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This week’s show opens with Mike and Jay discussing President Trump’s decision to not allow the release of the Democratic response to the memo released last week by House Intelligence Committee chair Devin Nunes. While the FBI and Department of Justice voiced concerns with releasing the Democrats’ response, Mike points out that they also raised concerns about the Republican memo, which the President allowed to be released. Even so, Mike is withholding judgement because the White House claims it will work with the Intelligence Committee to come up with a version of the Democratic memo that can be released. Jay agrees with Mike that the Trump administration’s handling of this whole thing has been somewhat less than supremely competent.
Next is a look at the bipartisan (yes, that’s right bipartisan) budget agreement reached by Congress. While some on the left were disappointed that protection for Dreamers wasn’t part of the deal, and some on the right were angered by what they see as reckless spending, there were more than enough votes to send the measure to President Trump’s desk. Mike and Jay discuss the winners, losers, and policy implications of the agreement. (Earlier in the week, Mike promised to compose and sing a song titled ‘Donald Trump is Great’ if there was a budget before they aired the show. While he was technically right about there not being a budget – the measure President Trump signed was a continuing resolution, with the actual budget coming in March – Mike decided that he didn’t want to skate by on a technicality. If you want to hear him ‘sing’ his Donald Trump ‘song’, be sure to listen past the closing credits.)
After that it’s gerrymandering – a proposed redistricting plan in Ohio that has both Jay and Mike proud to be Buckeyes as well as a challenge to a Pennsylvania redistricting plan that the Supreme Court decided not to take up.
What Mike’s Reading
Naked Money. Charles Wheelan
What Jay’s Reading
Ohio’s redistricting fight suggests how principles and politics can mesh.
Eight views of Pennsylvania: A visual dive into Congressional redistricting and gerrymandering.
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Hi Guys, when discussing deficits most political commentary falls into the democrats ‘tax and spend’. I respect Jay acknowledges nuance within that, but it’s still his starting place. This graph (http://cdn.theatlantic.com/static/mt/assets/steve_clemons/assets_c/2012/10/Total%20Increase%20in%20debt%20to%20GDP%20overall-103309.php) of deficit spending as %gdp directly opposes that hypothesis by showing the largest deficit spenders were republican administrations. It doesn’t appear trump will reverse this trend. It’s worth noting that obama – the highest democrat ‘spender’ raised deficit as %gdp less than Reagan or bush 43.
Even with the biggest recession since the Great Depression, Obama inherited an economy with 10% deficit spending of gdp and left it under 4%. About half of Obama’s ‘increase’ in deficit spending was in the first year with a shrinking economy. I don’t think one can honestly argue that 08/09 economy/deficit problems were his fault.
I also ran a correlation between highest marginal tax rate and %gdp growth since 1945. It’s essentially 0 (no correlation). Obviously correlation is a limited measurement, but if the two were related (within the tax ranges tested), you’d expect at least a small relationship. Note this doesn’t include corporate tax rate, which I’ve seen evidence supporting can have a positive effect on short term growth.
I was born in 1988, so I don’t have the memory to give Reagan/Bush 1 the same perspective as obama. How can one interpret this information and deduce A) tax cuts reduce deficits? And B) republicans balance the budget?
Though I’m not an economist, I am a scientist. I struggled to find data supporting how we discuss the deficit problem societally. This isn’t intended to be a partisan hit, Democrats are certainly flawed humans (too). With deficit spending (seemingly) increasing under trump as a %gdp, it fits into the historical trend of republican administrations contributing more to the problem than democratic administrations. What information/context am I missing/not considering?
Thank you for your show and to both jay and mike. I ask and present some evidence in sincerity, as I believe you both address the problems as honestly as one can.
Hi Keith,
Thanks so much for taking the time to write such a thoughtful comment! What you’ve found is more or less the standard finding of most economists, though as with all such things, there are some who disagree. The problem with the tax rate / GDP growth correlation (or lack thereof) is that there are so many other independent variables that influence GDP growth that it’s just about impossible to isolate the effect (if any) of changes in the highest marginal tax rate.
I don’t know that there’s a lot you’re missing here. Republicans have essentially chosen the path of ‘borrow and spend’ as opposed to the Democrats’ ‘tax and spend’ – as such, Republican administrations with Republican Congresses are bound to increase the deficit. Now, it’s certainly possible that this isn’t such a horrible thing, so long as the spending done with the borrowed money nets a higher rate of return than the interest payments on that spending, thought that’s also incredibly difficult to measure.
I think this might make for an interesting conversation between Jay and me, so I’ll be adding it to our listener comment queue so that we can discuss it – though I’ll most likely edit your comment slightly, while still endeavoring to preserve the main thrust of your question. – Mike