Tax Reform Shouldn’t Surprise Anyone

I’ve already touched on this issue in several ways.

https://theproblematicmy2cents.wordpress.com/2017/03/28/tax-reform-debt-ceiling-and-budget/ (link not inserted)

the economy is based on an Agricultural-Consumerist-Service economy, so it’s not in governmental fiefdoms, public-private partnerships, and aspiring public-private mergers to promote raising the debt ceiling to prioritize capital structure in the budget. It will promote the Agricultural-Consumerist-Service economy that caters to them.

http://www.politico.com/story/2017/05/23/donald-trump-budget-analysis-238729?lo=ap_c1

Trump avoids such politically tough decisions yet still promises to achieve a balanced budget in 10 years.

Without prioritizing capital structure, deficit reductions aren’t going to do squat about the debt therefore will not result in a balanced budget. It will require amplified deficit to debt spending that already by old school measurements taking the US Dollar as the world’s reserve currency status into account over 80% of GDP but under 93% of GDP. It’s not going to happen.

The article largely omits and ignores circular flow here is Federal Treasuries chasing State Treasuries chasing Local Municipality bonds chasing State Treasuries chasing Federal Treasuries. This is why tax increases are required, and inflation rates increases tax brackets of wages in compensation of labor conducted leads to a consumer collapse regardless of consumer confidence.

http://www.politico.com/story/2017/05/23/steven-mnuchin-criticize-house-tax-reform-238726?lo=ap_f1

“One of the problems with the border adjustment tax is that it doesn’t create a level playing field,” Mnuchin said at the Peter G. Peterson Fiscal Policy Summit, using the plan’s technical name. “It has very different impacts on different companies. It has the potential to pass on significant costs to the consumer. It has the potential of moving the currencies. We want to make sure we’re creating a level playing field.”…

“I cannot support the border adjustability provisions as introduced,” he said. “I really want to urge this committee to listen, to be educated and to address” criticism of the plan “as we move forward with reform.”

… But the proposal has come under heavy criticism, especially from retailers who fear they will face giant tax increases under the plan. Target’s Cornell told the Ways and Means Committee his company, a heavy importer, could see its tax rate soar to 75 percent under the proposal.

(qtd, bold emphasis mine)

http://thehill.com/blogs/pundits-blog/economy-budget/334592-us-should-keeping-leading-the-global-economy-not-close-off

…Trade policy is one area where the President can act to appease his political base with almost total autonomy from Congress and the courts. This rightly has pro-trader advocates worried, including Republican Sens. John McCain (R-Ariz.) and Ben Sasse (R-Neb.), who voted against confirming Lighthizer based on concerns that NAFTA renegotiations could harm agriculture exporters in their states.

It’s clear that Trump’s views on trade have not changed much since the 1990’s. Since his inauguration, the President has withdrawn from the Trans-Pacific Partnership, imposed 24 percent tariffs on Canadian softwood lumber and ordered the review of all major U.S. trade relationships.

… The benefits of global trade and NAFTA specifically are substantial, even if they are not well understood. Texas, Louisiana and North Dakota export oil, natural gas and refined products to Mexico. Agricultural states like Iowa, Nebraska and Minnesota sell wheat and corn to feed a growing Mexican population.  In Michigan and Ohio the automotive industry relies on a dynamic cross-border supply chain that supports jobs all three countries. In all, economists estimate that 14 million jobs are supported by U.S. trade with Canada and Mexico.

