of the country.

Americans may find it impossible  to decide who and what to believe about taxes.

Their problem is aggravated by little trust in Congress and the President.

In trying to decide who and what to believe about the idea of huge tax cuts for the rich being  necessary and effective to get jobs and boost wages for the rest of the people, voters might start by thinking about the 2008 financial crisis.

The 2008 financial crisis and the 2017 tax cut 
In the 2008 financial crisis, Wall Street had the rest of the country over the barrel on the basis that, if Wall Street was not bailed out, the nation's financial system would collapse.

The country was told it had no choice, and Wall Street was bailed out.

After the bail out, the fortunes of Wall Street and the super-wealthy recovered and zoomed spectacularly.

Much of the rest of the country, however, went into a long, tough struggle trying to get back to where they were before the financial crisis.

Now, in 2017, Trump and the Republicans are telling the country that, to finish the job of recovery from the financial crisis and get on a robust upward trajectory for all, it is imperative for there to be a very large corporate tax cut, in order to stimulate economic growth, and provide great wage growth and millions of jobs to benefit those who have lagged behind. If the tax cuts are not passed, those who have lagged since the financial crisis will continue to lag, say Trump and the Republicans.

Having seen what happened in the financial crisis, and who came out ok and who did not, there may be reason to cast a jaundiced eye on what is being put out to Americans by Trump and the Republicans concerning their tax cut plan.

Consider some things about 2008 and 2017.

2008 was frighteningly dire for the country, financial collapse was imminent, and there was not room  for destructive, self-interested hyperpartisanship. The direness for all in 2008 summoned up a trusting and belief by the American people that their leaders were doing the right and necessary thing in bailing out Wall Street to save the financial system.

In 2017, the country is not in dire straits, a cataclysm is not overhanging the country, self interested hypartisanship is raging, there is much distrust of Congress and the President, and all that gives room for skepticism about what Trump and the Republicans are telling the country.

Both 2008 and 2017 give rise to asking one's self: How much do Wall Street and the super rich genuinely care about what happens to the rest of the country? To what extent will they act on a first priority of taking care of themselves, regardless of what happens to the rest. In the case of 2017, how strongly do Wall Street and the super rich believe that wages will be increased and millions of jobs created for the rest of the country, or are they just saying that in service of getting huge tax cut benefits for themselves?

In appraising this, it is unfortunately needed to work through  the debate going on about the tax cut plan of Trump and the Republicans.

Central questions
The central questions raised by the tax cuts proposed by Trump and the Republicans are these:

1. Who is going to get what amounts of the tax cuts, and what is "fair" distribution of the tax cuts in a situation of those who pay the most taxes getting a disproportionate share of the tax cuts; 

2. How much increased economic growth will result from the tax cuts, and how much benefit from the increased growth will accrue to labor (in the form of higher wages and new job creation) and how much will accrue to capital (in the form of higher after tax earnings paid out as dividends and higher stock prices); and

3. How much additional tax revenues will result from the increased economic growth that will offset the greater deficits and higher national debt that would occur if the tax cuts did not result in increased economic growth.

Who gets what tax cuts
The rough general information is that there will be a net of $1-1/2 trillion in tax cuts, businesses will receive about $1 trillion of the tax cuts, and individuals will receive about $500 billion. (See Business Insider),

Much information will be put out about the amounts of tax cuts that persons in various categories and circumstances will receive under the tax cut plan.

Proponents of the tax bill are putting out that an average family of four will receive about $1200 in tax cuts.

Amounts of corporate tax cuts need to be traced through to ultimate recipients and beneficiaries of the saved taxes. The corporate tax cuts can be used by corporations to pay dividends to stockholders, or to pay higher wages to existing employees, or to expand the business, and in the latter case, beyond the amounts of the tax cuts, there are additional wages that may get paid to new employees and increased corporate earnings that may be paid to stockholders.

How much "labor" will get from the corporate tax cuts and how much "capital" will get from the corporate tax cuts will be affected by a number of possible factors, and this probably makes for a great deal of uncertainty about predictions. These enter into the debate about how the above $1200 average family tax cut gets raised by average amounts of wage growth (discussed more in the next section).

Increased economic growth
Trump and the Republicans cannot sell their tax cuts plan merely on the basis of the average family getting $1200, and Trump and the Republicans have to make the case that huge tax cuts for corporations and the rich are needed and will result in greatly increased economic growth and great wage increases and job creation for those who have been lagging in the recovery.

The Democrats will say endeavor mightily to cast doubt on what Trump and the Republicans say.

Each side will have their economists weigh in, and the economists on the two sides are expressing very differing views.

Try as hard as you want, I think you will only find imponderable disagreement among economists and other experts about how much increased economic growth will result from the tax cut plan, and how much benefit from the increased growth will accrue to labor (in the form of higher wages and new job creation) and how much will accrue to "capital" (as in the form of higher dividends and higher stock prices).

