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Paul Krugman drops a bomb on Trump’s base — he just saddled you with $2 trillion more in debt

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New York Times columnist Paul Krugman outlined all the reasons why President Donald Trump’s tax cut failed — and how much it’s going to cost American taxpayers.

Krugman pointed out that although the 2017 tax cut is Trump’s only “significant piece of legislation” to date, it only delivered for the nation’s richest.

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What’s more, the columnist argued, is that the theory behind the tax cut “has turned out to be a complete bust” that will leave American taxpayers saddled with an additional $2 trillion in debt.

“The Trumpist theory — which was, I’m sorry to say, endorsed by conservative economists who should have known better — was that there was a huge pile of money sitting outside the U.S. that companies would bring back and invest productively if given the incentive of lower tax rates,” Krugman wrote.

“But that pile of money,” he continued, “was an accounting fiction.”

What’s more: “the tax cut didn’t give corporations an incentive to build new factories and so on; all it did was induce them to shift their tax-avoidance strategies.”

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Krugman noted that Brad Setser of the Council on Foreign Relations pointed out the source of that disparity: upon first glance, it appears that American companies make huge profits via overseas subsidiaries, but a deeper inspection reveals that “the bulk of these reported profits are in a handful of small countries with low or zero tax rates, like Bermuda, Luxembourg and Ireland.”

“The companies obviously aren’t earning huge profits in these tiny economies,” he wrote. “they’re just using accounting gimmicks to assign profits earned elsewhere to subsidiaries that may have a few factories, but sometimes consist of little more than a small office, or even just a post-office box.”

It’s unsurprising, Krugman concluded, that “the investment boom Trump economists promised has never materialized.”

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“Companies didn’t use their tax breaks to invest more,” he noted. “Mainly they used them to buy back their own stock. This in turn, put more money in the hands of investors, which gave the economy a temporary boost — although for 2018 as a whole, one of the biggest drivers of faster growth was, believe it or not, higher government spending.”

In spite of the large debt figure, Krugman said he’s “not deeply worried” at the looming $2 trillion deficit created by the tax cuts.

“Given low borrowing costs, the costs and risks of federal debt are far less than the usual suspects — again, the same people who cheered on the Trump tax cut — have claimed,” he mused.

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“But think of all the other things we could have done with $2 trillion — all the infrastructure we could have built and repaired, all the people who could have been given essential health care,” Krugman wrote. “What a colossal, corrupt waste.”

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Enjoy this piece?

… then let us make a small request. Like you, we here at Raw Story believe in the power of progressive journalism — and we’re investing in investigative reporting as other publications give it the ax. Raw Story readers power David Cay Johnston’s DCReport, which we've expanded to keep watch in Washington. We’ve exposed billionaire tax evasion and uncovered White House efforts to poison our water. We’ve revealed financial scams that prey on veterans, and efforts to harm workers exploited by abusive bosses. We’ve launched a weekly podcast, “We’ve Got Issues,” focused on issues, not tweets. Unlike other news sites, we’ve decided to make our original content free. But we need your support to do what we do.

Raw Story is independent. You won’t find mainstream media bias here. We’re not part of a conglomerate, or a project of venture capital bros. From unflinching coverage of racism, to revealing efforts to erode our rights, Raw Story will continue to expose hypocrisy and harm. Unhinged from corporate overlords, we fight to ensure no one is forgotten.

We need your support to keep producing quality journalism and deepen our investigative reporting. Every reader contribution, whatever the amount, makes a tremendous difference. Invest with us in the future. Make a one-time contribution to Raw Story Investigates, or click here to become a subscriber. Thank you.



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Three more major NRA leaders are out — as gun group continues downward spiral

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Tuesday, three more members of the National Rifle Association have stepped down making it a total of seven NRA board members to leave in the last several months, CNN reported.

The first three were board members who complained about the money NRA chief Wayne LaPierre used to pay for a Beverly Hills wardrobe. Their responsibilities were cut and they left shortly after.

Professional sports shooter Julie Golob left the board just one week ago before her three-year term was up.

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Minor ‘was forced to lose her virginity’ to Jeffrey Epstein — and abuse continued after plea deal: lawsuit

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Accused child sex trafficker Jeffrey Epstein is facing further allegations of sexual abuse.

"Three new accusers have sued the estate of Jeffrey Epstein alleging that he abused them with sex toys and forced them to engage in other sex acts, according to court documents reviewed by multiple outlets," Vice News reported Tuesday.

"One woman said she was forced to lose her virginity to him after they met when she was 17. Another said that Ghislaine Maxwell, Epstein’s alleged madam, taught her the 'proper way to give a blow job' to Epstein after they met," Vice reported.

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‘It’s time for decent people to push back against Fox News’ on antifa: columnist

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President Donald Trump and Fox News are turning American values upside down with their fascist propaganda, Philadelphia Inquirer columnist Will Bunch explained on Tuesday.

"It seems like if you were truly sincere about the whole 'Make America Great Again' thing — that is, if it weren’t just a campaign slogan that jibes with your xenophobic branding and can move tens of thousands of red hats at $25 a pop — then one might actually want to celebrate America’s first victory against fascism," Bunch wrote.

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