(Bold emphasis mine)

The bold should sound familiar because it should; I referenced in a previous post surrounding Thomas Friedman’s “It’s A Flat World After All” in which he references ‘supply-chaining’ “This is Wal-Mart’s specialty. I create a global supply chain down to the last atom of efficiency so that if I sell an item in Arkansas; another is immediately made in China (If Wal-Mart were a country, it would be China’s eighth-largest trading partner)”. This also ties into Friedman’s promotion of out-sourcing, in-sourcing, open-sourcing, and etc that ties into another previous post through the “Urban Optimist” interview.

https://dupress.deloitte.com/dup-us-en/deloitte-review/issue-20/daniel-doctoroff-interview.htmlid.html

Now imagine the digital networked age where technologies such as sensors and social networks help us better understand what’s going on. Cities can say, “You can do whatever you want in that building as long as your decibel level doesn’t go above X, and we’ll be monitoring it.” The ability to change uses and space quickly becomes possible, enabling the emergence of a whole set of new industries around flexible buildings that can be monitored, lowering cost and creating economic growth.

(Bold emphasis mine)

The ‘Urban Optimist’ Dan Doctoroff is referencing the ability through adjusting zoning laws to enable in-sourcing that in globalization terms means enabling a foreign parent or subsidiary to take over a Corporation features such as Friedman references ‘I let a company like UPS and have them take over my entire logistics operation’.

http://thehill.com/policy/transportation/334828-trump-budget-kills-marketing-program-for-us-tourism

A marketing program that promotes tourism in the United States would be completely gutted under President Trump’s budget request, stepping up concern about the Trump presidency in an already-worried travel industry.

The marketing program is a public-private partnership that was set up by Congress in 2011 as part of an effort to bill the United States as a top tourist destination for international travelers.

“With all that’s going on in the world, unilaterally disarming the marketing of the U.S. as a travel destination would be to surrender market share at the worst possible time,” Dow said.

“With international visitation being the country’s No. 2 export supporting 15 million American jobs, we’re struggling to understand how cutting Brand USA squares with this administration’s stated priorities.”

Brand USA’s marketing initiatives are responsible for bringing in 3 million incremental international visitors, generating $21 billion in business sales and supporting nearly 50,000 incremental jobs per year, according to Oxford Economics.

Technologically Advanced Agricultural-Consumerist-Service economies propped up by governmental fiefdoms, public-private partnerships, and aspiring public-private mergers… ‘The more things change the more they stay the same’ and ‘those who fail to learn from history are often doomed to repeat history’ comes to mind but on the bright side ‘those seeking to make history often do so by repeating history’.

Now, lets look at how Democrats are responding.

http://thehill.com/homenews/house/334762-dems-see-political-gold-in-trump-budget

Unveiled Tuesday, Trump’s fiscal 2018 budget proposal pushes sharp increases in military spending, steep across-the-board cuts to nondefense domestic programs and huge tax breaks for businesses and wealthy Americans

Note by removing the tariffs and keeping the Corporate tax reduction, it’s not doing Republican leadership any favors.

But many of the programs slashed or eliminated by Trump’s proposal disproportionately benefit low- and middle-income families — many of whom supported Trump at the polls last November — and the Democrats wasted little time on Tuesday vowing to hang the president’s budget around the necks of Republicans who defend the plan.

Without prioritizing capital structure, wealth inequality worsens.
Without prioritizing capital structure, purchasing power remains debased by inflation rates leading to polarization of wages to attempt increasing purchasing power by increasing minimum wages that temporarily outpaces inflation rates. For most of the country, the purchasing power for minimum wage is merely around 2.40 per hour and parallels the wages of Chinese laborers but benefits from better purchasing power placing their wages’ purchasing power around 5.60 an hour. What does this have in common with wages? $15 an hour minimum wage movement increases purchasing power temporarily around 5.40-5.60 per hour in purchasing power.

Without prioritizing capital structure, there will never be a balanced budget. Deficit is excess spending that becomes debt by rolling it over into debt faster only provides the appearance of reduced deficits given the debt is still owned at interest rates that to bypass default requires payment or roll over.

Ryan also praised Trump’s plan, saying it will promote economic growth.

Nope, this path leads to a contraction as deficit to debt spending closes in on 93% of GDP already with the US Dollar’s world’s reserve currency status over 80% of GDP.

Same old B/S…

 

 

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