Posted on 05/09/2017 1:35:23 PM PDT by lowbridge
President Trump's administration says his tax cut will pay for itself. It turns out it's really hard to find an economist who agrees.
The University of Chicago's Booth School of Business regularly polls economists on controversial questions. In a survey the school published last week on Trump's tax plans, only two out of the 37 economists that responded said that the cuts would stimulate the economy enough to cancel out the effect on total tax revenue.
Those two economists now both say they made a mistake, and that they misunderstood the question.
“I screwed up on that one,” said one of those two economists, Kenneth Judd, when asked about his response to Trump's tax claim. “I meant to say that this is a horrible idea, a bad idea — no chance in hell.”
The other respondent who said that Trump's tax cuts would pay for themselves was Bengt Holmström of the Massachusetts Institute of Technology, who confirmed in an email to The Washington Post that he had also misread the question.
Besides Judd and Holmström, another 35 economists said that the tax cuts would not finance themselves, and five more did not answer the question.
In total, there is not one economist in the Chicago poll who believes that Trump's cuts would pay for themselves, suggesting his administration might not be able to deliver on a crucial promise.
(Excerpt) Read more at washingtonpost.com ...
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“I guess they didn’t poll Laffer and Kudlow.”
The 35 know that Reagan’s economists included spending cuts in the Reagan program because they also believed that the tax cuts wouldn’t pay for themselves. Which they didn’t, as verified by Lawrence Lindsey’s exhaustive regression analysis published in The Growth Experiment.
The Reagan economists predicted that economic growth stimulated by the tax cuts would recoup a major portion of the tax revenue projected to be lost using static analysis. They predicted just over 60% would be recovered and that’s the number that Lindsey’s study found as well.
The only rate cuts that resulted in increased revenue were the capital gains cuts ironically signed into law by Jimmy Carter.
And I trust economists less than RINOs
Too bad Milton Friedman ain’t around
Yeah, all the experts said Clinton would win too. Tax Cuts WILL pay for themselves. They’ve done it before.
That, and, spending cuts.
As an old time builder and user of modeling, algorithms, spreadsheets, I am skeptical of anybody making snap judgments over such complicated predictions.
I worked for an oil company that developed a monte carlo simulation model, so sophisticated, that other bigger companies paid to use it.
At that point in time, oil prices were about $3.00 per bbl.
We used ranges for the price, way up to $7.50 for our “Best” case, but assigned a small 5% chance to that.
Little did we know prices would be over $20.00 within months, and would remain so.
Years later, different company, considering a huge acquisition, of a supposedly countercyclical industry opportunity.
Guess what? Instead of one half of the company going downcycle, both did. IOW they did NOT behave as predicted based on history. It very nearly sunk the parent firm.
It is the data variables, not the model itself.
If it is good enough for Art Laffer, it is good enough for me.
I don't want President Trump's tax cut to "pay for itself". I want drastic reductions in the size, scope, power, and cost of government to pay for it. Downsize Fedzilla NOW!
I can almost guarantee that all those economists depend heavily on federal grants for their livelihoods, and any that don’t probably work with ones who do.
Right.
If Economist means “Keynesian and other socialists” then you won’t find any that agree that tax cuts pay for themselves. If you ask economists from the old Chicago School, than you get the other reaction and those guys informed Reagan’s cut which certainly “paid for itself” as did Kennedy’s cut. The Bush cuts are more problematic but he was doing other things that worked against the prosperity that tax cuts engender.
Did the two who changed their minds wake up with a horsehead in their beds?
It’s “settled science” and we have a “consensus”. Don’t try using logic. :)
That sounds like USX in the early '80's.
If you don't look at increased revenue across the board due to increased business and employment, then you will never agree. It also has a given lag of a few years, I imagine.
Except for Walter E. Williams and Thomas Sowell, is there any economist out there who is not a left wing hack?
I think they only polled other economics at universities. Not sure how many have ever set foot outside academe.
7 years, per the Cato article I posted upstream.
Makes sense, too.
Thus proving PhDs are book-smart-idiots.
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