Hi, Shrewd!        Login  
Shrewd'm.com 
A merry & shrewd investing community
Best Of PoliticsBest OfAll BoardsThe Shrewd’m WeeklyLearn to InvestHow to Become Shrewd
Search
Shrewd'm.com Merry shrewd investors
Search
Best Of PoliticsBest OfAll BoardsThe Shrewd’m WeeklyLearn to InvestHow to Become Shrewd


The week's question
In March 2025, in the thread "Re: OT, out", Umm asked the members: "Do you think it is because America is made up of magical soil that makes businesses based in America magically profitable?" This week it is put to everyone again. The button below opens the small thread re-asking it - read what others have said so far, then give your own answer as an ordinary reply.
Answer this questionContinue to Shrewd'mThis note won't appear again
Halls of Shrewd'm / US Policy
Unthreaded | Threaded | Whole Thread (65) |
Author: albaby1 ✶❂🐝 GOLD
SHREWD
  😊 😞

Number: of 86269 
Subject: Re: JediPunishment France
Date: 09/29/26 3:05 PM
Post New | Post Reply | Report Post | Recommend It!
No. of Recommendations: 17
This argument is the basis for why liberals say 'never cut taxes'.

No, it's not. It's the basis for why liberals say, 'cutting tax rates will not increase revenues.' And why they're correct to say that.

The reason liberals say 'never cut taxes' is because they believe that the U.S. is not raising enough money in federal tax receipts to cover the things that government needs to spend on. Which is almost entirely the various social insurance programs (Medicare, Medicaid, Social Security, VA, and unemployment insurance) and the military. We know what those things cost, we're not going to get rid of them, and so we need to pay for them. Liberals want the government to do more than that, of course. But liberals have long intuited what conservatives like Norquist failed to understand, and which Trump has finally forced the GOP to recognize - social insurance programs are popular, and they're not going away.

Blaming the "Bush tax cuts" or the "OBBB" is overly simplistic. For one the Bush tax cuts were two decades ago and any effect they've had has long since washed through the economy.

That's not true at all. Any stimulative effect they've had has long since washed through the economy. But the revenue effects, though, continue for as long as the rates are lower. The lower tax rates are permanent until changed. That's the point. Government revenue (at least from income taxes) is largely determined by the tax rates and other provisions of the tax code. Lower the rates, and government revenues are permanently lowered relative to baseline. The fact that this was a long time ago doesn't change that.

Merely saying 'tax cuts, bad' removes 99% of the nuance of how the dynamics of the US economy.

Note that I have not uttered the words, 'tax cuts, bad' - because I know that saying something that simplistic removes a lot of the dynamics of the discussion, in much the same way that just tossing off "...boomers couldn't save and couldn't govern their way out of a wet paper bag" also does.

But when you're talking about fiscal policy and the budget deficit, revenues matter. They're not merely 1% of the issue. Conservatives like to frame the issue as one of spending, rather than revenues, because that's more favorable to their small-government preferences. Assume a budget then set your spending to match it. But the other framing is that the government has things that it needs to spend money on, and it's valid to look at what the spending needs are and then raise enough money to cover it. Get those "profits" up, as Trump seems to be labelling increased taxes on imports, as it were. Deficits and fiscal trainwrecks arise from the mismatch, and you could get rid of most of the mismatch by simply putting taxes back to where they were in 2001.

Liberals are stridently opposed to ANY reforms in entitlements and/or government spending practices and therefore their solutions default to 'just tax rich people more' (and never mind anything else).

Right - because they think that the government's overall level of spending is fine. Because almost everything the government spends money on today is stuff that's insanely popular. The government spends almost all of its money - literally 90% - on just six things: Social Security, Medicare, veterans benefits, interest on the national debt, Medicaid, and the military. That's all. One of those is completely off the table - you have to pay the interest on the debt. Nearly everyone is stridently opposed to major reforms to Medicare or Social Security - that was Trump's insight - or to veterans benefits. The GOP is stridently opposed to cuts to the military. The only "entitlements" that are actually, realistically on the table is Medicaid - and all the governors would be upset if that got slashed, even the Republican ones.

That's why spending never changes, and why the solutions have to default to raising taxes. Everything but Medicaid is an 80/20 issue, so of course you can't "cut spending" out of this dilemma (and even Medicaid is actually an 80/20 issue, because while there's more conservative opposition to the program in general, even that fades once those bills gets shifted onto state governments that still have to deal with all the sick poor people). That's the structural problem. Not liberals.
Post New | Post Reply | Report Post | Recommend It!
Print the post
Members reply directly to albaby1 here — and replies get answered. Reading is free; so is joining the conversation. Join Shrewd'm »
This community has written 86,214 posts about US Policy. The article-length ones it recommended most:
It's going to get worse · 33 recs · 2025
G’day Donny · 30 recs · 2026
Old Related Story · 28 recs · 2026
HCR is a national treasure · 27 recs · 2025
Fascism in America · 27 recs · 2025
Unthreaded | Threaded | Whole Thread (65) |


Announcements
US Policy FAQ
Contact Shrewd'm
Contact the developer of these message boards.

Best Of Politics | Best Of | Favourites & Replies | All Boards | Followed Shrewds | Open Questions | Moving a community