David - As your second chart shows, percapita healthcare spending continued to grow during Trumps's presidency. In fact, it grew faster than it did during 2010 - 2014.
Note also that healthcare spending accelerated starting in in 2014, which is when most of the ACA became effective. I do not know whether there's a causal relationship.
In answer to your question, Healthcare Spending/GNP started declining in 2017 because of the rapid rise in GNP. I believe the acceleration in GNP can be attributed to the success of President Trump's economic policies.
Lots of Trump economic policies helped the economy grow. E.g.,
1. Cutting the corporate income tax from 36% to 21%. 2. Eliminating a huge number of burdensome regulations 3. Re-negotiating NAFTA 4. Appointing judges who are less apt to find against businesses. 5. Advancing the Keystone and Dakota Pipelines 6. Repealing some of the massive energy regulations that were put into place during the final months of the Obama administration 7. Encouraging the use of methods to extract shale oil 8. Ending the Obama discouragement of coal mining. 9. I*ssuing an executive order instructing the EPA to begin the process of rescinding major parts of the Obama-era Clean Power Plan 10. Return to Normal Order in the Regulatory Process
>>1. Cutting the corporate income tax from 36% to 21%.<<
So why has job growth slowed? From what I've read, most of this decrease has gone into buying back a company's stock. That doesn't help the economy.
>> 2. Eliminating a huge number of burdensome regulations <<
I see people write this. But no one has any actual data.
>> 3. Re-negotiating NAFTA <<
How has this helped? What I read is that there were in fact few changes, just a lot of puffery from Trump.
>> 4. Appointing judges who are less apt to find against businesses. <<
What rulings are you thinking of?
>> 5. Advancing the Keystone and Dakota Pipelines <<
One of these is still blocked. So where are the jobs
>> 6. Repealing some of the massive energy regulations that were put into place during the final months of the Obama administration <<
Regulations such as what?
>> 7. Encouraging the use of methods to extract shale oil <<
Methods such as what?
>> 8. Ending the Obama discouragement of coal mining. <<
Obama's Clean Power Plan was never implemented -- it never left the court system. Meanwhile, growth in coal mining jobs is only 1.3 %/yr under Trump, below the rate of GDP growth.
Coal is loser. The people in suits know this.
9. >> I*ssuing an executive order instructing the EPA to begin the process of rescinding major parts of the Obama-era Clean Power Plan <<
Which parts?
>> 10. Return to Normal Order in the Regulatory Process <<'
David -- business expansion is often based on multi-year plans. Many of the steps I listed encouraged businesses to expect a better opportunity for profit in the US going forward. They didn't have to be in effect in order to help. The bottom line is that Trump did a lot of things that one would expect would encourage business. Sure enough, business grew and unemployment came down to very low levels.
In economics, cause an effect can never be proved scientifically. We can't re-run the period from January, 2016 with Hillary's policies to see what would happen. IMHO the combination of business-friendly actions along with actual results is as close to "proof" as you can hope for in economics. But, if believe that Trump's policies didn't help, I cannot definitely prove you wrong.
David -- I assert that Trump's actions generally encouraged businesses to expand more than they otherwise would have, or to shrink less than they otherwise would have. But it would be impossible for me to obtain real evidence for my assertion. Can we go to each business that expanded and find out what factors motivated their expansion? Can we go to every business that contracted and find out what factors prevented them from shrinking even more?
Even if some Professor got funding for such a study, it might not be conclusive. Business decisions are always based on a combination of factors. Even the decision-makers might not be able to assign weights to the factors influencing them to expand or contract.
So, you are right that I have not proved my assertion. You're free to disbelieve it if you like.
From what I've read, most of this decrease has gone into buying back a company's stock. That doesn't help the economy.
It does increase stock value, which benefits investors. Ironically, most investors are likely foreign. Americans are paying 2.3 trillion over 10 years for this tax cut. That's $1,822/family/year. If taxes for your family decreased by over $1,800 then you're doing all right. If not, then us foreigners thank you for your sacrifice.
Layzej - because our media is mostly wedded to the Democrats and is strongly anti-Trump, what you've read may not be so. In this case, I don't know what % of the corporate tax cut is being used for stock buybacks that otherwise would not have occurred.
BTW any increase in stock price from a buyback is indirect. If a company has excess cash, they could invest it in some other company's stock. If they think their stock is a good buy, they can invest the excess cash in their own stock. In principle these two strategies are pretty similar.
