GOP's tax cut bill is ill-timed for economic moment

[Yo_Mama_Been_Loggin]

By Kathryn Anne Edwards / Bloomberg Opinion

There are two distinct threats to the U.S. economy of 2025. One is the president’s shoot-first-ask-questions-later trade war, which has rattled both consumers and the bond market, not to mention economists. The other is the government’s projected annual deficit of $1.9 trillion, despite more than three years of low unemployment and consistent growth.

The first threat makes a recession more likely, and the second would make a recession harder to deal with. At the risk of crying wolf in the face of an economy that has yet to show any tangible signs of weakness, allow me to say: The House Republicans’ tax bill is so ill-suited to the moment that the most charitable conclusion is that they simply do not know how to manage the economy.

-snip-

Nearly 70 percent of the U.S. economy is household consumption. So a critical component of macroeconomic stabilization is to prop up demand and keep households spending; or, to put it more bluntly, getting money to people who will quickly spend it. In general, the marginal propensity to consume is inversely related to income and wealth. Hence, during recessions, the government needs to get money and resources to low-income households and those who have lost their jobs.

The tax bill does the opposite. First, most of the benefits of the bill’s changes to the tax code flow to the top. The Center on Budget and Policy Priorities estimates that half of the bill’s benefits go to the top 5 percent highest income households, based on the structure of the prior Tax Cut and Jobs Act. The Tax Policy Center finds that 68 percent of the tax change accrues to the top 20 percent of households, while the bottom 40 percent gets just 6 percent.

https://www.heraldnet.com/opinion/comment-gops-tax-cut-bill-is-ill-timed-for-economic-moment/

[Bernardo de La Paz]

1. To the para "tax bill does opposite"

Per Krugman

[SheltieLover]

2. Depends on your perspective. From kraznov's, it's perfect for one trying to destroy US for pootin.

[SWBTATTReg]

3. Yes, one of the things to do in stimulating the Economy is to run more dollars into the Economy, increase the

velocity of money, hence more economic activities. Instead, they are awarding those that will literally sit on the money, not spend it, otherwise hoard it away.