DeLong is Wrong on Trump's Tax Cuts
Bradford DeLong posted a vicious rant on his blog recently accusing the signatories of a letter in support of President Trump’s economic policies of being “both 100% cynical and 100% deluded” as well as "moronic and easily grifted." However, it turns out that Delong himself suffers from the delusion that a president gets to write and pass legislation exactly as he sees fit. In reality, the Washington swamp is under almost complete control of lobbyists and special interest groups. We would wager that very few of our fellow signatories are completely satisfied with these pieces of economic legislation as they were passed. However, Delong claims the signatories are:
1. Cynical and delusional to think the 2017 tax reform legislation is a middle-class tax cut.
Well first you have to understand that nearly half of American taxpayers pays no federal income tax at all while the top 10% of income recipients pay over 70%. The middle class will receive a 1-4% cut in their federal income taxes. That’s not much but it’s a step in the right direction. The corporate income tax represents double taxation of profits, which are taxed again as dividends at the personal level. Most economists recognize that the corporate tax is a counterproductive tax that stifles economic growth and needs to be changed, if not abolished.
2. Cynical and delusional to claim that Trump’s regulatory relief is anything but “Berlusconi-like corrupt advantaging of favored clients.”
It is regulation itself that is corrupt because the regulators are invariably “captured” by the regulated industry. The result is that regulated industries gain protection from competition and government largess and bailouts at the expense of consumers. Thus regulation did not prevent Bernie Madoff's scam or the financial crisis, nor does it protect the American consumers from skyrocketing health care costs. Even a moderate dose of regulatory relief will produce lower prices, more jobs, and economic growth.
Washington has always been a swamp where the political elites and their connected financial and business cronies enrich themselves at the expense of the American people. Unlike the delusional Delong, we fully recognize that Trump's legislative accomplishments fall far short of the ideal but they do represent a step in the right direction.