However, when a company invests in its own stock, it is telling the world that it has confidence in itself. Also, the buyback an be a way to increase earnings per share. OTOH if they invested in some other company's stock, that would also increase EPS.
I do not buy the theory that all money belongs to the government, except that portion of their money that they allow us to keep. Money not paid by corporations in taxes is not my money.
David in Cal wrote: "I assert that Trump's actions generally encouraged businesses to expand more than they otherwise would have, or to shrink less than they otherwise would have. But it would be impossible for me to obtain real evidence for my assertion."
David - there are different standards for assigning cause and effect in economics than in physics. As I already said, Trump applied policies, as listed above, that most economists would think would help the economy. The economy did indeed boom. In economics that's sufficient proof.
David - As your second chart shows, percapita healthcare spending continued to grow during Trumps's presidency. In fact, it grew faster than it did during 2010 - 2014.
ReplyDeleteNote also that healthcare spending accelerated starting in in 2014, which is when most of the ACA became effective. I do not know whether there's a causal relationship.
In answer to your question, Healthcare Spending/GNP started declining in 2017 because of the rapid rise in GNP. I believe the acceleration in GNP can be attributed to the success of President Trump's economic policies.
Cheers
"I believe the acceleration in GNP can be attributed to the success of President Trump's economic policies."
ReplyDeleteSuch as?
Job growth is actually slowing down under Trump:
ReplyDeleteJob gains during Trump's first 26 months:
5.12 M
During Obama's last 26 months:
5.57 M
(From FRED series USPRIV+USGOVT.)
Lots of Trump economic policies helped the economy grow. E.g.,
ReplyDelete1. Cutting the corporate income tax from 36% to 21%.
2. Eliminating a huge number of burdensome regulations
3. Re-negotiating NAFTA
4. Appointing judges who are less apt to find against businesses.
5. Advancing the Keystone and Dakota Pipelines
6. Repealing some of the massive energy regulations that were put into place during the final months of the Obama administration
7. Encouraging the use of methods to extract shale oil
8. Ending the Obama discouragement of coal mining.
9. I*ssuing an executive order instructing the EPA to begin the process of rescinding major parts of the Obama-era Clean Power Plan
10. Return to Normal Order in the Regulatory Process
Cheers
>>1. Cutting the corporate income tax from 36% to 21%.<<
ReplyDeleteSo why has job growth slowed? From what I've read, most of this decrease has gone into buying back a company's stock. That doesn't help the economy.
>> 2. Eliminating a huge number of burdensome regulations <<
I see people write this. But no one has any actual data.
>> 3. Re-negotiating NAFTA <<
How has this helped?
What I read is that there were in fact few changes, just a lot of puffery from Trump.
>> 4. Appointing judges who are less apt to find against businesses. <<
What rulings are you thinking of?
>> 5. Advancing the Keystone and Dakota Pipelines <<
One of these is still blocked. So where are the jobs
>> 6. Repealing some of the massive energy regulations that were put into place during the final months of the Obama administration <<
Regulations such as what?
>> 7. Encouraging the use of methods to extract shale oil <<
Methods such as what?
>> 8. Ending the Obama discouragement of coal mining. <<
Obama's Clean Power Plan was never implemented -- it never left the court system. Meanwhile, growth in coal mining jobs is only 1.3 %/yr under Trump, below the rate of GDP growth.
Coal is loser. The people in suits know this.
9. >> I*ssuing an executive order instructing the EPA to begin the process of rescinding major parts of the Obama-era Clean Power Plan <<
Which parts?
>> 10. Return to Normal Order in the Regulatory Process <<'
What is the "Normal Order?"
Under Trump I calculate 2.6% of GDP growth.
ReplyDeleteAnd
Obama 1st term = 1.6%
Obama 2nd term = 2.3%.
Using data from FRED, here's what I calculate for average GDP growth rates. (These are nominal, not real):
ReplyDeleteEisenhower1 2.8%
Eisenhower2 2.1%
Kennedy 5.4%
Johnson1 5.3%
Johnson2 5.1%
Nixon1 3.3%
Nixon2 1.2%
Ford 2.7%
Carter 3.3%
Reagan1 3.2%
Reagan2 3.8%
GHW Bush 2.1%
Clinton1 3.4%
Clinton2 4.2%
GW Bush1 2.6%
GW Bush2 1.0%
Obama1 1.6%
Obama2 2.3%
Trump1 2.6%
That said, GDP growth isn't a very good metric of progress.
