Monday, November 26, 2018

Increase Spending, Reduce Taxes, Deficit?

It seems the current administration has a problem with math.  If you reduce income and increase spending it turns our you have less money, not more.

Of course the fuzzy logic was that the growth rate was going to explode and increase revenue even with the reduced tax rates.

Problem with this was the country was already well into the recovery and growth could at best be tweaked.

If we had had a large number of unemployed, we might have seen users turning into contributors but we already had low unemployment.  The bigger issue was that many of the jobs were low paying service jobs as opposed to high paying manufacturing jobs.

Those jobs aren't coming back in the numbers that would be required and in fact, more and more of them will fall victim to automation.

The well paid jobs require skills or at least an entrepreneurial spirit.

However, being employed but making minimum wage or something close to it, does not solve the deficit problem since it doesn't result in much in taxes, and may keep you on some benefit programs.

When you consider the tax reductions mostly ended up in the pockets of wealthy individuals who didn't increase anything that would create jobs, the fuzzy math gets fuzzier.

Meanwhile the spending on mandatory programs like Social Security and Medicare as well as increased spending on defense, border security and infrastructure with a increase in the cost of money has led to a skyrocketing deficit.

It is of course a mathematical certainty, but not to this group.

If they were asked to do a math problem with one train traveling east and the other train traveling west, the answer would be the trains colliding.

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