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The stimulus plans they come up with are often of roughly the same size as income tax receipts, so it wouldn't be much worse than that financially. Unlike those plans, though, it would actually help ordinary people.
Are there financial stimuli every year?
No, I was just giving a sense of scale.
Keynesian stimulus is not good for economic health, though, which tax cuts are.
Got it! So, if they get rid of that tax, they'd have to find a way to make up for it or just print more money?
Or a smaller government budget
That’s certainly my preference
One of the silver linings of paying interest on debt is that voters can see the gravity of high debt especially debt to GDP ratio.
I don’t think voters care enough for this to be a silver lining.
Only about a third of government financing is from income taxes anyway. Some of the deficit would be made up for by other tax revenues increasing, which would happen because of the sharp increase in economic activity.
Payroll taxes
How significant is capital gains tax?
Medicare and Social Security are the two largest outlays
I think capital gains taxes only bring in about $200B.
I don’t consider tax cuts to be stimulus.
Or economic stimulus is not the reason for cutting or eliminating income taxes
No, but that’s how macro people think. I think of it as a cessation of systemic expropriation.
Macro people think is Orwellian newspeak
It really is
Macro thinking requires macro assumptions
They have no interest in actually helping ordinary people. Only pretending to want to help them to get their votes.
Of course. This exercise is just for fun. Although, maybe someday we'll get our own Milei type madman and some of this stuff will actually happen.
May the Forces of Heaven be with you
On that note of bond yields though, I'm perpetually shocked at what lenders will tolerate, in terms of the underlying fundamentals.
I truly have no idea what will finally make people stop lending to the Feds.
I heard Buffet give a talk one time basically saying that at a certain scale there is nothing you can do with your money but buy bonds.
Think about it in shitcoin terms. Yes, kids playing with $100 can make money with PREGNANT-OBAMA-BUTT coin, however its impossible to actually play that game with 100x that money because you will destroy the market (swamp all liquidity and drive prices crazy).
If you have 100M there are lots of good investments / safe allocations. At 1B in cash the options dwindle significantly. At 100B there is no place to put your cash other than US Bonds, because its simply too much cash to be absorbed by anything else.
That's right. There's nothing else that's always for sale in that quantity.
Here's the obligatory "Bitcoin fixes this".
SMCI and NVDA options and derivatives!
Annual federal government budget is 6 trillion dollars.
China and Japan and other foreign governments make big purchases of USA bonds. They used to buy more.
It's insane.
That would be a winning strategy until bond yields completely blew out and the market crashed. I like the idea though.