GDP actually DROPPED in the report out today for 3Q2017

Today's GDP report was the third and final estimate for 3Q2017.

A month ago, current dollar GDP was estimated at $19.509 trillion.

Today, it's $8.4 billion less: $19.5006 trillion.

Yeah, I know, big whoop, but don't expect anyone in Conservatism Inc. to point it out, because, you know, "the economy is booming". 

American business abandoned America starting in 2000, investing gargantuan sums abroad instead of here at home

This is why we have so much income inequality in 2017.

American business increased investment levels abroad by 282% since the year 2000, chasing cheaper labor and resources and jurisdictions with few regulations (environmental, safety, wage and insurance laws).

But domestically investment is down, almost 18%. This is why incomes are stagnant, GDP is low, and good jobs are scarce in the United States.

Don't let the Republicans do this to us again.

Sum Ting Wong: Low top marginal tax rates since 1986 have NOT delivered

Low top marginal tax rates have NOT delivered since 1986.

The average top marginal rate has been 38% for the last thirty years, 49% lower than the average rate of 75% which prevailed from 1956 until the Reagan tax reform of 1986.

After the reform, stocks have done little better than before, but gross public debt has increased at a rate 21% higher than before, growth of current dollar GDP has plunged by 66%, and growth of household net worth has slowed by 48%.

Where did the gains from the Reagan tax cuts go?

You know the answer. The number of US billionaires has exploded from just 41 in 1987 to 536 in 2015, up 1,207%. The money has gone into the pockets of the few, instead of into investment. From 1960 to 1986 net domestic investment grew 846% whereas in the 30 years since 1986 the metric has grown by only 117%, a contraction of 86% under the more favorable personal income tax regime.

The lesson seems clear.

Higher marginal income tax rates force the wealthy to invest in business and derive their income from investments taxed at the preferred lower long term capital rates. Lower marginal personal income tax rates, however, entice them away from going through all the trouble, in turn depriving the economy of growth, employees of growing incomes and wealth, and the government of revenue.

Like the formerly sound public policy which invented the 30-year mortgage to force people to save for the future in the housing piggy bank, the time has come to reincentivize business owners to invest more in their businesses by making the personal income option less attractive.

Neither Republican tax bill does this. 

  

Jimmy P has it right: Tax cuts never jazzed core Trump voters the way immigration restriction and The Wall did

Here for The Week:

Remember, the U.S. is in its 101st month of a steady-if-unspectacular economic expansion. The unemployment rate is low. While there are obviously millions upon millions of Americans who continue to struggle, overall the economy simply isn't the priority for voters that it is in times of real economic crisis. What's more, a failed tax cut is unlikely to derail the expansion, since expectations of a fat tax cut aren't responsible for the growing economy and rising stock market. (You can thank a global economic upturn for that.) And tax cuts — much less corporate tax cuts — weren't the motivating factor behind the Trumpopulist surge. Tax cuts never jazzed core Trump voters the way immigration restriction and The Wall did. Trump's diehard supporters won't howl over a failure to slash corporate tax rates. ... [N]o magic tax cut will turn 2 percent GDP growth into sustained 3 percent or 4 percent growth.

Presidents' first nine months of current dollar GDP compared, including LBJ

Typically I present the data for JFK/LBJ as a unit because Kennedy was shot and Johnson finished his first term and then one of his own, making eight years. Same with Nixon/Ford, because Nixon resigned and Ford finished Nixon's second term, making eight years.

But when comparing first time office holders, LBJ really should be included. The key difference is that LBJ was elected in his own right in 1964, while Ford was not in 1972. So LBJ should be included, but not Ford in order to compare apples to apples.

Johnson was like Truman in three respects: For serving out a dead president's term, for being elected in his own right, and for deciding against standing for re-election.

So, the updated chart including Old Guns 'n Butter himself (note that Trump thus ranks 7th out of 12 starts in this update):

Today's second estimate of GDP for 3Q2017 doesn't give Trump much of a bump in the rankings

Trump remains in 6th place among 11 starts since 1948.

It's hard to escape the conclusion that US GDP has been highly dependent on fertility

Peak Baby Boom 1952-1957 when births per 1,000 of population averaged 25.17 (graph 1) is probably the simplest explanation for outsized GDP performance during the years when this generation turned 22 from 1974-1979. More babies in the 1950s equaled more GDP come the late 1970s.

We only wish for that GDP now.

Jimmy Carter, elected in 1976, still owns the best 4-year GDP record in the post-war, despite everything you've been told (graph 2). It's nothing special he did really, it's just that in 1975, the year before his election, you had the very peak of the Baby Boom turn 18, those born in 1957 when births per 1,000 hit 25.3 for the second and final time in the post-war. They and the rest of their cohort were ready to consume in numbers never seen before. Their era spanning from Nixon/Ford from 1972 when the first of them turned 20 through Reagan in 1984 when they turned 32 represents the coming of age of America's most powerful economic demographic and the period when America's GDP performance hit its highest levels (average 46.3%).