If you wish to wade into the disagreements, you can start by reading: (i) White House economist and former Treasury Secretary spar over Trump tax plan; (ii) Lawrence Summers' Hatchet Jobs On Tax Reform And Kevin Hassett;  (iii) Prepared Remarks By Council of Economic Advisors Kevin Hassett Before the Tax Policy-Center Foundation (the "Remarks"); (iv) The Trump administration’s tax plan is an atrocity "Remarks"): and (v) Lawrence Summers: One last time on who benefits from corporate tax cuts.

You should also consider how it will take time to gain a good sense of who was right and who was wrong, and even then there are likely to be other factors and causes that bear on the economic situation of the country down the way so that it will be very hard to tell exactly what effect the tax cut plan of Trump and the Republicans have had (assuming it is enacted).

For something to talk about, let's refer to the $1000 to $4000 range for average family increase in wages that Summers and Hassett lay out.

There are about 125,000,000 household in the country. Multiplying that by the $4000 high range of Hassett yields $500 billion to "labor", and $125 billion to "labor" if the Summers $1000 number is used..

While you may think the tax cut plan presents very significant uncertainty about what the outcome a couple of years down the line, there may be great propensity for you to say, "well, I'm going to get some tax cut, the country has to try something with taxes to increase economic growth, there should be some positive effect in jobs and wages, and maybe it will turn out pretty well."

Trump and the Republicans certainly want you to react that way.

The Democrats will try to get you to react differently.

The political stakes for Trump and the Republicans and for the Democrats are enormous.

Economic inequality
At bottom, the country may be in a terrible box regarding the tax cuts plan.

This box  comes from economic inequality that has grown during the past thirty years and that has gotten very extreme during the past ten.

This increased economic inequality distorts even further the disproportionate share of the benefit of the tax cuts going to Wall Street and the super rich, and creates an even greater risk if the tax cuts don't do as Trump and the Republicans promised, and such will even further exacerbate the problem of economic inequality.

Let's explore this

A. Economic inequality since financial crisis

Consider the below that Trump's economist Hassett says in the Remarks:
Over the course of the Obama administration, U.S. corporate profits rose by a healthy 11 percent per year. But workers’ pay didn’t keep pace, and median wage growth was a paltry 0.6 percent per year. This disconnect between profits and wages is a radical departure from previous economic norms. Workers used to get a 1.1 percent raise for a 1 percent increase in corporate profits. Now the passthrough to workers is closer to 0.4 percent. Why did it change so much? Because the profits are offshore, benefiting other nations’ workers. In 2016, U.S. firms kept 71 percent of foreign-earned profits abroad. What would happen if they didn't do that? A simple back-of-the envelope calculation suggests U.S. workers in 2016 would have received a raise of nearly 1 percent. What if these firms didn't do that for the next 8 years? The median U.S. household would get a $4,000 real income raise.

What Hassett says above corresponds with the sense in the country that Wall Street and the super rich fared spectacularly well in coming back from the financial crisis and the rest of the country has been left behind for a decade.

As Hassett states above, "[o]ver the course of the Obama administration, U.S. corporate profits rose by a healthy 11 percent per year."

Up to the election of Trump, the stock market valuation more than doubled since the financial crisis, and that correlates with the very worsening picture about economic inequality.

But Hassett says there is a "disconnect between profits and wages [that] is a radical departure from previous economic norms.'

At this juncture of the "once in a generation opportunity"  regarding tax reform,  it would seem extremely important that the country get it right in diagnosing the reason for the "radical departure from previous economic norms". If that is diagnosed incorrectly, and  the "radical departure" may continue and lead to even greater economic inequality and result in more lagging by those who have lagged since the financial crisis.

B. Increased economic inequality from the tax cuts

Since Trump's election the stock market valuation has increased possibly by as much as $5 trillion. (Fortune magazine puts the increase at $3.8 trillion for the S&P 500. http://fortune.com/2017/11/08/donald-trump-record-stock-market-election/ .)

Stock market valuations are based on earnings, expectations about future earnings and about future growth that will contribute to future earnings, and other financial factors that affect the valuation of profitability.

Wages, increased wages, and wages that are paid to new employees if there is job growth, are dollars that go to labor and not to capital. Expectations about increased wages or wages to be paid to new hires are not something that will cause stock prices to rise. If the stock market valuation goes up, it is not measuring the increased amounts going to labor but only increased profits that happen along with the increased amounts going to labor.

As regards tax cuts, besides academic economists such as Hassett and Summers, also investors and their economists try to predict how corporations will use their tax cuts for paying higher dividends, paying higher wages, or expanding their business, and they try to  predict how much corporations will expand their business, and how much the expanded business will yield earning that can go to the stockholders after their projections of how much will go to increased wages or wages for new employees.

