Tag: National Economic Council (United States)

Obama complained in two recent speeches that he has not received adequate recognition for his contribution to the soaring economy, for which he claims credit. This is Obama’s fantasy land, because he has a total misunderstanding of basic economics. Obama reopened his assault on President Trump and congressional Republicans with a claim that tax cuts increase the deficit but that Republicans really don’t care about deficits and national debt. But as Larry Kudlow, President Trump’s chairman of the White House National Economic Council, reported on CBS’s “Face the Nation” last month, “Even the [latest] CBO numbers show now that the entire $1.5 trillion is virtually paid for by higher revenues and better nominal GDP.” Many people have trouble understanding the relationship between tax policy and the economy, and the economy’s effect on tax revenues resulting from differing tax policies. Today, the economy is booming in response to the 2017 tax reform, and the resulting effect on tax revenues is so strong that even state and local tax revenues are increasing. Similarly, when Reagan entered office in 1981, he led Congress to enact across-the-board tax cuts of 25 percent and, in the 1986 tax reform, replaced the entire federal income tax structure with just two rates — 28 percent and 15 percent. Even with those sweeping tax cuts, federal tax revenues during Reagan’s presidency actually doubled because of the booming growth resulting from such tax liberation. As former senior congressional staffer Mike Solon reported in Real Clear Politics on Aug. 5, CBO’s April 2018 Budget and Economic Outlook stated (page 94) that 10-year federal tax revenue estimates had risen by $1.008 trillion “for economic reasons.” Solon said, “This is the largest jump in revenues ‘for economic reasons’ ever reported by CBO and results from, in CBO’s words, their ‘current projections suggest[ing] a stronger economic outlook than those that the agency published in June 2017.’” In June 2017, just the anticipation of Trump’s tax cuts led to increased investment and growth, producing $195 billion in new revenues “for economic reasons.” With further revenues and increased growth by April 2018, the total resulting revenue increase was $1.238 trillion, offsetting 88 percent of the originally projected $1.456 trillion revenue loss, or virtually all of it. By Obama’s last year (2016), CBO’s 10-year projected revenue loss from his 2013 tax increase had ballooned to $3.1 trillion, almost five times his supposed tax increase, which only further increased the deficit. The Trump/Republican tax reform is not significantly increasing the deficit, but rather producing growth that is paying for the tax cuts, just as Reagan’s and Kennedy’s did.