Slashing corporate tax “a Trillion-Dollar Blunder’

Corporate tax rates and rates of tax for the rich have long been argued about.

In New Zealand major changes in the 1980s were supposed to result in ‘trickle down’ and benefit everyone, with more jobs and more pay. Instead it delivered more profits and more inequality and more hardship for many.

The tax rate argument is raging in the US right now with Donald Trump’s massive tax shift progressing through the Republican led Congress and Senate.

Michael Bloomberg writes: This Tax Bill Is a Trillion-Dollar Blunder

CEOs aren’t waiting on a tax cut to “jump-start the economy” — a favorite phrase of politicians who have never run a company — or to hand out raises. It’s pure fantasy to think that the tax bill will lead to significantly higher wages and growth, as Republicans have promised. Had Congress actually listened to executives, or economists who study these issues carefully, it might have realized that.

Instead, Congress did what it always does: It put politics first. After spending the first nine months of the year trying to jam through a repeal of Obamacare without holding hearings, heeding independent analysis or seeking Democratic input, Republicans took the same approach to tax “reform” — and it shows.

The largest economic challenges we face include a skills crisis that our public schools are not addressing, crumbling infrastructure that imperils our global competitiveness, wage stagnation coupled with growing wealth inequality, and rising deficits that will worsen as more baby boomers retire.

The tax bill does nothing to address these challenges. In fact, it makes each of them worse.

The bill’s cost — $1 trillion to $1.5 trillion — makes it more difficult for taxpayers to afford Medicare and Social Security for the baby boom generation, which is now hitting retirement.

In effect, the tax bill achieves four main things:

  • It takes money away from schools and students.
  • It restricts our ability to invest in infrastructure.
  • It does nothing to boost real wages while making health insurance more expensive.
  • It makes it harder to control the costs of Medicare and Social Security without cutting defense and other spending — or further exploding the deficit.

To what end? To hand corporations big tax cuts they don’t need, while lowering the tax rate paid by those of us in the top bracket, and allowing the wealthy to shelter more of their estates.

Republicans in Congress will have to take responsibility for the bill’s harmful effects, but blame also falls on its cheerleader-in-chief, President Trump.

The tax bill is an economically indefensible blunder that will harm our future. The Republicans in Congress who must surely know it — and who have bucked party leaders before — should vote no.

A harsh critique.

 

Reaction to US withdrawal from Paris climate agreement

It was no surprise that Donald Trump announced a US withdrawal from the Paris climate accord, he would have risked serious questions from his support base if he had reneged on one of his biggest campaign promises.

But there has been a lot of criticism from around the world, which not surprising given that the US is one of only three countries that are out of the Paris agreement – and one of those because it doesn’t do enough to combat climate change.

There has been a more mixed reaction from the US. Many have been critical, from corporations to ex-politicians like Michael Bloomburg (Billionaire Michael Bloomberg is launching a coalition to defy Trump and uphold the Paris Agreement) and Arnold (Schwarzenegger on Paris agreement: ‘One man cannot destroy our progress’).

And an ex-President:

But the Trump administration is defending the withdrawal.

“Exiting Paris does not mean disengagement.”

“People have called me a climate skeptic or a climate denier… I would say that there are climate exaggerators.”

“We’ve led with action, not words.”

The action of withdrawal is not leading.

We’re just not going to agree to frameworks and agreements that put us at an economic disadvantage.”

Getting out of step with the rest of the world on climate change may turn out to be more of a disadvantage.

Does President Trump believes climate change is a hoax?

He doesn’t know what Trump believes about climate change? Communications fail big time, whether he doesn’t know or is not disclosing.

There have been a number of claims that Trump doesn’t understand the Paris Accord, or climate change.

Trump’s speech announcing withdrawal from the Paris Agreement on climate change has been analysed.

Vox: The 5 biggest deceptions in Trump’s Paris climate speech

Yesterday, President Donald Trump gave a speech announcing that the US would withdraw from the Paris climate agreement.

It is a remarkable address, in its own way, in that virtually every passage contains something false or misleading.

1) No, an agreement cannot be both nonbinding and draconian (Spoiler: Paris is the former)

Early on in the speech, Trump said: “Thus, as of today, the United States will cease all implementation of the nonbinding Paris accord and the draconian financial and economic burdens the agreement imposes on our country.”

2) No, Paris cannot be “renegotiated”

Trump said the US will “begin negotiations to re-enter either the Paris accord or really entirely new transaction on terms that are fair to the United States, its businesses, its workers, its people, its taxpayers. So we’re getting out, but we will start to negotiate and we will see if we can make a deal that’s fair. If we can, that’s great. And if we can’t, that’s fine.”

As mentioned above, each country determines its own contribution. That’s why they’re called “nationally determined contributions” (NDCs). Each country is free to revise its NDC at any time — no negotiations needed. If Trump wants different terms he just has to say so.

3) No, abiding by the agreement will not cost the US a bazillion dollars

“Compliance with the terms of the Paris accord … could cost Americans as much as 2.7 million lost jobs by 2025,” Trump said. “The cost to the economy at this time would be close to $3 trillion in lowered GDP and 6.5 million industrial jobs, while households would have $7,000 less income and in many cases, much worse than that.”

