There are multiple theories of economics. Three are currently prevalent. Today I’ll only deal with two. I’m leaving out Marxism from the argument and the count, it’s more a critique than a way to do things. Demand side, monetarism, and supply side are the primary drivers of the economic theory debates that define western society. Monetarism overlaps with both. That theory is left for another day.
Modern economic theory, the kind we think of, started with Adam Smith. He had ideas about supply, demand, and how they balanced. John Maynard Keynes changed the game.
The great depression that followed the crash of 1929 was ugly with millions of unemployed, a truly worldwide crisis. Keynes created and helped implement the theories that got us out of it. He went beyond the ideas of supply and demand from Smith and looked at the demand side of the economic equation. He posited that people and governments buy things and that is what drives investment, employment, and growth. Keynes understood that companies build things, create things, respond to demand, to the market, to what people, other companies, and governments buy. Iif a company makes something that no one wants there will be no markets, the company will go out of business, and workers will lose their jobs. Keynes approach to get us out of the Great Depression was two-fold: 1) through tax cuts and government assistance help people to have money to buy things so companies will create, sell, hire. 2) create government policies to build things, bridges, tunnels, roads, schools, parks, either by directly sponsoring projects or contracting with companies to act on their behalf. And it worked. The economy started to grow. And it grew even faster when World War II increased the demands for arms, food, and more.
After Keynes a different economic theory grew. Regan promoted it, as president, and built his policies around it. The idea was called “supply-side” economics. His, their idea, was to cut corporate taxes thereby making it cheaper to invest and make things. It was a field of dreams, if you build it they will come, theory. The tax side of the equation came from the theories of a guy named Arthur Laffer. His idea was that greater growth from corporate tax cuts would pay for themselves through economic growth. He even had a great chart. Cut taxes, companies create, hire, grow, and we have more revenue from the increased profits and, the tax cuts pay for themselves. Except they didn’t. The truth is that companies don’t build, don’t create if there is no one to buy their products. And what was the result? The Regan supply side economic theory and tax cuts led to the greatest non-wartime budget deficits in the history of our country. They didn’t pay for themselves. Companies didn’t invest because they need customers, demand, to justify expansion. Tax cuts and tax policy can help make a marginally profitable product feasible, but they won’t create new ones without a market. They can help lower costs and promote new ideas and technologies, but only if consumers want the products. The most recent examples where tax policies helped growth are the assistance to promote solar and wind power as well as electric cars. They did this by lowering costs, making new products affordable and competitive with other technologies. Standalone, non-targeted supply-side tax cuts failed.
So what are we to learn? Trump is at it again. He says let’s cut taxes on corporations, freeing them to invest and to grow. But there is a reality that he’s left out. Companies invest when they have markets and growth opportunities. Tax cuts can free cash, but free cash isn’t the problem at this point in history. Companies like Apple are sitting on cash hoards amounting to trillions of dollars. They have the money to invest. What they need is consumers to buy their products. What would help to expand growth? Start by creating more opportunities for people to buy goods and services. Expand tax credits to low-income families and extend tax cuts to the middle class, freeing up cash for them to buy new things. This seems to missing from the Trump tax proposal.
A second component offered by Trump is cutting taxes on corporate profits from foreign earnings. The idea is that this will entice companies to bring back money currently sitting overseas, letting them be free to create and hire. The claim is that it will create unrestrained growth. Yet it’s a lie. As outlined above, even if the money comes back, it won’t be invested. What will happen is greater deficits from the reduced revenues due to the tax cuts, not increased investment.
So what to make of all this? 1) Regan and Laffer were wrong, supply side economics didn’t work. 2) There is an ongoing massive violation of ethical responsibilities via the president’s actions; and 3) treason. I’ve covered the first above. Let’s explore the latter two.
First, this isn’t just about corporations. It includes partnerships and family businesses. Trump owns and runs an extensive family business. Most real estate deals are structured as partnerships. So in reality he’s offering a package to cut his own taxes. A 15% tax rate on partnerships will massively benefit Trump and his family. It will cut his federal tax liability by a half or more. But who will pay? Us, all of us who are not part of the one percent. A middle class family with an average household income will pay a far higher effective tax rate, somewhere around 18% inclusive of Social Security and Medicare taxes. Ethics? He’s said they don’t apply to him as president. It’s clear that the Trump idea of ethics is to fatten his wallet passing the costs to the average American family, including those who voted for him.
Second, treason: There is a reason Trump won’t release his tax returns. Not only will they show how much his tax bill will benefit him, they’ll also show treason. His partnerships with foreign investors are examples of him selling out the country. The Trump tax policies, if enacted, will benefit him and his foreign friends, including foreign governments, at the expense of American taxpayers. Trump’s tax returns will show that he’s been paid off, in the control of foreign powers, outside interests. The tax returns will offer proof to what he doesn’t even deny. I’ve written about treason before. His tax returns will prove it.
So what is treason? From Merriam-Webster:
“the offense of attempting by overt acts to overthrow the government of the state to which the offender owes allegiance or to kill or personally injure the sovereign or the sovereign’s family”
Trump owes allegiance to foreign creditors, including some nation states. A president owes allegiance to one country, the one he rules. His duty is to protect the people of his country whether it be their economic interests or their safety. His tax cuts benefit him and are an act of treason by increasing his personal wealth through reducing taxes paid on payments from foreign power, all done to his benefit and undermining the interests of the people he was elected to represent. Furthermore, these payments violate the emoluments clause of the Constitution. Again, Merriam-Webster regarding emoluments:
“the returns arising from office or employment usually in the form of compensation or perquisites”
Trump is clearly using the office of the presidency to increase the money paid to himself and his family, often from foreign sources. This is a clear violation of the Constitution, specifically Article I, Section 9 Clause 8:
“No Title of Nobility shall be granted by the United States: And no Person holding any Office of Profit or Trust under them, shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State.”
Payments from foreign powers meet the constitutional definition for removal from office as specified in Article II, Section 4:
“The President, Vice President and all civil Officers of the United States, shall be removed from Office on Impeachment for, and Conviction of, Treason, Bribery, or other high Crimes and Misdemeanors.”
The case for treason via high crimes and misdemeanors is clear through the president’s continuing violation of the Constitution’s emoluments clause. The fact that the president neither cares about nor is willing to abide by the Constitution nor the laws of this country is clear. It’s time that we, those who oppose Trump, move on from fighting his policies to instead focusing on the crimes the president is perpetrating against our country. Acting to remove Trump from office will stop his ability to attack the ACA, Planned Parenthood, foreign residents, and more. If he has to defend his illegal actions then his energy will be diverted from the ongoing assault on the values and services that we hold most important.