The Washington Post may have misled readers on the Trump administration’s claims about the impact of its proposed cut in the corporate income tax. It noted the claim that “that more than 70 percent of the corporate tax burden is passed on to U.S. workers.” In fact, it is assuming an amount of growth that would vastly exceed the size of the tax cut. If workers get their share of this growth, well over 100 percent of the tax cut would be passed on in higher wages.
That is how it gets the figure of a $4,000 average gain per household. That would come to approximately $560 billion a year, as compared to a tax cut that will average around $150 billion a year.
The Washington Post may have misled readers on the Trump administration’s claims about the impact of its proposed cut in the corporate income tax. It noted the claim that “that more than 70 percent of the corporate tax burden is passed on to U.S. workers.” In fact, it is assuming an amount of growth that would vastly exceed the size of the tax cut. If workers get their share of this growth, well over 100 percent of the tax cut would be passed on in higher wages.
That is how it gets the figure of a $4,000 average gain per household. That would come to approximately $560 billion a year, as compared to a tax cut that will average around $150 billion a year.
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University of Maryland economics professor Peter Morici misrepresented the Republican’s proposed change in the mortgage interest deduction in a debate with my friend Jared Bernstein on Morning Edition. Morici said that the proposed cap would only hit people paying more than $500,000 in interest on their mortgage. In fact, it would cap the amount of principal on which interest could be deducted at $500,000.
Morici is correct that this would hit very few people, since it means having an outstanding balance on a mortgage of more than $500,000. Furthermore, the cap only applies to the margin over $500,000. This means that someone with outstanding principal of $540,000 would still be able to deduct the interest on $500,000 or more than 90 percent of their interest payment.
It is only the interest on the last $40,000 that would no longer be deductible. If they are paying 4.0% interest on their mortgage this would mean they are missing a deduction of $1,600, which translates into a tax increase of $400 for someone in the 25 percent tax bracket.
Addendum
Budget Geek reminds me in a comment below that current mortgages are grandfathered so they would still be able to deduct interest on principal in excess of $500,000. (There is already a cap at $1 million.) It is only newly issued mortgages that would be subject to the $500k cap.
University of Maryland economics professor Peter Morici misrepresented the Republican’s proposed change in the mortgage interest deduction in a debate with my friend Jared Bernstein on Morning Edition. Morici said that the proposed cap would only hit people paying more than $500,000 in interest on their mortgage. In fact, it would cap the amount of principal on which interest could be deducted at $500,000.
Morici is correct that this would hit very few people, since it means having an outstanding balance on a mortgage of more than $500,000. Furthermore, the cap only applies to the margin over $500,000. This means that someone with outstanding principal of $540,000 would still be able to deduct the interest on $500,000 or more than 90 percent of their interest payment.
It is only the interest on the last $40,000 that would no longer be deductible. If they are paying 4.0% interest on their mortgage this would mean they are missing a deduction of $1,600, which translates into a tax increase of $400 for someone in the 25 percent tax bracket.
Addendum
Budget Geek reminds me in a comment below that current mortgages are grandfathered so they would still be able to deduct interest on principal in excess of $500,000. (There is already a cap at $1 million.) It is only newly issued mortgages that would be subject to the $500k cap.
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Yep, that seems to be the point of a major NYT article highlighting increased sales of Canadian lobsters in Europe. The point is that a trade deal between the European Union and Canada eliminated a 7 percent tariff on Canadian lobsters, which remains in place on U.S. lobsters.
To put in some of the perspective that is altogether lacking in this piece, the lobster industry in the United States is a bit under $500 million annually. Or, to put this in some context that might make sense to most NYT readers, it amounts to less than 0.003 percent of US GDP. In other words, the tariff is an issue that might make a difference to a small number of lobster trappers in Maine, but it matters pretty much not at all to the economy. (Actually, the rest of us will pay more for lobster if the tariff on U.S. lobster was eliminated, but the NYT forget to mention this fact.)
