Paul Krugman Explains Why Small Cities Fail

Small cities in the US started out as centers for the agriculture industry.  Since agriculture has become more productive, they don't provide enough jobs to prevent small cites from collapsing.  Some small cities, like Rochester, NY, survived and prospered for some time because new businesses were formed that prospered for awhile after the decline of its agricultural base.  It has struggled since the decline of Eastman Kodak and Xerox which were central to its economy.  Large cities typically have more businesses so they are not as dependent upon the survival of a particular business activity.  They are typically located near educational institutions which seed new business formations or they have other geographical advantages such as nice weather or access to transportation centers.

Krugman concludes that the demise of small cities had little to do with globalization. They were primarily affected by changes in the agriculture industry.  He does not discuss the decline of large cities like Detroit which were dependent upon the auto industry which suffered from foreign competition.  More generally, he does not offer explanations for the shifting of our economy from a manufacturing base to a services economy.

What Would You Do If You Had Hired Donald Trump?

Suppose that a corporation hired Donald Trump because they were impressed by his success in the real estate business.  Things have not gone as well as they had hoped so the directors invite him to a meeting to discuss the erosion of his support among customers and the management team.  The directors would realize that they had made a mistake and they would have to fire him in order to save the corporation from ruin.  Ezra Klein reviews Trump's interview with a NYT reporter and concludes that he is not fit to occupy his job as our president.  Unfortunately, Trump was given a four year contract and he cannot be fired for poor performance. Republican members of Congress, and some who voted for him, may search for reasons to defend his presidency.  After all, he sold a tax plan that Republicans love, and he has used his position to put an arch conservative on the Supreme Court.  On the other hand, there are more important things that a president has to do.  Its pretty clear from this interview that Donald Trump is a clear and present danger to most Americans and to the rest of the world.  He believes that he is the greatest president in our history, and he finds a way to twist everything that happens on his watch to substantiate his self image.

I reached a similar position in the post below.  I was tempted to believe that most of his lies were intended for the poorly informed members of his political base.  The NYT interview was ostensibly about the number of lies that he told in a 30 minute interview.  Its really more serious than that. Donald Trump is both  incompetent and delusional.  He claims that he wants to defend America against the enemies that he imagines.  He spends much of his time defending himself from the media which exposes his weaknesses.  He turns on Fox News, which is part of his psychological support system, to convince himself that he is really as great as he believes himself to be. 

Why Trump's 30 Minute Interview With NYT Is Very Troubling

Donald Trump's interview with the NYT produced 24 lies or misleading statements about a number of topics.  We are accustomed to Trump's tweets, which are primarily intended for his base, that are less than truthful. Its hard to understand why Trump would attempt to mislead a NYT reporter.  He must know that the reporter will fact check the statements that he makes and that they will not filter down to his base.  Trump must really believe some of the statements that he made, and some of his comments indicate a profound lack of understanding about important topics like trade deficits.  In either case, it is very troubling. Trump has a deep need to interpret events in a way that bolsters his ego.  He is also ignorant about important matters. We can't expect him to make good judgements about important matters that every president faces.  We can no longer dismiss his comments simply as red meat for his political base which he understands very well.  His narcissism and ignorance is malignant.

UN Votes To Condemn Trump's Decision To Declare Jerusalem As Capital Of Israel

Donald Trump made a decision that appealed to his donors and parts of his political base. It also cemented his connection to the conservative government in Israel.  It was less popular at the UN. 138 voted to condemn the decision; 9 supported his decision and 35 nations abstained.  The US ambassador to the UN was not pleased with the vote.  Both she and Trump warned the UN membership not to condemn Trump's political decision.  Their warnings were unheeded.  Trump's America First policy seems to mean that Trump will do whatever it takes to please his base.  He has no interest in providing US leadership at the UN.  They don't vote in US elections and they don't donate funds to Republican campaigns.