In the investment universe, investors don't have to wait to see how things turn out before money can be put in their pockets. Unlike the rest of the country that has to wait to see whether they will have  wage growth and new jobs actually created, investors, based on their expectations, can proceed to bid up stock prices. This provides immediate realization of amounts investors will get of the corporate tax cuts. The full amount of what investors will get from the reduced corporate taxes  may not get immediately reflected in stock prices, and stock prices can continue to rise over time as it becomes more certain what amounts investors will receive from the tax cuts.

The $4 trillion or so run up in the stock market since election day may be attributable to a number of causes including (i) Trump's loosening of regulations contributing to expectations business will be able to be more profitable, (ii) expectations that corporate taxes will be reduced and part of the tax cuts will be payable as dividends, and (iii) expectations of increased economic growth attributable to tax cuts, and such growth further increasing corporate earnings payable as dividends.

No one can say for sure how much of the $4 trillion or so run up in the stock market since election day is attributable to  expectations of tax cuts and how much "capital" will receive from the tax cuts.

Regardless, since election day, the amount by which economic inequality has been increased by the $4 trillion or run up in the stock market might be fairly put at that $4 trillion or so.

Further no one can say how much further run up there will be if the tax cuts arepassed (or how much the stock market will fall if, for some reason, it appears that there will not be corporate tax cuts), and how much more will go to "capital" and further increase economic ineqaulity

With nothing being provable anytime soon, Trump and the Republicans will be absolutely adamant that the promised benefits will happen, and the Democrats, can be equally adamant that there will be a huge giveaway to Wall Street and the super rich which the rest of the country will get little, and the country will be saddled with bigger deficits and bigger national debt.

Deficits and the national debt
It should also be kept in mind how the risks about deficits and national debt will be played down by Trump and the Republicans by reason of their short term political desperation to get a legislative win on taxes.

Trump seems to care little about deficits and the national debt and will most likely say little or nothing about that in trying to sell his tax plan. The Republicans will exhibit more ostensible concern and will talk about the certainty of increased economic growth resulting from the tax cuts and how increased tax revenues from that will offset increased deficits and national debt that would occur if there was not increased economic growth.

Who cashes in now; who's at risk?
As discussed above, Wall Street and the super rich are all set to "cash in" on the tax cuts. There has already been a spectacular run up in the stock market, in part attributable to the expectation of tax cuts. There may be more of a run up if the tax cuts are enacted.

The rest of the country is at risk about how much wage boost and how much job creation will come about.

Throw on top of that the risk to the rest of the country of increased deficits and national debt if increased economic growth does not take place as projected.

Listen to what is being said about donors driving the Republicans to act. That's another sign of Wall Street and the super rich seeking to cash in for themselves with little good for the rest of the country.

It should be noted how Trump himself will cash in on his tax cut plan.  Trump has made clear he is exempt from conflicts of interest and he has a right to profit from his presidency. Eliminating the estate tax is a whopper of Trump's using the Presidency to benefit himself and his family.

What are the other choices?
2017 is not dire the way 2008 was. Things are going positively for the economy. It is not imperative that something be done in 2017 about taxes the way it was imperative to do something in 2008 about the financial crisis.

The short term self-interested political desperation of Trump and the Republicans are an immense driver for "cut taxes now" and should be allowed to take precipitous action on taxes.

A good argument can be made that Wall Street and the super rich have already cashed in and may cash in much more on the corporate tax cuts, and that it would be fair for a time to increase the individual tax rates of the rich to balance off the immense benefit to their wealth they have received and will receive from the corporate tax cuts (which they say are imperative to increase economic growth, boost wages, and create jobs for the rest of the country).

A different approach that would give more bona fides to the "good" intentions of Wall Street and the super rich would be doing tax cuts in the form of tax credits to corporations if there are increased payrolls (from wage boosts and new jobs). In other words, instead of guaranteeing their cash in to Wall Street and the super rich, the proposition to them would be, "Ok you say tax cuts will boost wages and create jobs. Show us. Here are tax cuts you will get if you proceed with expand business activities that increase your payroll." This could be extended to tax credits of education programs undertaken by corporations to educate and train workers with skills that can contribute to greater productivity, wage growth and job creation.

Basing the tax cuts on increased payroll makes more certain benefits to labor and shifts risk and onus to capital that capital may get increased returns from the tax cuts but it is required that labor is benefited.

Instead of being hell bent on saving their political skins, Trump and the Republicans could use some serious soul searching about the increasing economic inequality, and factors that may impair achieving what they say the tax cuts will achieve. An example is automation and robotics that may be increasing the return to capital and decreasing the return to labor from economic activity, and what can done to compensate for that in the society. Another example is the extent to which that there are already jobs that are not getting filled because of a lack of qualified workers and how to meet economy's need for worker training.

Instead of acting out there short term political desperation, Trump and the Republicans are probably in need of soul searching about health care reform, which is likely far more critical for the country than saving their political skins with "must cut taxes now."

Deciphering taxes
The deciphering of taxes I come up with is that I do not trust Trump and the Republicans, and I believe their tax cuts plan should not be passed by Congress.