One of Albert Einstein’s famous sayings was, “Doing the same thing over and over again expecting a different result is insanity”.
This definition applies to Donald J. Trump and the economic policy that he has proposed and presented in the first 2016 Presidential Debate. Mr. Trump supports massive tax cuts for both individuals and Corporations. It would be the largest reduction in taxes since Reagan in 1981. Individual rates would be consolidated into three brackets, 12%. 25% and 33%. There would also be an increase in the Standard Deduction to $25,000 for single taxpayers and $50,000 for married couples. The Corporate tax rate would drop to 15%. The bottom line is that by far most of the tax reductions would apply to the people in the top 10% with the wealthiest seeing a reduction of up to a 22% in their Personal Income Taxes. Business would do even better receiving more than a 50% cut in taxes. Taxpayers earning the Average, $56,500, would see almost no reduction in their taxes with about a 3% cut in their individual taxes. Overall the impact of the Trump tax cuts would be to add about $10 Trillion Dollars to the National Debt from 2017 to 2027.
The argument Mr. Trump used to justify his proposed tax cuts is the same argument used by Ronald Reagan in 1981 and George W. Bush in 2001 and 2003. Cut taxes on the upper income taxpayers and the economy will grow and the benefits will trickle down. The term given to this idea is Supply-Side Economics or what George H.W. Bush termed, “Voodoo Economics” Let’s see why the Trump Plan fits Einstein’s definition of Insanity:
In 1981 we were told the Tax cuts would stimulate growth in Gross Domestic Product (GDP), balance the budget and the benefits would “Trickle Down” to lower income taxpayers. What did happen?
Tripled the National Debt during the 8 years of Reagan.
Unbalanced the Budget for 18 years and added $5 Trillion Dollars to the National Debt by 2000.
The growth in the GDP was only half what was promised, causing the National Debt increase.
There was no “Trickle Down” and the wealth became more concentrated in the top few percent.
This US Presidential Election will be a challenge for all of us, let’s take these points on our consideration. It took 18 years to restore balance in the annual budget and in 2000, after a series of tax increases that took place in the 8th year of Reagan, during George H.W. Bush and Clinton as well as spending cuts, especially in the military, we reversed the impact of the 1981 tax cuts and had a small Surplus. In 2001 George W. Bush used the very same argument used by Ronald Reagan and got the Republican controlled Congress to cut taxes that mostly benefitted the wealthy. We immediately returned to an Annual Budget Deficit caused by the lost revenue from the 2001 tax cut and resumed the increase in the National Debt. In 2003 George W. Bush and Congress Doubled Down and passed a second tax cut that went again went to the wealthy and further increased the Annual Budget Deficit and further accelerated growth in the National Debt. Middle income taxpayers got nothing,” No Trickle Down”, and the wealth of our country was further consolidated in the top few percent. Job growth as well as GDP growth from 2001 to 2008 was low by historical standards and during the 8 years of George W. Bush we added another $5.7 Trillion Dollars to the National Debt.
President Obama made an unfortunate choice when he agreed to a compromise with Republicans in late 2010 relative to the Bush Tax Cuts that were scheduled to expire in December 2010. His compromise, modified the Bush tax cuts, made them permanent and resulted in the loss of 85% of the tax revenue from the Bush Tax cuts. That prevented restoration of a balanced budget, even after the improvement in the economy that began to take place in 2010 when the impact of the Stimulus Package began to take effect. That, plus the added spending from the two Bush wars and impact of the Near Depression that came to a head in September 2008 has taken our the National Debt to $19 Trillion Dollars in 2016. It continues to grow by just over one half a Trillion Dollars a year with no end in sight.
Now we have another US Republican, Donald Trump is proposing yet a fourth time to do the same thing as Ronald Reagan and George W. Bush did in 1981, 2001 and 2003 and promise US a Different Result. Does Belleview have a room in their mental ward for Mr. Trump?