Trump Takes Credit For Repealing Obamacare With Tax Bill

In a moment of honesty, which he had been told to avoid, Donald Trump could not resist the temptation to brag.  During his victory speech he said that the tax bill also repealed Obamacare.  That was not one of his lies.  The tax bill repealed the individual mandate which is the glue that held Obamacare together.  Insurance premiums will increase dramatically and analysts estimate that 13 million Americans will not be able to afford to purchase health insurance on the exchanges.  Republicans accomplished with the tax bill what they could not get done with their failed attempt pass a healthcare bill that would have ended Obamacare and also disrupted our entire healthcare industry which accounts for 17% of the US economy.  Republicans stripped the individual mandate out of the tax bill because it also eliminated government subsidies to low income citizens which allowed them to purchase insurance.  Eliminating the subsidies helped to fund the corporate tax cuts which were the primary focus of the tax bill.  Trump, in another moment of honesty in his victory speech, also declared that the tax bill was not primarily designed to benefit the middle class.  He boasted that the primary purpose of the tax bill was to cut corporate taxes.  Republicans sold bill as a middle class bill under the assumption, which most economists do not accept, that corporate tax cuts will end up benefiting the middle class by stimulating economic growth which would increase jobs and wages for the middle class.

Trump's inability to resist boasting about his achievement will give Democrats lots of ammunition to use against Republicans in the 2018 elections. The huckster could not resist bragging about the product that he was really selling to his base.  The tax bill is all about cutting taxes for Republican donors and repealing Obamacare.  Trump made it available on video for Democrats to package into their campaigns.

A Weak Response To A Big Problem From David Brooks

David Brooks, like his counterpart at the NYT, wants to believe in reform conservatism.  He realizes that the Republican Party, under Trump, has not been good for most of the people who voted for Trump's populist agenda.  He runs through a list of conservative thinkers at conservative think tanks who have advocated policies that address many of problems that have been ignored by Trump and most Republican members of Congress.  He also argues that the Republican tax plan, which eliminates many tax deductions to help fund large tax cuts for businesses is a good thing and that it is wrongly criticized by his liberal friends.  He argues that corporate tax cuts are needed to make US corporations competitive with foreign corporations that have lower tax rates.  The good guys in his article are the reform conservatives who have had little impact on conservatives in Congress.  They are not visible to most Americans either.  In other words, he offers nothing practical in response to policies that don't help most Americans and which may be harmful to the economy and to our national interest.  Corporate profits and stock prices are at all time highs.  There is little reason to believe that they need lower taxes to be competitive in international markets.  There are good reasons to believe that cutting important tax deductions, in order to fund corporate tax cuts, will be counter-productive.

The Republican tax plan reduces the deduction for state and local taxes to help fund the corporate tax cuts.  The deduction is capped at $10,000.  Households in states and localities with deductions above that level will pay higher taxes to the federal government and they will be less willing to pay state and local taxes without the deduction.  States and localities spend most of their tax receipts on education.  It will be more difficult for states and localities to maintain funding for public universities and public schools as the net cost increases for many state and local taxpayers. In order to increase economic mobility we should be doing the opposite.  One of Brooks' conservative reform ideas is to increase access to education for low income citizens.  That will not happen as states and localities face a higher hurdle to fund education.

The Republican Party under Trump is doing what it has typically done since the 1980's.  Brooks understands this. He knows that they want to cut taxes for their donors, and he also understands that their policy proposals will not serve the interests of the populists who elected Trump. He claims that ignoring their interests will make them less well off and that will make them more likely to vote for Republicans.  Trump supporters, and many low income Republicans, have consistently been suckered by the hucksters who tell them that cutting taxes for the rich is good for them. GOP donors are willing to pay for their campaign promises.  The reform conservatives have no voice in the Republican Party.

How Trump Lies About His Impact On The Economy

One of the ways in which Trump lies or misleads us about the economy is that he changes his mind about important economic indicators.  For example, during the Obama administration he claimed that the low unemployment rate was meaningless because the statistic itself was faulty.  Now he brags about the low unemployment rate that his policies created.  The same thing is true about the performance of the stock market.  He claimed that presidents have no impact on stock prices when stock prices rose during the Obama administration.  Of course, now he takes credit for the performance of the stock market. When the stock market falls he will deny any relationship between his policies and falling stock prices.  If Trump managed a football team he would probably change the point system so that his team did well no matter how it performed.

