Trumpism and the Post Hoc Fallacy

This seems to be a good study on the effects of the Tax Cuts and Jobs Act.

Abstract:

This paper examines the Tax Cuts and Jobs Act (TCJA) of 2017, the largest tax overhaul since 1986. The new tax law makes substantial changes to the rates and bases of both the individual and corporate income taxes, cutting the corporate income tax rate to 21 percent, redesigning international tax rules, and providing a deduction for pass-through income. TCJA will stimulate the economy in the near term. Most models indicate that the long-term impact on GDP will be small. The impact will be smaller on GNP than on GDP because the law will generate net capital inflows from abroad that have to be repaid in the future. The new law will reduce federal revenues by significant amounts, even after allowing for the modest impact on economic growth. It will make the distribution of after-tax income more unequal, raise federal debt, and impose burdens on future generations. When it is ultimately financed with spending cuts or other tax increases, as it must be in the long run, TCJA will, under the most plausible scenarios, end up making most households worse off than if TCJA had not been enacted. The new law simplifies taxes in some ways but creates new complexity and compliance issues in others. It will raise health care premiums and reduce health insurance coverage and will have adverse effects on charitable contributions and some state and local governments. Looking forward, the ultimate effects of TCJA will depend on the currently uncertain responses of other countries, the Federal Reserve Board, and future Congresses, among others.

The Urban-Brookings Tax Policy Center is a joint-venture nonpartisan think tank based in Washington D.C, founded by tax specialists who had served in the Ronald Reagan, George H.W. Bush, and Bill Clinton administrations.

The Brookings Institution in particular has been described by The Economist as "perhaps America’s most prestigious think-tank" and by The University of Pennsylvania's Global Go To Think Tank Index Report as "Think Tank of the Year" and "Top Think Tank in the World" every year since 2008. It's variably described as conservative, centrist, and liberal.

It's about as trustworthy as they come.

Michael: There you go. You looked at a study to try to assess the effects of one of Trump's policies as opposed to simply assuming that if something good happened afterwards it must have been caused by Trump. Why people can't see that jumping to conclusions and merely assuming that something must have been caused by a prior event, is beyond me. It's as if millions upon millions of Americans lack the most basic thinking skills or else they don't give a darn about what they state about Trump.

American politics has become so partisan that facts don't matter.

Reply to ssu With an electorate where about 50% doesn't know what you meant by that. Facts? Huh? Parmezan? Huh?

Reply to Benkei No it is alternative facts and fake news. Reporting the facts would make you an enemy of the people.

Reply to LD Saunders Post hoc fallicies are endemic to politics. But tax cuts should be expected to boost the economy, so the claims are not unreasonable. Less reasonable is the generic claim that any good economic news is a consequence of the party (or person) in power.

But back to the tax cuts, although these are stimulative, this doesn't mean they are necessarily worth the cost, and the timing is questionable. We risk deficits that are unsustainable (i.e. if intetest on the national debt grows faster than the economy, that is an unsustainable path). Further, cutting them during a period of growth constrains you from cutting them (or taking other actions that increase the deficit) when the economy is tanking.

Relativist: You just supported my position. Tax cuts do not automatically stimulate the economy. What will occur due to a tax cut depends on numerous other factors as to what is going on in the economy at any given time. Yet, all I ever hear from right-wing politicians and political pundits is that lowering tax cuts always stimulates growth. Despite an enormous amount of economic data to the contrary.

Reply to LD Saunders ". Tax cuts do not automatically stimulate the economy. "
It's a virtual certainty that a cut in corporate tax rates will have a positive short term impact on the economy: it means there will be a higher return on investment. More prospective investments will meet a hurdle rate. The question is still: how much impact does it have, and was it worth it on the long run to run up the deficits.

On the other hand, the trade war is bad for the economy. How high an impact is uncertain.

Relativist: It's most definitely not true that corporate tax cuts will have a positive short term impact on the economy. If the tax cuts are going to cause a huge deficit? If the tax cuts are occurring when the economy is already heating up, and they will cause inflation fears and a central bank to raise interest rates? That's just two situations where tax cuts will have a negative impact, even in the short-run.

It was a trade war that crashed the stock market in 1929 and started the great depression that followed. Trump, while the stock market was in a bubble, has started a trade war. That was the dumbest economic strategy he could have followed, and we are seeing the fallout from it, right now. Maybe if he quickly reverses himself we can avoid a major recession, but I doubt Trump is smart enough to figure out he has screwed up the economy, and he was handed a great running economy when he took office. Why anyone supported his economic plan, which was doomed to failure, as has been explained now for centuries of economic theory and evidence, is beyond me. Trumpers may as well not believe in gravity if they are willing t believe that a trade war will strengthen the economy and is a great idea when the stock market is already in a bubble.

Even the claim that we are in competition with China when we trade with China is beyond stupid. That's like saying a customer of Walmart is in competition with Walmart. Wrong. When we trade with China we are in a mutually beneficial exchange, and we are in competition with others who would also like to trade with China. Trump couldn't have gotten things more backwards and distorted.

Reply to LD Saunders
Quoting LD Saunders

It's most definitely not true that corporate tax cuts will have a positive short term impact on the economy. If the tax cuts are going to cause a huge deficit?

The negative impact of deficits is long term.

[Quote]It was a trade war that crashed the stock market in 1929 and started the great depression that followed.[/quote]
The tariffs imposed by Smoot–Hawley were pervasive and astronomical. The current ones are more targetted. That doesn't mean they are good, but it remains to be seen how big the impact will be, and when it will have a noticeable effect.

We should be able to agree that Trump's economic policies are bad in the long run. The negatives may not have a material impact during the next two years, so be careful what you predict.

Quoting LD Saunders

Why anyone supported his economic plan, which was doomed to failure, as has been explained now for centuries of economic theory and evidence, is beyond me.

Nobody really supports many of the things that Trump proposes. The staff and bureaucracy try to cope with it as best they can, often having to scramble to devise policy updates on the fly to match Dear Leaders latest Twitter brain-snap. Trump has a reckless ultra-nationalist policy advisor by the name of Peter Navarro, who got the job because of his book Death by China. He and Mnuchin had a screaming match at one of the negotiation conferences, according to reliable sources. He is regarded as a hawk on all matters China.

Mind you, I actually think the USA should be tough on China. China is indubitably hell-bent on stealing the world's trade secrets and at attaining technological and business dominance by whatever means possible. But I'm not sure that the blunt object of tariffs is going to achieve those ends. Here's hoping the Mids go really well for the Dems.

Quoting Wayfarer

China is indubitably hell-bent on stealing the world's trade secrets and at attaining technological and business dominance by whatever means possible. But I'm not sure that the blunt object of tariffs is going to achieve those ends.

I'm also doubtful, but shouldn't we be open to the possibility it will help - even while maintaining skepticism? I'd be inclined to stop Trump, but since we can't - we're going to have to let it play out, and the right thing to do is to hope for the best. Republicans wanted Obama to fail, even though failure meant bad things for the country. Let's not be that way.