The President’s Economic Report, Why Taxes Matter, and Superheroes

By at 23 March, 2019, 8:18 am

Image by Andrew Martin from Pixabay

by Raymond J. Keating-

Each year, one of my favorite moments is the publication of the Economic Report of the President. Yeah, I know, it’s largely an economist or policy nerd thing – or perhaps a superhero thing.

The 2019 edition of the Economic Report of the President was just recently published, and it serves up an assortment of essays on economic and policy topics, and pages of data on the economy. This report has been published each year starting in 1950, and is written by the Council of Economic Advisers (CEA), whose current chairman is Kevin Hassett.

Warnings about Socialism, the Benefits of Deregulation

In terms of this year’s edition, it’s interesting, and distressing, that it was found necessary to include an extensive essay making clear the many ills of socialism (“Markets versus Socialism”). But that’s the state of American politics. In addition, there are interesting essays relating to aspects of regulation, and how deregulation of markets is benefiting the economy and small businesses. Chapters include: “Deregulation: Reducing the Burden of Regulatory Costs,” “Enabling Choice and Competition in Healthcare Markets,” and “Ensuring a Balanced Financial Regulatory Landscape.”

As for the abundance of data included in the Economic Report of the President, so many trends or points could be highlighted here, but I choose to look at one – the trend in real, per capita disposable personal income (after-tax income (personal income less current taxes) adjusted for population and inflation). This arguably is the most economically significant measure of income given that disposable income is what people use for consuming, saving and investing.

The Trend in Real, Per Capita Disposable Income

As noted in Table B-18 of the report, real (in 2012 dollars), per capita disposable income obviously dropped during the latest recession, from $38,125 in 2008 to $37,728 in 2009. That was a decline of 1 percent.

Growth subsequently resumed, until a big tax increase hit at the start of 2013. That resulted in real per capita disposable income dropping from $39,780 in 2012 to $38,996 in 2013, a decline of 2 percent. That is, double the rate of decline that was suffered during the Great Recession.

Tellingly, those were the only two years in which annual real, per capita disposable income declined over the last 27 years. It fell in 1991 as well, after President George H.W. Bush signed a tax increase into law in late 1990.

By the way, real, per capita disposable income barely inched ahead in 1993 – rising by only 0.3 percent – the year that President Clinton signed a major tax increase into law. Prior to 1991, one has to go back to 1980, amidst that deep recession, for the previous decline.

Currently, real per capita disposable income (2018 Q4) is projected to be $48,170, up from $47,582 for the third quarter of 2018.

So, the disposable income data reminds us that, yes, taxes matter.

Superhero Interns

Finally, just to confirm that this report is an economic/policy nerd thing, the New York Times took note of some interesting names that appeared in the list of interns who worked on the document:

“The list of Council of Economic Advisers interns on Page 624 of the report includes Steve Rogers (a.k.a. Captain America), Peter Parker (Spider-Man) and Bruce Wayne (Batman). There’s also Aunt May (Peter Parker’s guardian; apparently there are no anti-nepotism rules at the council), J. T. Hutt (a superfan abbreviation for Jabba the Hutt, the “Star Wars” gangster who hangs a frozen Han Solo on his wall), the actor John Cleese, Kathryn Janeway (a “Star Trek” captain)…”

Yes, economists (well, some of them) also have senses of humor, and rank among the superheroes of the policy universe – although my assessment might be biased.


Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.



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