Patrick's Notebook

It’s clever. After months of being under suspicion concerning the Russian government’s intervention on his behalf, Trump can now turn the tables and accuse Obama of intervening on Clinton’s behalf. Isn’t that convenient? Where people have been starting to see this growing Russian scandal as the biggest political imbroglio since Watergate, Trump and his right-wing minions will now deflect attention to this story in the hopes that their followers will treat it as the “real scandal” and if they are lucky, make everyone else’s heads explode. It is a bold misdirection and while it’s fatuous in the extreme, don’t assume that it won’t be effective.

http://www.salon.com/2017/03/06/trumps-obama-gambit-its-utter-nonsense-but-not-as-dumb-as-it-seems/

A breeding ground for the next Great Depression now exists.

In simple terms a depression is a recession that begins at a time when there are extreme levels of private-sector debt, an over-leveraged fragile banking system, and stratospheric asset prices.

According to the Bank of International Settlements, the relative level of private debt today is comparable to and, in many cases, worse than in the late-1920s.

Trump recognizes that America’s private sector desperately needs reflating, but doesn’t realize that this involves alleviating personal and business debt and enabling more equitable distribution of wealth and incomes, especially in favor of the poorest and lowest earners.

It seems that we can expect some redistribution of funds from the U.S. government to the wealthiest and those earning more than $1 million per year who will claim almost half of the tax cuts expected to be offered:

GOP tax reform blueprint, would significantly reduce marginal tax rates, increase standard deduction amounts, repeal personal exemptions and most itemized deductions, allow businesses to expense new investment, and not allow businesses to deduct net interest expenses. Taxes would drop at all income levels in 2017, but most savings would go to the highest-income households. Federal revenues would fall by $3.1 trillion over ten years and the federal debt would rise by at least $3.0 trillion over the first decade and by at least $6.6 trillion over the second ten years.

Former Fed governor Ben Bernanke acknowledged that tax cuts have a much smaller impact on economic growth than government spending has on growth. The National Bureau of Economic Research estimates that of every dollar of corporate tax cuts, only 50 cents reappear in economic circulation – meaning that it has a very limited positive effect, despite all the false rhetoric claiming that tax cuts are a significant economic stimulus.

Whatever proprietary dynamic models the Trump economic team uses to support its fictional future growth forecasts, the $6-7 trillion of proposed tax cuts will ultimately be funded by reduced spending.

At the precise time when increased government spending is required to reflate America, the redirection of this funding into tax cuts is almost certainly adverse. Maybe this explains why Trump tax reform’s timeline has now been extended until the August recess.

http://www.cnbc.com/2017/03/06/trump-tax-reform-could-tip-america-into-recession-and-possibly-serfdom.html

http://www.zerohedge.com/news/2017-02-19/barclays-equities-rushed-price-reagan-1986-tax-cuts-crashing-1987

http://www.taxpolicycenter.org/publications/analysis-house-gop-tax-plan