For those who are interested in how the economy has performed under Obama and Trump, using the usual statistics,  this article contains the relevant data.

David Brooks Equates Trumpism With Radicalism On The Left

David Brooks makes a good case against the radicalism we see among Trump and many of his followers.  They oppose our institutions and they are not swayed by evidence that is inconsistent with their opinions.  That has made Brooks very uncomfortable because he no longer has a political party to promote.  Unfortunately, Brooks had to invoke false equivalence to make his case against Trump's phony populism and his promises to drain the swamp in Washington.  Since there is an absence of left wing radicalism on the left today, Brooks took us back to 1972 when he helped to create a conservative response to left wing radicals like Saul Alinsky.  Bernie Sanders is no Saul Alinsky and he lost the Democratic primary to a center left Hillary Clinton.  Frankly, the absence of  Democratic policy proposals to deal with the real problems faced by many Americans opened the door for Trump to offer radical promises that he has long forgotten.

HIger Education Bill Proposed By Betsy Devos Assists For Profit Colleges In Scams

Donald Trump's for-profit college defrauded students.  Trump University was shut down and he had to pay a $25 million fine for promising jobs to students upon graduation without appropriate training.  Trump University and other for-profit colleges took advantage of student loans backed up by a government guarantee.  The government ended up paying for defaulted loans by students who were not provided with the skills required for employment.  The Obama administration tried to fix that problem by holding the for-profit colleges accountable for a portion of the defaulted loans.  Betsy Devos, who is the new head of education in the Trump administration is an advocate for private for-profit schools.  Her proposal eliminates many of the Obama rules that were established to protect students from places like Trump University.  Her plan also eliminates the use of credit hours as a key metric in the awarding of degrees.  That would allow for-profit schools an opportunity to award degrees to students without any save guards on graduation requirements. 

Trump Adminstration Sets A New Record

It didn't take Trump long to break another important record.  He promised to "drain the swamp"
in Washington during his successful political campaign.  That is what the public wanted but he has given them something else.  A recent poll by a bipartisan organization found the 44% of the public believes that the Trump administration is corrupt.  He has filled the swamp instead of draining it. Ordinarily, the public views Congress as our most corrupt institution.  Trump beat Congress on that metric by 6%.  That has happened despite the poor performance of the Republican Congress on healthcare reform and their unpopular tax reform bill.  Trump defeated a very strong competitor on the corruption metric.  Perhaps we have to give the public more credit for perception than they deserved when they put Trump in the White House to clean up the government in Washington.

Pulp Fiction From The US Treasury Department To Sell Tax Plan

The Treasury Secretary rolled out a one page summary of a study that was never done by his department to sell the Republican tax plan to their base.  Economists generally agree that the US economy will grow by 1.9% annually  over the next ten years.  If that forecast is correct the tax cuts, mainly for US corporations, will increase the national debt by $2 trillion.  Consequently, Steve Mnuchin's one page defense of the tax plan assumes that the economy will grow by 2.9% annually because the tax cuts,  deregulation and infrastructure investments will stimulate the economy enough to pay for the tax cuts.

The editors of the NYT and the Washington Post can't believe that Steve Mnuchin would defend a 400 page tax plan with a one page summary of a plan that does not exist, while the CBO, the Tax Policy Center and other organizations, which government typically uses to assess policy proposals disagree with Mnuchin's fictional analysis of the tax plan.  That is especially true when the deregulation and infrastructure spending included in his analysis do not exist.  They are simply Trump administration talking points.  The answer to the questions raised in the editorials is unfortunate but pretty simple.  Its because Mnuchin, the Republican Congress and the Trump administration don't believe that its base requires more than the one page summary by Mnuchin.  GOP donors don't care about budget deficits; they just want their taxes cut.  The rest of the GOP base gets most of their information from Fox News and other sources that enjoy selling magic solutions to them.  It does not matter to Republicans that the majority of Americans don't like the tax plan.  They expect that small tax cuts, that are supposed to expire after a few years, will appease most of the public.  Of course, if those tax cuts do not expire according to plan,  the federal debt will balloon and then the Republican Congress can justify cutting Medicare, Medicaid, Social Security and other popular social welfare programs to demonstrate their fake concern for fiscal responsibility.

