Monday, November 28, 2016

Debt Hysteria

I'm absolutely slammed at work today, so I'm gonna laze out and tell you to go read Dean Baker's latest.  If you're also slammed at work, the key points are below.

Trump's infrastructure plan might not add a dime to the deficit up front, but will cost the government money in the long run.  Emphases added throughout is mine:

But if we give the tax credit (Trump has proposed a tax credit of 82 cents on the dollar), then we have added zero dollars to the government debt. However, we will collect less money in tax revenue in future years. Given his plan, we will collect $820 billion less in revenue over the period where the tax credits are cashed in. Other things equal, this will raise our debt in future years by $820 billion compared to a situation where we did not have the infrastructure spending, but at least for initial scoring purposes we can say that it didn't add to the debt, so the Peter Peterson–Washington Post crew should be happy. (The boost to output from greater productivity should add to tax revenue in future years, but this would be the same regardless of whether we paid for the $1 trillion in spending through borrowing or a tax credit. If the economy is below full employment, there will also be a boost to demand, and therefore output, as a result of this spending, but again this is independent of how we finance the spending.)

And then Baker raises the key point about government debt fear mongers:

Let's turn to the other part of the story, the tolls. Trump's plan will bias infrastructure spending towards areas that are able to create a revenue stream, like tolls, as opposed to clean drinking water (think Flint) or other areas of public investment like child care, which may lead to diffuse gains. It may also lead to inefficiencies since collecting tolls can be a waste of resources. (Imagine paying tolls to use the sidewalk in front of your home.)

But ignoring these issues, let's think about the tolls for a moment. Suppose the government paid for the infrastructure and used tolls to recoup part of the cost. The tolls are then future revenue to the government, just like any other tax. But with Trump's plan people pay the tolls to private companies, so the money doesn't go to the government. In Peter Peterson–Washington Post land we are supposed to be worried about the burden to our children of the tolls collected by the government, but somehow the burden imposed by the private companies don't count.

That's correct.  It's fine to be hysterical about government debt, but where's the hysteria over economic burdens imposed by the private sector?  If the government isn't burdening taxpayers, but those very same taxpayers are being burdened by private vendors, well, does it make a lick of difference who imposed the burden?  A burden is a burden is a burden.  At least the government is answerable to the taxpayers via their role as a voting public.

"What's the total burden, and who imposes it?" Questions that are infrequently asked, on both right and left, much to the detriment of all.

There's also this: Donald Trump claims that "millions" engaged in voter fraud.  It's likely not true, and it also doesn't matter; his fan base will get pumped up no matter what he says, and his opponents will remain riled up with each bombastic claim.  I document it here for posterity but it's ultimately of no consequence.

Now it's back to work for me!  Y'all have a great day.

1 comment:

  1. Read about the tolls that Rick perry laid on Texas. Maybe he is coaching trump