Their failure to have enough children themselves, however, is also a big part of the explanation for the GDP trend heading south after their time. They consumed, but they did not at all produce children like their parents had. In fact, the nadir of births per 1,000 before the current period occurred from 1972 to 1977, precisely the period exactly 20 years after peak Baby Boom 1952-1957. Births per 1,000 averaged just 14.92 during this period, a rate nearly 41% lower than their parents' era. So the most prolific fruit of the Baby Boom had gone on to become themselves the least prolific, having the fewest children ever.

Not surprisingly, without enough bodies the economy inevitably began to run out of gas starting about two decades after that. Clinton era GDP performance was never as good as Reagan's, and the era was marked by various warnings, not the least of which were the bond debacles of 1994 and 1999. The great Reagan bull market ended in August 2000, a recession ensued in 2001, average S&P 500 return has been reduced to 5.2% per annum over the last 17 years, and the GDP growth rate after Clinton has averaged just half what it averaged before Carter (16% vs. 32%). No wonder the trend is down so dramatically (graph 3).

The solution?

Have LOTS more kids, and wait 20 years, if you want America to still be America, that is. Otherwise, let in even more than the 1 million immigrants we already let in annually, and prepare to kiss your country goodbye.

But don't hold your breath. Births per 1,000 have fallen to an average of just 12.5 for the five year period 2011-2015.

They don't call it the suicide of the West for nothing.

graph 1

graph 2

graph 3

If economic growth under Trump feels like it was under Bill Clinton, that's because it is: Trump so far ranks 6th best out of 11 starts

How to tax the rich and only the rich as originally intended in 1913, and solve a lot of problems

In 1913 when the average Joe made about $800 a year, the first income tax under the 16th Amendment didn't worry him because he didn't pay it and probably thought he never would. The personal exemption for a married couple in the original tax code was $4,000.

Today that $4,000 personal exemption adjusted for inflation using the Consumer Price Index amounts to about $100,000.

Even in 2016 that kind of income is made by fewer than 10% of individual wage earners. Under the original income tax of 1913, 90% today wouldn't have to worry about paying the dreaded income tax either.

Is there a way to return to this golden age of taxation?

I'm here to tell you that I think so, and I say that as a conservative. We could easily simplify the tax code by returning to the status quo which prevailed before the First World War, pay all the bills, abolish Social Security and Medicare taxes, the corporate income tax and all the other little irritating taxes and reduce income inequality in the process. We'd also save a lot of time and money wasted in complying with the tax code's myriad baroque features.

Here's the math.

In 2016 according to the Bureau of Economic Analysis personal income in the United States was $15.9287 trillion.

Social Security's Office of the Chief Actuary tells us that in 2016 there were 163.5 million individual wage earners. If you exempt the first $100,000 of everybody's individual wage income in 2016, including from the rich, you're talking about $6.213 trillion of individual wage income which would be tax-free.

That leaves $9.7157 trillion of personal income left in 2016 to tax, to pay all the bills.

According to The Tax Policy Center, the bills were the total estimated federal outlays of $3.9513 trillion in 2016.

So, the tax is 40.67% (9.7157 X .4067 = 3.9513) on all personal income in excess of $100,000 a year, no itemized deductions, no credits of any kind (this is where they all came from in the first place, because the rich pissed, moaned and complained and bribed the politicians to carve out privileges for them to escape paying).

The rich, all 14.9 million of them, will still have $7.2544 trillion to play with ($1.49 trillion from their first $100K tax-free, just like everybody else, and $5.7644 trillion left over after taxes from the income in excess of $100K).

The rest of us, 148.6 million, won't pay any federal income tax, Social Security or Medicare tax, gasoline tax, or any other kind of federal tax on our $4.723 trillion. The only taxes we'll have to pay will be State and Local Income Taxes, property taxes, sales taxes and the like. Of course rich people will have to pay those too, but that's a problem for all of us and for a different level of politics.

I summarize:

$15.9287 trillion personal income 2016 (BEA)

-  3.9513 trillion federal taxes, all from those making $100,000+ per year @40.67%

-  7.2544 trillion left over for the 14.9 million making $100,000+ per year (top 10%)

-  4.7230 trillion left over for the 148.6 million making less than $100,000 per year (bottom 90%)

___________________________________________________________________

0

And the budget balances.   

Percentage of GDP spent by government at all levels in the US 1898-2016

Since 1979 through 2016, outlays at all levels have doubled on average every 12.3 years, similar to the period 1898 through 1932 when they doubled on average every 11.3 years.

Outlays in the US in between those periods, from 1932 to 1979, at all levels doubled every 7.8 years on average.

The slowdown in outlay doubling times from the end of the Carter administration is no doubt connected to increased Republican governance, but outlays now divert from productive purposes 4.6 times what they did in 1898, the highest ever except for WWII but still higher than during WWI.

Why? Are we at war today?

