Furthermore, if the point is to have people actually spend the money, it would make far more sense to have the tax cut directed at low and middle income people. If we give Bill Gates another $1 billion, it likely wouldn't affect his spending at all. On the other hand, if we gave a million low and moderate people $1,000 each, we would likely see spending increase by close to $1 billion.
Even better, the government can spend $1 billion directly on modernizing our infrastructure, paying for research into clean energy and other areas, and improving education, and childcare. These expenditures would boost demand and also increase productivity so that we would be able to produce more in the future. If we could somehow get Congress to agree to spend Trump's $9.5 trillion tax cut on investment in these and other areas, it would be a great thing for the economy.
In fact, even here it is possible that the $9.5 trillion is too much. We do need additional spending to boost the economy, but we probably don't need the $950 billion in additional annual demand that we'd get from using Trump's tax cut for investment. (This is before including a multiplier effect.) Spending of this size probably would over-stimulate the economy, leading to higher interest rates and/or a serious run-up in the inflation rate.
But the idea of spending more and running larger budget deficits is a good one. Trump may take it too far and want to give all the money to rich people, but he is not wrong for wanting to increase the budget deficit to boost the economy. This is a position that progressives should embrace and ideally force the Democratic presidential candidate to embrace.
So when it comes to the Trump tax plan, we can criticize him for wanting to give so much money to rich people and for his unwillingness to support necessary public investments. But by deriding the Trump plan as a budget buster, we make getting support for these investments even more difficult. There are plenty of legitimate reasons for attacking Trump. It would be best to stay away from the illegitimate ones.
(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).
1