Anyhow, the proposed EU–U.S. trade deal, the Trans-Atlantic Trade and Investment Pact (TTIP), actually had very little to do with trade, since trade barriers in almost all areas are already relatively low. The deal was about putting in place a pro-business structure of regulation. Among other things, it would set up special tribunals for investors that would override domestic laws in both the EU and US. It was also protectionist in that it would lock in longer and stronger patent and copyright protections.
Major media outlets, like the NYT, have been strong proponents of this deal using both their news and editorial pages to push it. This piece is an example of a pro-TTIP article that wrongly implies the U.S. is suffering major economic damage as a result of not pursuing TTIP. That is not true.
Yep, that seems to be the point of a major NYT article highlighting increased sales of Canadian lobsters in Europe. The point is that a trade deal between the European Union and Canada eliminated a 7 percent tariff on Canadian lobsters, which remains in place on U.S. lobsters.
To put in some of the perspective that is altogether lacking in this piece, the lobster industry in the United States is a bit under $500 million annually. Or, to put this in some context that might make sense to most NYT readers, it amounts to less than 0.003 percent of US GDP. In other words, the tariff is an issue that might make a difference to a small number of lobster trappers in Maine, but it matters pretty much not at all to the economy. (Actually, the rest of us will pay more for lobster if the tariff on U.S. lobster was eliminated, but the NYT forget to mention this fact.)
Anyhow, the proposed EU–U.S. trade deal, the Trans-Atlantic Trade and Investment Pact (TTIP), actually had very little to do with trade, since trade barriers in almost all areas are already relatively low. The deal was about putting in place a pro-business structure of regulation. Among other things, it would set up special tribunals for investors that would override domestic laws in both the EU and US. It was also protectionist in that it would lock in longer and stronger patent and copyright protections.
Major media outlets, like the NYT, have been strong proponents of this deal using both their news and editorial pages to push it. This piece is an example of a pro-TTIP article that wrongly implies the U.S. is suffering major economic damage as a result of not pursuing TTIP. That is not true.
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The NYT had a lengthy article reporting on the Trump administration’s efforts to reverse the movement away from fee for service payments to doctors initiated by the Obama administration. Tom Price, who had been head of the the Department of Health and Human Services, was a central figure in this effort.
At one point the piece tells readers that Price:
“…had fought against what he saw as unnecessary government intervention since his days as a surgeon in the suburbs north of Atlanta.”
While it is possible that Price “saw” the new payment structures as a “unnecessary” government intervention, we might also think that Price was primarily upset about a payment system that would lower his pay and that of other doctors. It’s good that the NYT was able to determine Price’s true motives for us.
The NYT had a lengthy article reporting on the Trump administration’s efforts to reverse the movement away from fee for service payments to doctors initiated by the Obama administration. Tom Price, who had been head of the the Department of Health and Human Services, was a central figure in this effort.
At one point the piece tells readers that Price:
“…had fought against what he saw as unnecessary government intervention since his days as a surgeon in the suburbs north of Atlanta.”
While it is possible that Price “saw” the new payment structures as a “unnecessary” government intervention, we might also think that Price was primarily upset about a payment system that would lower his pay and that of other doctors. It’s good that the NYT was able to determine Price’s true motives for us.
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The NYT gave us yet another account of an industry that apparently can’t get enough workers:
“Trucking is a brutal job. Drivers endure long, tedious stretches where they are inactive but have to stay focused, and they spend weeks at a time away from home. For those and other reasons, the industry’s biggest problem has been the scarcity and turnover of drivers, making it hard to keep up with shipping demand.”
According to the Bureau of Labor Statistics, the average hourly wage for production and nonsupervisory employees in the trucking industry went up 2.4 percent. If it is really the case that the industry can’t get enough drivers, they may try raising the pay. This is at least what the intro econ textbooks would say.
The NYT gave us yet another account of an industry that apparently can’t get enough workers:
“Trucking is a brutal job. Drivers endure long, tedious stretches where they are inactive but have to stay focused, and they spend weeks at a time away from home. For those and other reasons, the industry’s biggest problem has been the scarcity and turnover of drivers, making it hard to keep up with shipping demand.”