Virginia's Dave Brat caves to Conservatism Inc, will vote for tax cuts without spending cuts

Federal spending already is north of 21% of GDP, and government spending at all levels north of 36%. This is taxpayer money diverted from productive purposes, then skimmed to pay the useless intermediaries of The Swamp, and finally distributed for purposes formerly deemed to be the province of individuals but now the responsibility of  The State.

And they wonder why GDP is so low.

Oh please, Allah, send the asteroid Ceres to destroy DC. Our countrymen never will.

Andrew Mellon, we hardly knew thee.

From the story here:

“I will vote for the Senate budget and while I applaud the work that Chairman Black did in our budget committee to begin the process of mandatory spending reforms, at this point, achieving economic growth is the first priority and so I want to keep that train moving,” said Rep. Dave Brat (R-Va.), a member of the conservative House Freedom Caucus. ... Earlier this year, House Freedom Caucus members had been willing to delay committee passage of the House budget on demands that it include instructions to cut more mandatory spending. Now they are signaling acquiescence to the smaller Senate figures. ... Twenty-two conservative economic organizations under the banner of the National Taxpayers Union sent a letter to House members urging that they adopt the Senate budget.

Now if we could just get some strong men in The White House

Meanwhile, we get "broken window fallacy" nonsense from The New York Times about Hurricane Harvey

Destroy the previous products of GDP which produced GDP of their own, and presto! More GDP!

Might as well just print the stuff on steroids and spend it.

About 21% of taxpayer money and borrowings is already misallocated to expenditure by the federal government. Some of that is absolutely necessary, but even that is not spent well.

Hurricanes aren't called disasters for nothing.

Here:

Ellen Zentner, chief United States economist at Morgan Stanley, said that although Hurricane Harvey’s impact on national gross domestic product in the third quarter might be fairly neutral, “the lagged effects of rebuilding homes and replacing motor vehicles can lost longer,” providing a lift to gross domestic product in the fourth quarter and beyond.

On the other hand, an extended rise in gasoline prices could have a more immediate effect. Each 10-cent rise in the price of gasoline is equivalent to a $10 billion tax on consumers, Ms. Zentner said, so “should higher prices be sustained, it would rob other categories of spending as dollars are diverted to filling tanks.” ...

The economic impact of the storm will not be clear with any degree of accuracy for a while. But given Houston’s commercial importance — and its perch along a well-trod hurricane zone — economists and others have long taken it for granted that an epic storm would hit the region eventually, so have a head start on the numbers.

If anyone's lying about GDP, it's Rush Limbaugh

Rush Limbaugh just said Obama's never had real GDP above 1.5%, which is just silly. The man doesn't have a clue what he's talking about.

Trump's first six months of current dollar GDP aren't awful, but that's about it

With Bush and Obama, America has entered a new era of stupid, paying in excess of $1 for every extra dollar of GDP

The Reagan GDP miracle is a complete myth: It was all government spending (on defense)

And it set a horrible precedent for the dramatic overspending of George W. Bush and Barack Obama, which has sent us on a course to oblivion. You can argue it was necessary to defeat the USSR, but you can't argue that baseline spending (in black) has done anything but go up, up, up to dangerous new levels as a result (notice the baseline Jimmy Carter inherited from liberal Republicanism, for which he got the blame from Ronald Reagan, which wasn't very nice of the old man who went on to bequeath a similar giant new baseline to his successor, G.H.W. Bush).

No, the real miracle was the pathetic loser in Iran, Jimmy Carter, who spent the least in the post-war for his additional GDP, followed by Bill Clinton.

Of course, the spending is all the prerogative of the Congress. The president proposes but the Congress disposes, as the saying goes.

Beware libertarian politicians preaching balanced budgets, as well as utopian infrastructure spending enthusiasts promising the moon and liberal Republicans selling government spending as security to senior citizens at the expense of younger Americans in a time of protracted war. They have delivered little beyond $20 trillion in debt.

The much maligned Jimmy Carter is the hero of the post-war for paying the least for GDP

Employers immediately panicked after Obama was elected, shedding jobs by the millions

From November 2007 through October 2008, there were 19.6 million first time claims for unemployment.

Not good, but nothing like what followed.

Immediately after Obama was elected, the figure jumped by over 52% in November 2008 and never looked back. For the first twelve months after Obama's election, jobless claims jumped by 56% to 30.6 million.

The average per month jumped from 1.6 million per month to 2.6 million.

And in the first eight months since Trump was elected?

The average is 1.1 million per month.

Happy Independence Day!

Rahm Emanuel just lies about economic growth in Chicago: He's presiding over decline, not growth

Here:

Cities with reliable, modern mass transit are more economically competitive, have higher productivity, fewer carbon emissions and a better quality of life. And as we have seen in Chicago, mass transit not only connects people to opportunities, it also fuels growth. Modernizing our existing mass transit is one reason Chicago’s economy has expanded faster than the economies of New York and Washington, and faster than the national average for the last five years.