Joseph Stigliz,  a Nobel Laureate in economics,  explains why this is the worst tax proposal that he has ever seen in a short video. 

Why Tax Cuts Are The Wrong Medicine For US Economy

Larry Summers argues that the US economy is on a "sugar high" and that the medium term outlook cannot be improved by tax cuts.  They will be bad for the economy.

Trump points to the 24% rise in US stock prices but they are not the result of government policies.  They are driven by corporate profits.  That is part of our "sugar high" the rise in stock prices have boosted spending.  Moreover, growth in the US is lower than growth in much of Europe and Asia.  Investment has not been pouring into Trump's economy.  The dollar has dropped in value relative to the Euro and the Yen. 

Given that we are experiencing a "sugar high" what is our medium term outlook?  According to Summers it is not very good.  We have a low unemployment rate so there is no room to boost GDP by increasing the supply of labor.  The path to higher growth must come from an increase in productivity.  However, our major corporations are flush with cash and interest rates are very low.  Apparently, they don't see an opportunity to increase their investment rates.  Consequently, the public sector must expand in order to increase the productivity rate.  It would also help if we could grow the economy in a more equal fashion.  Instead inequality has been on the rise and we are making the tax system more regressive. 

Simpson and Bowles pointed out that US tax revenue should not fall below 21% of GDP to insure a healthy economy.  The Trump tax cuts reduce that healthy ratio to 17% of GDP.  There will be less room for public investments and productivity growth in that kind of fiscal environment.

Fake News Can Be Hopful And Humorous

This video, set to the tune of the hit song from a James Bond movie, shows how easy it is to create fake news.  Its also very funny.  The title of the video is also a clever take off from a well known beer ad.

Democrats Should Ignore Low Information White Men And Sweep The Woman Vote

Jennifer Rubin is one of the conservative intellectuals on the Post who has been repelled by Trump's takeover of her political party.  Democrats have been brainstorming about how they can recapture the white males in the Rust Belt who jumped parties to elect Trump.  She argues that they would be more successful recruiting suburban women who voted for Trump.  She explains why they would find more switchable women taking yoga lessons than they might get from men in the Rust Belt who never expected Trump to do much more for them than other politicians have done.  She also provides some excellent messages that Democrats might use to sell themselves to women.  For example, it makes a lot of sense to explain how Trump's tax plan will make college more expensive for their children, or how it will make grad school more, and why Medicaid won't fund senior care for their parents, than it does to critique technical issues in the plan.

Donald Trump Has Over Achieved In One Area Beyond Dispute

A professor at that University of Virginia did a research project on lying behavior.  This is the only study that I have ever read on this subject. It is not a mainstream topic in academic psychological research. However, it does offer some unexpected insights.  For example, it classified lies into reasonable categories and it described norms on the frequency of lies within each category.  This article describes Donald Trump's lying behavior relative to the norms that it found in the general population.  Donald Trump has no peer as a liar.  He lies "bigly" compared to the general population and he excels in one particular category of lying.  A large percent of his lies were intended to harm others.  Most of our lies are intended to protect ourselves, or simply to get along with others.  Donald Trump has managed to convince a small percentage of Americans that he is truthful.  After all, we all tend to believe what we want to believe, and Donald Trump excels at telling a small percent of our population what they want to believe.  Of course some of his supporters could care less about whether he is lying or telling the truth.  They only care whether his lies serve their purposes.  That was good enough to put him into the White House.  We will have to see how long he prevails given his defenders in the media who earn their living serving the same market that Trump has targeted.  Some in their target market belong to places like Mar-A-Lago but most of them just want someone to tell them the lies that want to hear.

