Tuesday, December 5, 2017

Strategy 101 and Revisiting Stated v. Revealed Preferences

I have inveighed repeatedly against the GOP tax bill making its way through Congress. For more reasons than I have time to lay out, I believe this is a terrible bill. The most prominent reason being that if we have an extra $1.5T to spend, perhaps there is something more worthwhile to do with the money than give it to the wealthy, i.e. universal pre-k, universal healthcare, control the cost of higher education, improve infrastructure, etc. Really, anything other than playing "loot the till, robber baron style" is preferable.

Nonetheless, if the Republican caucus could see past its own nose, it would have done this:
 [T]hey could have drafted the kind of bill they promised. A legislative text that cut taxes on the middle class while closing loopholes and avoiding giveaways to the rich would have put Democrats in a tough spot. The GOP would essentially have picked the low-hanging fruit of the revenue-raiser world (things like closing the carried interest loophole) and then expended it on something popular and hard to take away (middle-class tax cuts). That would have made it very difficult for the next Democratic administration to pursue aggressive welfare-state expansion.
If shrinking government was the goal, they would have done this, presumably. However, as noted in the previous post about stated preferences vs. revealed preferences, I tend to think that the stated preference is a giveaway to the donor class rather than having anything, whatsoever, to do with an ideological aversion to the size of the government. Could it be that all of this posturing about government debt for the past 8 years was just an excuse to complain about an otherwise good and competent president? Say it ain't so Joe! 

What they actually did was raise taxes on the middle class in the long run to cut taxes for incredibly profitable multi-national corporations, their major stockholders, and wealthy heirs (a la Eric Trump). These are easy things to undo in the future, and the smart money is on them being undone.

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