Davie: "0, 179, 465, 654—what is the next number in this series? Stephen Moore claims it is obvious, and gestures at it with an 'and so on'": "Davie's master is also blocked by paywall, but given the quote about 'compounding', Davie would diffidently suggest that the mathematical error is more basic: The sequence should read 179, 365, 554. That is, from the second number in the sequence on, Mr. Moore accidentally added 100 to the total. Davie has seen his master make similar errors while not recognizing them, under the influence of Alzheimer's-type dementia. Davie would therefore gently suggest that Mr. Moore be checked for dementia...
...Davie would also wonder if Mr. Moore is comparing apples to oranges. It would seem credible that Mr. Moore did something like compare the total deficit projected by the Congressional Budget Office over the next 10 years under entirely different assumptions to the total increase in GDP he is projecting. It appears that the correct approach would be to take the projected decrease in government tax revenue directly caused by the tax cut in any given year compared to, say, 2017, times the government borrowing rate in one-year T-bond equivalents (now above 2 %) and compare it to the government tax revenue generated by increased GDP (with a lag). Both sides of the comparison would be compounded in a 10-year comparison (because Mr. Moore assumes a one-shot tax effect), but the government tax deficit would be compounded by (1 plus the government borrowing rate), while the positive tax effect of increased GDP would be compounded by (1 plus the percentage increase of GDP due to the tax in 2018), which Mr. Moore seems to suggest is about 2 %). In other words, under reasonable assumptions, if the tax cut has a one-shot effect and has not been paid back in full via increased GDP in 2018, it is highly likely the deficit will continue to increase over the next 8 years.
But what does Davie know? Davie is only a cat...
#commentoftheday