To support these ludicrous assertions, Trump cited a study (progress, I suppose!) from National Economic Research Associates. The study was commissioned by the American Council for Capital Formation and the US Chamber of Commerce, two longstanding corporate anti-tax lobbying groups. To help with their lobbying, they needed a study that showed Paris targets would cost a bazillion dollars. So they ordered one from NERA, and NERA, as per its reputation, delivered.

Rachel Becker at the Verge has a great post looking at some of the study’s assumptions. (Washington Post’s FactCheck also has some good stuff on it.) Suffice to say, it’s a model rigged to show high costs. It doesn’t count the value of avoided emissions; tech innovation slows for no apparent reason; businesses do not innovate to avoid costs, they just absorb them. It flies in the face not only of most other models, but of recent experience, in which growth in advanced energy has outpaced even the most optimistic forecasts. The sector is now adding jobs at a faster clip than virtually any other economic sector.

4) No, China and India are not getting away with anything

“Further, while the current agreement effectively blocks the development of clean coal in America,” Trump said, “China will be allowed to build hundreds of additional coal plants. So we can’t build the plants but they can. According to this agreement, India will be allowed to double its coal production by 2020. Think of it. India can double their coal production. We’re supposed to get rid of ours.”

First, side note, it’s not clear that Trump has any clue what “clean coal” means. Insofar as it has any meaning, it means coal plants that capture and bury their carbon emissions. Far from “blocking” the development of clean coal, a commitment to reducing carbon emissions is the only reason to invest in it.

But then, I think Trump just says “clean coal” when he means “coal” because lolnothingmatters.

Second, China is not “allowed” to do anything. Like all other participants, China offered its own NDC and can revise it at any time. The only one in control of China’s policies is China.

Third, China is still building (advanced, cleaner) coal plants because, unlike the US, it does not have access to cheap, abundant natural gas, which has been the main driver of recent US carbon reductions.

Fourth, India (which also won’t be “allowed” to do anything) is, in fact, projected to use more coal, but it is working at breakneck speed to transition. It has pledged to get 40 percent of its energy from renewable sources by 2030, which will include building out 100 gigawatts of solar energy by 2022. India is set to pass Japan this year to become the world’s third largest market for solar (after China and the US).

Fifth and finally, we’re not “supposed to get rid of” our coal plants. Coal plants are closing (and not getting built) because coal is getting its ass kicked on the market.

5) No, other nations are not laughing at us behind our backs — or they weren’t, anyway

“The fact that the Paris deal hamstrings the United States, while empowering some of the world’s top polluting countries, should dispel any doubt as to the real reason why foreign lobbyists wish to keep our magnificent country tied up and bound down by this agreement,” Trump said. “It is to give their country an economic edge over the United States.”

Here we come to the root of the matter: tribalism. The tribalist (or “nationalist” as they are often called) sees all relationships, including relationships among nations, as zero-sum contests. There are only strong and weak, dominator and dominated, winners and losers.

For the millionth time, a voluntary deal cannot hamstring anyone, nor can it empower anyone. But the tribalist brain simply cannot grok an arrangement of mutual long-term benefit. So it must be unsavory “foreign lobbyists” trying to get us “tied up and bound down” so that they can drain our precious bodily fluids.

“At what point does America get demeaned? At what point do they start laughing at us as a country?”

We feel ridiculous and weak and the only way to restore our fragile ego is with dominance displays, to show everyone once and for all that we are in charge and the most important.

I think that last paragraph sums up one of Trump’s biggest flaws.

CNN: Author of MIT climate study says Trump got it wrong

>President Donald Trump used a Massachusetts Institute of Technology study to back up his departure from the Paris climate agreement on Thursday. But one of the study’s authors says the President misinterpreted their data, showing “a complete misunderstanding of the climate problem.”

John Reilly, the co-director of the MIT Joint Program on the Science and Policy of Global Change, told CNN Friday that he was unaware the White House was going to cite the study and only found out that they were mentioned when he was contacted by a Reuters reporter.

<href=”http://news.mit.edu/2016/how-much-difference-will-paris-agreement-make-0422&#8243; target=”_blank” rel=”noopener noreferrer”>How much of a difference will the Paris Agreement make?” — looked at the incremental changes in the accord that would happen if countries kept their promises. It found that over a 5- to 10-year period global warming would slow between 0.6 degree and 1.1 degrees Celsius by the end of the century.

“Even if the Paris agreement were implemented in full,” Trump said Thursday, “with total compliance from all nations, it is estimated it would only produce a 2/10’s of one degree Celsius reduction in global temperature by the year 2100.”

He then held up his hand, pushed two fingers together and said, “tiny, tiny amount.”

Talking points distributed by the White House also explicitly cited MIT.

The comment and the talking points were meant to undercut the efficacy of the Paris agreement, a claim that Reilly says is wrong.

“The whole statement seemed to suggest a complete misunderstanding of the climate problem,” Reilly said. “I think Paris was a very good deal for the United States, contrary to what they are claiming.”

He added: “This one small step with Paris is a necessary step. It is an incredibly important step. If we don’t take the step than we aren’t prepared to take the next step.”

Will Trump or any his supporters care about any of the criticism? Probably not when related to climate change.

But the level of disagreement and criticism from within the US and around the world is likely to be another blow to Trump’s ego.