Davd Brooks Explains How He Lost His Political Home

David Brooks represented a political party that many thoughtful people, like himself and his NYT readers, could respect.  There were a core of ideas for which the Republican Party stood.  The Democratic Party embraced a different set of ideas, but the two parties could come together much of the time and do what was best for the nation.  Compromise was not a mortal sin.  That is no longer possible today because the Republican Party has lost its soul.  That was inevitable under a leader who exploited populism to satisfy his insatiable need for power and adoration.  Excellence is hierarchical, it can't be populist.  Donald Trump has no ideas, moral principles, or competence beyond hucksterism.  He has taken the Republican Party down to the level of his political base.  They only look upward in anger and despair.  They want to punish excellence and those who do not belong to their tribe.  Donald Trump has led the Republican Party downward and it has followed him gladly in pursuit of political advantage and personal gain.  They will welcome Roy Moore into the Senate in order to gain one more vote for a tax bill, or another seat on the Supreme Court or an opportunity to destroy what remains of President Obama's legacy.  David Brooks cannot join them in their downward spiral into the moral abyss they have chosen to pursue.  He is not alone.  Many of his colleagues and friends can only watch their chosen political party disintegrate with every Trump tweet or policy proposal.  They are all carefully designed to maintain his hold on his political base which has become the electoral foundation of the Republican Party.  Our position as a global leader is sinking with Trump and his followers in a political party without a soul, and without a moral compass by which to lead. Our former allies can only watch in despair as Trump and his political party descend into the abyss.  Many of them are like David Brooks and many other former Republican intellectuals.  Donald Trump and  his Republican allies have destroyed in one year a system of governance that took decades to develop.  It can only get worse as David Brooks and others like him abandon the Titanic.

How A "Reform Conservative" Can Live With Terrible Tax Plan

Ross Douthat, like his counterpart David Brooks,  supported Marco Rubio in the GOP primaries.  Trump clobbered "little Marco" in the primaries and "reform conservatism" died with him.  Douthat and Brooks have not been comfortable with Trumpism.  This op-ed by Douthat typifies the struggle that "reform conservatives" are having under Trumpism.  He tries as hard as he can to defend a deeply flawed Republican tax plan.  His first step is to admit that it is not a populist tax plan.  It is heavily weighted towards Republican donors and does nothing for struggling Americans who voted for Trump.  He counters this by supporting the corporate tax cuts, and the parts of the tax plan that raises taxes on upper class liberals in blue states.  Apparently, the plan would be fine if it had included one of the "reform conservative" proposals by Rubio to increase child tax credits for low income families.

I must admit that I do not have the brain power to follow Douthat's argument that minor changes in the tax plan would turn it into an a victory for reform conservatism, whatever that is. It is much easier to understand Trumpism and its architect Steve Bannon.  They have no interest "reform conservatism" they want to engineer an autocracy, led by Trump, with Bannon playing the role of chief propagandist who aligns Trumpism with its far right counterparts in Europe and with Republican's in Congress who only care about winning elections orchestrated by Bannon and featuring Donald Trump as its fearless leader.

Steve Bannon Assumes Leadership Of The New Republican Party

Donald Trump won the GOP primary, and the presidential election, by following Steve Bannon's strategy of attacking the GOP "establishment" and politically correct Democrats.  Bannon is still attacking the GOP establishment and working with Trump to build the GOP base around voters like those in Alabama.  Trump and Bannon support Roy Moore in the Alabama senate race.  Bannon is currently attacking Mitt Romney, for coming out against Roy Moore in the election.  He claims that Romney "hid behind his religion" to avoid serving in the Vietnam war.  Trump's base in Alabama does not respect Romney's Mormon faith and they don't like draft dodgers.  Trump, of course, dodged the draft during the Vietnam war by claiming a medical deferment due to bone spurs in his feet. Bannon understands that the new Republican Party is based upon voters who believe what they want to believe and that his job is to tell them what to believe.  He was forced out of his job in the White House but he has taken a leadership position in Trump's Republican Party as the head of Breitbart News which is leading the Alt Right movement in the US.  The Republican Party that Romney once led is dead.  It is dependent upon the electorate that Bannon is developing, and on billionaire donors who fund Republican campaigns so that they can capture the government.

