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Comment by yalogin | Hacker News Reader

I keep saying over and over but the economic policy is something trump fucked up big time. He gave away the corporate tax breaks in times of prosperity when there was no need and the companies just made bank. He was dealt a great hand, a strong economy that would chug along no matter who the president was. Those are the times to focus on the poor and lift people up. Instead he wasted his opportunity on the tax cuts. Someone with foresight and common sense would have saved that arrow in the quiver for a more opportune time. Now would have been a great time to use that tool. Instead the fed has to resort to unlimited money printing and zero interest. We probably will need to do that at some point but losing that one option is a mistake.

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Similarly: I don't understand the Oregon Kicker: if there is a surplus, it is sent back to the people.

DUH! The point of a surplus is to save for emergencies! Sure, if there is more than, hm, let's use Chase bank: Six months savings, then send the rest back. But running a state with no emergency savings seems asinine, no?

Unless... maybe a state can just go way into debt immediately if they need to in case of emergency? I don't know how this works, but I'll quote Chase bank, when they berated millennials for not having 6 months savings in case of emergency.

I just learned it is illegal for many states to engage in deficit spending for emergencies:

"That’s in part because, in many cases, states are legally barred from deficit spending, which means in times of crisis, especially those producing huge budget shortfalls through collapsing tax revenue, they are functionally unable to respond at all. In such situations, the federal government is designed to serve as a backstop, but over and over again throughout this crisis, the White House has said states will get little to no help — that they are entirely on their own. (The federal medical stockpile isn’t meant for the states, as Jared Kushner has said, as though the country is anything more than its states.)"

This is why the Trump government stealing PPE supplies from states is so fucked up:

Source:

https://nymag.com/intelligencer/2020/04/hospitals-face-a-whi...

I don’t think corporate tax break would actually be a useful tool right now - corporate taxes are on profits and the profits are going to tank for most businesses.

I think the theory is if the US govt hadn't pumped the deficit on tax cuts for the profitable and rich in the good times, it would feel more free to spend it on bailouts for the vulnerable in the bad times due to less existing national debt. Although the Republican party's interest in making even the most token attempt to balance the federal budget over the economic cycle ended with the Obama presidency, so the debt's not going to be high on their list of priorities right now anyway.

Don't worry, it will begin again if and only if Biden wins.

corporate tax breaks weren't useful in 2017 (during a boom) either.

The forewent tax revenue now would have been useful for a larger payment protection program. Part of the cynicism and restrictions around current proposals stem from how the 2017 tax cuts excess monies were deployed (shareholder buyback and dividends, not hiring or pay raises)

Not that relevant as the shock is slump in demand. Printing more money etc makes it cheaper to buy things but people are still not buying so oil etc is in a free fall. Traditional interest rate based intervention doesn’t make sense you are just adding even more money available to a system that doesn’t want to spend it. Instead it needs to be targeted intervention that transitions the economy to the new reality and measures something different than quarterly gdp.

They're talking about actions taken before the pandemic.

We kept rates low and gave big tax cuts during boom times. This left little in our quiver for the end of the boom.

> Those are the times to focus on the poor and lift people up.

Which political party are we talking about here? This has never been a tenant of the modern Republican platform. They've tried to oppose every remotely reasonable education, healthcare and economic policy over the past 30 years.

You see the tax breaks as a mistake, but wealthy Republican donors got exactly what they wanted. There's no "oops" about this, it was intentional from the start. Rich bailouts for their rich friends. Not that the Dems are much better...

Trump cut taxes on corporate profits. That only helps when there are actually profits, so it would not do much right now.

Right but to cut tax you either need to be in a budget surplus, reduce your budget size or enter a budget deficit.

If you do that in January then you can't use the same money again in February when things are bad.

Currency issuers are not revenue constrained. For a nation with a fiat currency, the ability to spend is distinct from the need to tax.

The point you're missing is that the tax cuts were unfunded and paid for by huge deficits. So that huge overhang will limit how much deficit spending politicians might undertake to offset any downturn. And they may need to raise corp taxes now and create even more drag.

Right - it helped out a year ago when those companies used their profits to buy back stocks, giving executives piles of money, while leaving the companies broke and in need of a bailout.

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