According to the Bureau of Labor Statistics, the average hourly wage for production and nonsupervisory employees in the trucking industry went up 2.4 percent. If it is really the case that the industry can’t get enough drivers, they may try raising the pay. This is at least what the intro econ textbooks would say.
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That would appear to the implication of a complaint in a news story that:
“Trump also has spent time during the trip excusing predatory economic behavior of China and other countries and blaming past U.S. administrations for allowing the ‘unfair’ trade imbalances he railed against during the campaign.”
This is an interesting departure from the position the Post had generally taken in both its news and editorial page in the past, which largely derided the view that our pattern of trade was in any way detrimental to the U.S. economy. In particular, the idea that other countries might be managing their currency to maintain large trade surpluses was generally trivialized and those who argued this position were derided as “protectionist.” It is interesting that the Post appears to have completely flipped its position on this point.
That would appear to the implication of a complaint in a news story that:
“Trump also has spent time during the trip excusing predatory economic behavior of China and other countries and blaming past U.S. administrations for allowing the ‘unfair’ trade imbalances he railed against during the campaign.”
This is an interesting departure from the position the Post had generally taken in both its news and editorial page in the past, which largely derided the view that our pattern of trade was in any way detrimental to the U.S. economy. In particular, the idea that other countries might be managing their currency to maintain large trade surpluses was generally trivialized and those who argued this position were derided as “protectionist.” It is interesting that the Post appears to have completely flipped its position on this point.
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A front page Washington Post article on the continued use of coal in Germany, in spite of its impact on global warming, told readers that one of the reasons it is difficult to cut back on coal is the industry employs about 20,000 people. Since most readers are unlikely to have a clear idea of the size of Germany’s labor force, it would have been helpful to point out that this comes to less than 0.05 percent of its workforce of 43.0 million.
This doesn’t mean that job loss for these workers would not still be traumatic, although Germany does provide much better unemployment benefits than the United States. It is important for readers to have some sense of how important employment in the sector is to the nation as a whole, which this piece did not give.
A front page Washington Post article on the continued use of coal in Germany, in spite of its impact on global warming, told readers that one of the reasons it is difficult to cut back on coal is the industry employs about 20,000 people. Since most readers are unlikely to have a clear idea of the size of Germany’s labor force, it would have been helpful to point out that this comes to less than 0.05 percent of its workforce of 43.0 million.
This doesn’t mean that job loss for these workers would not still be traumatic, although Germany does provide much better unemployment benefits than the United States. It is important for readers to have some sense of how important employment in the sector is to the nation as a whole, which this piece did not give.
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The Washington Post refuses to follow journalistic norms and maintain a separation between the news and editorial pages when it comes to the Trans-Pacific Partnership (TPP). Yet again the paper referred to the pact as a “free-trade” agreement.
Of course, the deal is not a free trade pact. It does little, if anything, to remove the barriers that protect highly paid professionals like doctors from international competition. Also, a major focus of the pact is longer and stronger patent and copyright protections.
These forms of protectionism have been a major factor in the upward redistribution of the last four decades. In the case of prescription drugs alone these protections add more than $370 billion annually (almost 2 percent of GDP) to what we spend on drugs. The Post supports these protections and apparently would like its readers to believe that they are somehow part of a free market.
The Washington Post refuses to follow journalistic norms and maintain a separation between the news and editorial pages when it comes to the Trans-Pacific Partnership (TPP). Yet again the paper referred to the pact as a “free-trade” agreement.
Of course, the deal is not a free trade pact. It does little, if anything, to remove the barriers that protect highly paid professionals like doctors from international competition. Also, a major focus of the pact is longer and stronger patent and copyright protections.
These forms of protectionism have been a major factor in the upward redistribution of the last four decades. In the case of prescription drugs alone these protections add more than $370 billion annually (almost 2 percent of GDP) to what we spend on drugs. The Post supports these protections and apparently would like its readers to believe that they are somehow part of a free market.
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