"Peter, get balls"

It's the economy, stupid.

Ralph writes me: 

     "How about crony capitalism? How about military democracy? How about corporate nihilism? How about oligarchical lobbyists? How about stock owners without a boardroom vote? Think up some names to call them, or your blog isn’t worth a shit. So there."

Trump has his narrative: the economy is historically great, unemployment is down, the 2017 tax cut worked.

Maybe not. It isn't trickling down to Ralph, who sent the above comment.

Some numbers look good, especially if a voter has a home and a secure pension or 401k account. Prices are up.The rich got richer. It is great to be in the 1%. It is even great to be in the top 5%. The rich got richer.

Home prices are high--too high for young people to buy in, but great if one already owns a home. Stock prices are high. It is great for people who had money to buy low ten years ago, when Obama got elected. 

The news is dominated by the announcement and commentary on the Mueller Report and his Rorschach Test style announcement yesterday (Fox and Trump say "See! Total exoneration!" Democrats say "See! He is not exonerated!".)  

Click: Congressional Research report

Amid this, the Congressional Research Service released a report that is simultaneously important but dry. It isn't breaking news. But Ralph is feeling something personally so he tells it the way he tells it. The Congressional Research Service tells it their way.

The CRS is a nonpartisan division of the Library of Congress. It has a simple conclusion: the tax cut of 2017 did not do much good. The rich got richer, the deficit got bigger, but it didn't help the economy.

"In previous years, output grew by 2.9% in 2015 and 2.5% in 2014, thus the increase in growth is in line with the trend in growth over the period."  

The tax cut are not "paying for themselves." To do that the growth rate would have needed to be 6.7%, but the effect of the 2017 tax act was an increase of about 0.5%. There is a happy fantasy among budgeters that there is free money, that tax cuts mean more revenue. It doesn't. There was little growth in GDP to show for the new deficit.

The tax cuts affected corporations, dropping the average rate from 23.4% to 12.1%--good for them and stock prices-- but in fact individual tax rates fell little.

There was a surge in repatriated money in the the first half of 2018, but it mostly went to corporate stock repurchases, not wages and bonuses, then it returned to trend.

Back to trend line

There was a nominal growth in wages--3.2%--but after accounting for inflation the increase is about 1.2%. Better than nothing, but not much.

The Tax Act of 2017 got publicity for provisions that stopped companies from moving their headquarters abroad, but in fact "these inversions had apparently already been significantly slowed by regulators adopted in 2014, 2015, and 2016." It is just more of the trend.

Readers don't need to believe me. Read the report. Page one is an executive summary. For a government report, it is quite readable.

This blog has made the point in the past: the American economy has been in a slow recovery since the Financial Crisis of 2008-2009. There are structural problems with income distribution that cause populist feelings of the kind expressed by Ralph. Those kept President Obama and Democrats generally from "talking up" the economy during his presidency, even though it was improving. 

Trump played it smart. He called it "carnage." He said the unemployment numbers were fake

Ten year trend on Unemployment

And then, two months after inauguration he said the market was tremendous and all his doing. In fact, America is experiencing a steady economic recovery, in a steady trend line, neither accelerated nor de-accelerated by Trump. -

The structural problems still exist--as Ralph knows well--but solutions are available.  If health care were treated as a right of citizenship, paid generally by taxes and not the individual, this would constitute a significant shift in income distribution, ameliorating the winner-take-all elements of the current American system.

It would be a start.