Trump outlines massive cuts in Medicaid and Medicare in 2021 budget plan — Kevin Reed

A look at the plan to cut non-discretionary spending and increase the budgets of the Pentagon and Department of Homeland Security.

WSWS
Trump outlines massive cuts in Medicaid and Medicare in 2021 budget plan

Kevin Reed

Stephanie Kelton — The Democrats’ Options for Repealing the Trump Tax Cut

No, this won’t be on the table until 2021 at the earliest. But the party’s candidates need to offer some solutions.

Bloomberg Opinion
The Democrats’ Options for Repealing the Trump Tax Cut

Stephanie Kelton | Professor of Public Policy and Economics at Stony Brook University, formerly Democrats' chief economist on the staff of the U.S. Senate Budget Committee, and an economic adviser to the 2016 presidential campaign of Senator Bernie Sanders

Alan Longbon — Good News: U.S. Government Posts A $75 Billion Deficit For June 2018

• The US budget deficit is USD 75 billion in June 2018; this is a net add of income to the private sector and allows it to grow.
• The good news is that dollars are being added to the economy by the Federal government, and it grows the economy.
• Further net inflows are expected for the rest of the year from the Federal government and private credit growth.
• Private credit growth has so far added $36 billion to the net money supply; last year, it was only $23 billion. At this rate, it could total $100 billion for the year....

Alan Longbon schools his readers in Godley's monetary economics.

Seeking Alpha
Good News: U.S. Government Posts A $75 Billion Deficit For June 2018

Alan Longbon

Rohan Grey and Nathan Tankus — Corporate Taxation in a Modern Monetary Economy: Legal History, Theory, Prospects

Abstract

Corporate taxation is a perennially controversial topic in American politics. In fact, it may be the tax policy controversy that most Americans are aware of and even have an opinion about. Nevertheless, the purpose of corporate taxation is unclear in popular, or even for that matter, academic, discourse. In this paper we lay out and critically evaluate contemporary and historical corporate tax policy debates based on three common justifications for taxation: the “revenue” justification, the “distribution” justification, and the “behavior” justification. The revenue theory argues that the purpose of taxes is to raise the money required to finance expenditures. The distribution theory argues that certain taxes are required to produce desirable distributional outcomes. The behavior theory argues that certain taxes are required to change organizational and individual behavior in ways that benefit society.

This paper will trace the application of these justifications in American corporate tax law debates from the late nineteenth century through to the present, and analyze the implications of these debates to the contemporary corporate income tax debate. In particular, we argue that: a) following the observation made in 1946 by former President of the New York Federal Reserve Beardsley Ruml that, in the context of a modern government with a non-convertible currency, a floating exchange-rate, and its own central bank, “taxes for revenue are obsolete,” the revenue theory is empirically false; b) The distribution theory case for the modern corporate income tax is weak; and c) from the perspective of the behavior theory, the modern corporate income tax has strongly perverse impacts on corporate behavior.

Binzagr Institute for Sustainable Prosperity
Corporate Taxation in a Modern Monetary Economy: Legal History, Theory, Prospects
Rohan Grey and Nathan Tankus

Zero Hedge — Treasury To Issue Half A Trillion Dollars In Debt In Q4

This drawdown in cash, and jump in government outlays, was to be expected following the latest Monthly Statement from the Treasury which showed a surge in government outlays, which hit a record high $429 billion in June, for reasons discussed previously.

What austerity?

Zero Hedge
Treasury To Issue Half A Trillion Dollars In Debt In Q4

Tyler Durden

Pence — Trump's Tax Plan To Increase Deficit "In The Short Term"

Hours after Trump provided the broad framework, if few details, to his tax plan, conceived almost certainly by Goldman Sachs economists Alec Phillips and Jan Hatzius (and presented to the public by former Goldman employees Steven Mnuchin and Gary Cohn), the CRFB [Committee for a Responsible Federal Budget] calculated its impact on both the US budget deficit and future US debt. This is how the CRFB phrased it:

"Based on what we know so far, the plan could cost $3 to $7 trillion over a decade– our base-case estimate is $5.5 trillion in revenue loss over a decade. Without adequate offsets, tax reform could drive up the federal debt, harming economic growth instead of boosting it."

The administration doesn't think so.

Specifically, Pence acknowledged that the Trump administration's tax proposal could increase the deficit, at least at first. "Maybe in the short term," he said during an exclusive interview on NBC's "Meet The Press."

To be sure, Pence was confident that eventually the deficit would decline as it would be overcome by economic "growth" thanks to the tax cuts it will fund. However, even he hedged: “the truth is, if we don’t get this economy growing at 3 percent or more, as the president believes we can, we’re never going to meet the obligations that we’ve made today."…

Tax cuts are not spending. So it depends on how the increase in the "savings" of the private sector owing to reduced taxes is used. To the degree it is saved and not spent, the net effect on real growth will be nil. However, if that saving occurs in financial assets, those asset classes will greatly appreciate, creating an appearance of growth.

Zero Hedge
Pence: Trump's Tax Plan To Increase Deficit "In The Short Term"

Tyler Durden

Justin Sink and Erik Wasson — Trump Plans Historic Cuts Across Government to Fund Defense

[Office of Management and Budget Director Mick] Mulvaney on MSNBC said the litmus test his team used was, “Can we really continue to ask a coal miner in West Virginia or a single mom in Detroit to pay for these programs and the answer is, ‘No.’ We can ask them to continue to pay for defense, and we will, but we can’t continue to ask them to pay for the Corporation for Public Broadcasting.”

The OMB head is a moron that thinks that a currency issuer is the same as a currency user. Who appointed this guy anyway?

Bloomberg
Trump Plans Historic Cuts Across Government to Fund Defense
Justin Sink and Erik Wasson

Dirk Ehnts — US Congress has passed $1.8 trn spending measure…

For all the talk about austerity and running out of munnie, the US Congress goes all in on fiscal expansion.

It is quite clear that expansionary fiscal policy is not about the size of federal government: if you want it to shrink, you can go for tax cuts, and if you want it to increase you go for increased spending. However, there is no reason to not use expansionary fiscal policy because you believe in one or the other proposition regarding the size of the government. The US has a valuable lessons to teach to the austerity crowd in Europe:

It’s the economy, stupid!

econoblog 101
US Congress has passed $1.8 trn spending measure…
Dirk Ehnts | Lecturer at Bard College Berlin

Bloomberg — There's a Big Drop in U.S. Treasury Debt Supply Coming in 2016

Deficit falling. Treasury issuing mostly bills owing to demand for short term.

Bloomberg Business
There's a Big Drop in U.S. Treasury Debt Supply Coming in 2016
Liz McCormick and Daniel Kruger

David Lawder — Obama budget would shrink deficits by $1.2 trillion over 10 years: CBO

More or less guarantees the deficits over 10 years will balloon far beyond that unless the US subjected to buckling austerity. Not likely with the boomers retiring and old people vote their economic interests, and the US grand strategy of maintaining  global hegemony through endless war.

More political puffery with Democrats trying to look like more serious people than the GOP.

Reuters
Obama budget would shrink deficits by $1.2 trillion over 10 years: CBO
David Lawder