Robert Mueller Is Following Trump's Money

Mueller's investigation has taken a new turn that Trump will not like.  He asked Deutsche Bank, which holds more than $300 million of Trump's debt,  for information on Trump's finances with the bank.  We don't know what Mueller will learn that might be damaging to Trump but we do know that Trump has worked very hard to keep his financial information private.  Moreover, Mueller did not request that information for no reason.  He must have uncovered information about Trump's finances that raises questions about any reliance he might have on Russian sources funded through Deutsche Bank.  One thing is certain.  Trump will respond with a twitter stream even more vigorous than we have seen about other issues.  There is a reason why Trump is our only recent president who would not release his tax returns.

The Republican Party Is Paying A Big Price For Giving Up Moral Principles

The Republican Party once offered a home to conservative intellectuals who had platforms on the Washington Post and the New York Times.  They tended to support Republican policies and they also provided criticisms of the Democratic Party.  Jennifer Rubin is one of many conservative intellectuals who have moved from providing intellectual cover for Republicans to being a critic of the party.  She can longer tolerate the moral depravity of her former political party.  By supporting Donald Trump and Roy Moore, who is a serial sex predator, in order to get a terrible tax bill passed, Neil Gorsuch on the Supreme Court, and the authority to deregulate the government, they  have debased our democracy and the principles that have united our nation.  Even if Trump goes away the people who supported Trump and Moore will still be around.  That would be true even if Trump turned out to be more competent than he has demonstrated.  Her favorite political party has been corrupted.

She is not alone in her criticism of the Republican Party.  Two intellectuals from the conservative American Enterprise Institute wrote a book eleven years ago in which they criticized the performance of the Republican Party and the Democratic Party in Congress.  They argued that the government was not functioning and they suggested how it might function properly.  They no longer believe that story. In this article they argue that the Republican Party rationalizes and enables Donald Trump.  However, the decline of the Republican Party began in the 1990's.  That is when the party began to demonize Congress and argue that government itself is the problem.  They refused to support their Republican President during the financial crisis by voting against his TARP plan that kept the financial system from collapsing and worsening the Great Recession.  After the election of Obama their sole purpose was to block every initiative that he proposed.  It became a mortal sin and a sign of weakness to compromise with Obama.  The birther movement took this a step further into racism and Trump began his career by exploiting that movement.

The News media also lined up to support the Republican Party's alliance with the far right.  Talk radio, Fox News and Steve Bannon's Breitbart News built its audience on hostility to the establishment and political correctness.  That is where the Republican Party is today with reliance on a far right group of donors and a political base built upon hostility.  We no longer have a system in which a responsible Republican Party can balance the ideology of the Democratic Party.  We have system in which the Republican Party no longer recognizes the legitimacy of the Democratic Party. It would prefer a one party system that requires an autocrat like Trump to provide its leadership.

American Spending By Income Level

This study shows how American households spend their incomes as a function of income level.  There is a huge difference in spending between the top 20% of households with income above $177,851 and the bottom 20% of households with incomes below $10,916.  Most of the spending in each income category is on Housing, Transportation and Food.  However, low income households spend a much higher percent of their income on housing (40%) and most of it is on rent payments.  High income households spend a lower percent of their income on housing (29.9%) but a much higher percent own their homes. They also spend a significant share of their income on insurance and retirement savings.  Low income households spend almost nothing on these categories which makes them much more economically vulnerable.

