Grasping Reality on TypePad, by Brad DeLong

First, the medium-sized news: The “tax reform” bill, if it should pass, would most likely reduce the federal government's resources by about 1%-point of national income. It would most likely transfer those resources to the top 1%—raising the top 1% share of income from 22% to 23%, and even those gains would be concentrated, with the top 0.01% share of income most likely going from 5.1% to 5.5%. It would most likely do nothing to speed economic growth. But it would not be likely to do anything material to slow economic growth either. It would complicate the tax system by opening many loopholes—if it passes, I would not expect to ever understand my own taxes again.

It would be another brick, not a huge brick but a medium sized brick, in the wall that American plutocracy is constructing to enrich and entrench itself.

But now, second, the big news: The Anglo-Saxon model of representative government is in deep trouble. For four hundred years there was a very strong case that the republican semi-principality of the Netherlands, the constitutional monarchy of Great Britain, and the constitutional republic of the United States of America had managed to hit the sweet spot with respect to liberty, security, and prosperity. Countries that sought those goals—or, indeed, any one of them—were strongly advised to seek to imitate their institutions to as great a degree as their elites could be pushed to accept. And the verdict of history appeared to be: the greater the divergence from Anglo-Saxon institutions of governance, the greater the likelihood of unfreedom, insecurity, and poverty.

But nobody looking at institutional governance performance so far in the third millennium would dare to offer the same advice today. In Britain, the Conservative and Liberal Parties caught the country up in the Charybdis of austerity from which the Conservative Party then threw it into the maw of the Scylla of Brexit. In the United States, it is the age of “covfefe”—incoherent tweets and speeches from a President well over his head, plus those tweets and speeches nearly all informed observers merely wish had been incoherent.

There were people assuring us last November that a Trump presidency would not be a disaster. They would say that Reagan—at least after he survived the assassination attempt—was more a chief-of-state than a chief executive, and that George W. Bush had been the same; that when one elected a Republican president one was choosing to have the executive branch run by the Republican policy establishment; and that that bench was very deep and very competent—although, regrettably, by the 2000s both Cheney and Rumsfeld had lost several steps in judgment from their earlier selves. Trump, they would say, would be a chief-of-state—a divisive and destructive one focused on pleasing the base. But policy would proceed on its normal tracks.

The problem is that this has proved false. The Trump administration supposedly had four priorities for 2017: healthcare reform, tax reform, infrastructure development, and trade policy. Yet 2017 will end with no positive accomplishments on any of these.

“What are you going to do to fix your broken political and governance system?” people around the globe ask those of us in the United States, which is still the world’s preeminent superpower. And we do not have an answer.