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Questions raised

Many are touting the Trump era’s economic growth, and most agree that the Trump tax cuts helped fuel it.

Oddly, the growth generated by those cuts proves the validity of liberal, demand side, aka Keynesian Economics.

J. M. Keynes argued that tax cuts and government deficit spending increase economic growth because tax cuts and government spending put money into people’s pockets, and when that money is spent that spending increases demand for goods, which in turn drives up economic production and thus growth.

In November 2017, Paul Ryan, the Republican Speaker of the House, said the Trump tax cuts will increase a family of four’s income by $1,182 in 2018.

That increase in spending power is helping to drive economic growth. But those tax cuts have also increased the federal deficit.

Between January 1, 2018, when the cuts began, through September 1, 2018, the federal deficit is $210 billion larger than during the same eight months of 2017.

At that rate the federal deficit will grow by $314 billion this calendar year. That is $981 per American, or $3924 for a family of four.

In other words, if a family of four enjoyed Paul Ryan’s income increase of $1,182 that family did so in exchange for a debt of $3924.

Since the government’s debt must be paid back by tax payers, taxes will have to be raised or spending will have to be cut in the future to balance the budget and pay off the debt.

This raises certain questions.

Whose taxes will be raised?

What programs will be cut?

Which party is likely to put the tax burden on the wealthy who are most able to bear it?

Which party is most likely to cut programs like Social Security and Medicare to offset the rising deficit?

Richard Morris

Williamsport

Submitted by Virtual Newsroom

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