Not surprisingly, since high income households have more money to spend,  they spend much more money on every category.   The ratio of high income household spending to low income spending  in each category is amazing.  They spend 30 times what low income households spend on insurance and retirement, but they also spend 6 times more than low income households on alcoholic beverages.  They even spend more on tobacco products which is the category with the lowest spending ratio.  They live in completely different worlds.

What Are The Implications of Flynn's Plea Deal With Mueller

There has been a lot of speculation about Flynn's bargain with the Special Counsel.  This article provides a good framework for understanding Flynn's deal and how it might be used by Mueller.  Its pretty clear that Mueller would not have made the deal with Flynn unless he was given something in return from Flynn that would be pertinent to his investigation.  We don't know what Flynn can tell us about those above him in the White House.  But we do know that he did not operate as a lone wolf.  We also know that there were not many people who outranked him in the inner circle, and that his position as national security adviser gave him access to data and discussions that are only available at his level.  Trump did not go out of his way to terminate the FBI investigation of Flynn because he likes Flynn.  What just happened is just what he wanted to avoid.  Mueller will now interview Trump's inner circle and they will have to be careful in their answers to his questions because they are aware of information that Flynn may have provided to Mueller.

This editorial in the NYT takes an even stronger position on Flynn's cooperation with the Mueller investigation.  Obstruction of justice charge has been strengthened and Flynn may even testify that Trump was involved in his illegal discussions with Russian officials.

Michael Flynn Agrees To Plea Deal With Mueller

Flynn will plead guilty to a charge of lying to the FBI and his son, who was also under investigation will not be charged with any crime by Mueller.  No information has been released about what Flynn agreed to reveal to Mueller under the deal.  Coincidentally, Trump has asked several Republican senators to put a stop to the Mueller investigation.

Paul Krugman Describes The Pack of Lies Behind GOP Tax Plan

A friend, who happens to be a Republican,  gave me a call while he was watching some of Senate debate on the tax bill.  He asked me how they could vote on bill that they have not read.  The answer is simple: they are compelled to pass a tax bill that they do not understand because they believe that it is good politics to do so.  Their donors are demanding tax cuts and they have a need to demonstrate their ability to govern.  Paul Krugman describes the ignorance and lying at the foundation of the GOP tax proposal.  Its not just Trump.  The Republican Party is perfectly at home selling tax cuts for their friends.  However, there are some Republican senators who portray themselves as fiscal conservatives.  Its hard for them to pass a bill that would add a trillion dollars to the national debt.  Trump's Secretary of the Treasury told them that a study by his department proved that the tax cuts would stimulate economic growth and not increase the national debt.  He was not able to share the study with them because it does not exist.  He has been lying about the study in his speeches defending the tax cuts for weeks.  Unfortunately, lying in support of the tax cuts runs deep.  A group of economists,  most of whom are connected to the conservative Hoover Institute think tank, published a letter in the WSJ making a similar claim.  Their letter was based upon supportive research that they intentionally distorted.  There are a number of conservative think tanks, supported by tax free dollars, that provide a friendly home for economists with the right values.

The non-partisan Tax Policy Center just released its study of the tax bill and concluded that it would add at least a trillion dollars to the national debt over ten years.  That might bother some of the fiscal conservative pretenders in the Republican senate.  However, its unlikely that any of them will stand up to the brotherhood which is intent upon passing the tax bill.  There will be some tinkering with the bill to make it appear to be more fiscally conservative, and they will be able to demonstrate their fiscal conservatism to their constituents.

Unfortunately, the tax bill is not only fiscally irresponsible, it goes well beyond rewarding its donors.  It punishes its enemies as well.  Blue states are punished by the bill and it attacks universities who produce voters that tend to be more liberal than most Republicans.  The bill is also bad for the middle class.  It raises taxes for households with income under $70,000 over time in order to pay for tax cuts to its friends who enjoy life at Mar a Lago.  In addition to raising taxes for the middle class it provides the justification for cuts in popular entitlement programs as federal debt rises as a result of the tax cuts.  Its not just Trump.  The Republican Party has become rotten at the core.