David -- business expansion is often based on multi-year plans. Many of the steps I listed encouraged businesses to expect a better opportunity for profit in the US going forward. They didn't have to be in effect in order to help. The bottom line is that Trump did a lot of things that one would expect would encourage business. Sure enough, business grew and unemployment came down to very low levels.
ReplyDeleteIn economics, cause an effect can never be proved scientifically. We can't re-run the period from January, 2016 with Hillary's policies to see what would happen. IMHO the combination of business-friendly actions along with actual results is as close to "proof" as you can hope for in economics. But, if believe that Trump's policies didn't help, I cannot definitely prove you wrong.
Cheers
"The bottom line is that Trump did a lot of things that one would expect would encourage business."
ReplyDeleteAll you think you know is what you've heard in the ether. You have no data or evidence.
"Sure enough, business grew and unemployment came down to very low levels."
Here are corporate profits, AFTER TAXES, for the last 5 quarters. Where is this phenomenal growth?
https://fred.stlouisfed.org/graph/fredgraph.png?g=nECg
Corporate taxes before profits looks even worse:
ReplyDeletehttps://fred.stlouisfed.org/graph/?g=nECo
David -- I assert that Trump's actions generally encouraged businesses to expand more than they otherwise would have, or to shrink less than they otherwise would have. But it would be impossible for me to obtain real evidence for my assertion. Can we go to each business that expanded and find out what factors motivated their expansion? Can we go to every business that contracted and find out what factors prevented them from shrinking even more?
ReplyDeleteEven if some Professor got funding for such a study, it might not be conclusive. Business decisions are always based on a combination of factors. Even the decision-makers might not be able to assign weights to the factors influencing them to expand or contract.
So, you are right that I have not proved my assertion. You're free to disbelieve it if you like.
Cheers
From what I've read, most of this decrease has gone into buying back a company's stock. That doesn't help the economy.
ReplyDeleteIt does increase stock value, which benefits investors. Ironically, most investors are likely foreign. Americans are paying 2.3 trillion over 10 years for this tax cut. That's $1,822/family/year. If taxes for your family decreased by over $1,800 then you're doing all right. If not, then us foreigners thank you for your sacrifice.
Layzej - because our media is mostly wedded to the Democrats and is strongly anti-Trump, what you've read may not be so. In this case, I don't know what % of the corporate tax cut is being used for stock buybacks that otherwise would not have occurred.
ReplyDeleteBTW any increase in stock price from a buyback is indirect. If a company has excess cash, they could invest it in some other company's stock. If they think their stock is a good buy, they can invest the excess cash in their own stock. In principle these two strategies are pretty similar.
However, when a company invests in its own stock, it is telling the world that it has confidence in itself. Also, the buyback an be a way to increase earnings per share. OTOH if they invested in some other company's stock, that would also increase EPS.
Fair point DiC. To the extent that they are using your money to invest in stock (their own or others), we thank you!
ReplyDeleteI do not buy the theory that all money belongs to the government, except that portion of their money that they allow us to keep. Money not paid by corporations in taxes is not my money.
ReplyDeleteDavid in Cal wrote:
ReplyDelete"The bottom line is that Trump did a lot of things that one would expect would encourage business."
OK, so just give me ONE thing that Trump did and the EVIDENCE that improved the economy.
Just one.
David in Cal wrote:
ReplyDelete"In economics, cause an effect can never be proved scientifically."
They why are you making claims of cause (Trump) and effect?
David in Cal wrote:
ReplyDelete"I assert that Trump's actions generally encouraged businesses to expand more than they otherwise would have, or to shrink less than they otherwise would have. But it would be impossible for me to obtain real evidence for my assertion."
{Snicker.}
I rest my case.
David in Cal wrote:
ReplyDelete"However, when a company invests in its own stock, it is telling the world that it has confidence in itself."
Maybe. Or it's trying to keep its stock price up in an effort to present a false front to the world. And to let executives cash out at a higher value.
"Money not paid by corporations in taxes is not my money."
ReplyDeleteExcept that you are going into debt for it. Government debt is owned by the people. Your kids will pay for the tax cut (with interest) if you don't.
David - there are different standards for assigning cause and effect in economics than in physics. As I already said, Trump applied policies, as listed above, that most economists would think would help the economy. The economy did indeed boom. In economics that's sufficient proof.
ReplyDelete