Comments on: Notes From Washington

By: Michael

Michael — Thu, 10 Nov 2011 01:10:38 +0000

It’s not “willful ignoring.” Republicans have said, over and over, that they want to break the economy in order to make Obama look bad.

By: perplexed

perplexed — Fri, 04 Nov 2011 19:16:47 +0000

-”How does this apply to the federal government budget?”

It doesn’t; and those selling this meme do a tremendous disservice to everyone else by slowing the economy and enhancing income concentration to the detriment of all but a very few. http://jaredbernsteinblog.com/gov-perry%e2%80%99s-tax-plan%e2%80%a6/#comment-35944

The regressiveness of your tax policy suggestions accomplish the same goals. What you’re advocating for more of has already done enough damage and needs to brought to an abrupt stop & drastic reversal:
http://www.ted.com/talks/richard_wilkinson.html

By: dougfir

dougfir — Fri, 04 Nov 2011 00:51:36 +0000

We had a board meeting for our little non-profit organization last night and one of the topics was how much to raise fees for next year. The general response was something to the effect of “why? we covered expenses and had a little left over for the rainy day fund so why raise fees?” How does this apply to the federal government budget? Well, the line after “why?” is how.
To set the federal income tax rate, why not give every citizen and business, large or small a flat deduction of $5,000. Allow all tax payers to deduct 100% of charitable contributions and state and local income, property and sales taxes paid that year. Then charge whatever rate is needed on every dime of income from whatever source sufficient to cover expenses and a little for the rainy day fund.
Allowing a deduction for local taxes would eliminate some of the regressive nature of those taxes. Charging a single rate would satisfy the hateful people who want to stick it to the poor. And the wealthy could not complain that they were made to pay more than the poor.

By: perplexed

perplexed — Thu, 03 Nov 2011 18:55:22 +0000

That would be a great place to start the discussion. That would force us to address what range of inequality is acceptable without destroying the underlying incentives that make capitalism effective. It seems likely that there’s an “optimal range” with respect to total output but I don’t know yet if there’s any research to support it. Studies like this one (http://www.imf.org/external/pubs/ft/fandd/2011/09/Berg.htm)seem to confirm what Keynes said about wealth and income concentration acting as a break on growth, and obviously insisting on “complete equality” would destroy all of the incentive that makes capitalism so effective. Its likely the “optimal” level is in the middle somewhere and needs to be managed through progressive taxation (including wealth and estate taxes). It also seems likely that this is what Keynes was getting at: the more income that goes to those with a high marginal propensity to consume, the greater the overall growth of the economy. There is no need for a wealthy “class” of “savers” to support investment as the savings required for investment will be provided by all as interest rates adjust to provide incentives to save. The argument that $57 trillion of wealth concentrated mostly at the very top is somehow superior to $57 trillion of wealth widely distributed seems totally nonsensical to me; not to mention extremely dangerous from a power concentration standpoint.

This would also tie our marginal tax rates to our “objectives” for income and wealth concentration instead of the subjective “fairness” discussions that have no “shared definition” we can agree on or any underlying economic theory of how they should be determined. If we are within our “target ranges,” additional revenues could be raised through VAT’s if needed.

If Keynes was right about this relationship, the upside is that making capitalism better serve society by managing the “arbitrary” outcomes also would make it more effective in terms of total output. If we so drastically need to “cut spending and reduce the deficit,” how can we possibly afford a $6 trillion output gap? With our existing wealth and income concentration coupled with our intolerable under and unemployment situation, I’d say there’s no better time than right now to resolve these arguments and find out if Keynes was right http://jaredbernsteinblog.com/newspapers-across-the-land/#comment-35373

By: Chigliakus

Chigliakus — Wed, 02 Nov 2011 22:20:21 +0000

So as far as estimates on the rate of “turning this ship around,” what did you have in mind? Would it be a plot of the Gini coefficient on Y and time on X for various tax reforms, or is that oversimplifying?

By: perplexed

perplexed — Tue, 01 Nov 2011 22:07:50 +0000

That’s a great list Jared! Unfortunately, we need to start with with 100% public financing of campaigns to stay within the constraints of “but the rule is that neither of ours can invoke magic to get there.”

Without true “representative” government, we stand little chance of getting the other items seriously considered, let alone implemented. This likely means that Democrats are going to have to choose between their wealthy contributors and the 99%’s and make this a priority if they are serious about implementing the changes we need.

-”It’s getting late in the day and we’ve got a lot of work to do.”

IMHO few fully comprehend how “late in the day” it really is and how long its going to take to “turn this ship around” once we get started. And “getting started” isn’t even on the horizon. We could use some estimates of how many generations it will take to return this to “the land of opportunity,” that is, how many generations after we get “started.”

By: Lawrence Berg

Lawrence Berg — Tue, 01 Nov 2011 18:12:38 +0000

This is an easy sell for Perry. If you oppose federal government, de-funding it makes it go away. There may not be a country left when finished, but who cares? I got my money!

By: Jared Bernstein

Jared Bernstein — Tue, 01 Nov 2011 17:56:23 +0000

You’re right Merrill, but I read that to mean the non-defense part of discretionary, which is around 3% of GDP…I suspect that’s what Bartlett meant, but the way it’s written, you’re correct.

By: the buckaroo

the buckaroo — Tue, 01 Nov 2011 17:36:24 +0000

…seems when Republican partisans put on too much of a swell front concerning tax proposals that favor the upper crust it is necessary to remind them of their dreadful past, for which the people scourged them out of power.

The theories as to the causes of the memory lapse of past performance & deeds range from the solar flares & sun spot activity to prophecies of the Hebrew Scriptures to exotic kool-aid imbibing rituals at the Club for Growth shindigs.

This “tax anybody but the corporations & those with too much money” party is getting old…and against all that the founding fathers represented.

As Hamilton wrote eloquently in the The Federalist No. 36…and (taxation) must naturally tend to make a fixed point of policy in the national administration to go as far as may be practicable in making the luxury of the rich tributary to the public treasury, in order to diminish the necessity of those impositions which might create dissatisfaction in the poorer and more numerous classes of the society. Happy it is when the interest which the government has in the preservation of its own power, coincides with a proper distribution of the public burdens, and tends to guard the least wealthy part of the community from oppression!

By: readerOfTeaLeaves

readerOfTeaLeaves — Tue, 01 Nov 2011 17:20:47 +0000

I watch these events from a distance, but I pay attention because in odd ways, they affect me and mine.
Coverage and cost control in health careWithin six weeks of that deficit ceiling fiasco, I incurred over $36,000 in medical costs that resulted from one fall off a bicycle. And I’m just one person.
Fortunately, I have excellent medical coverage.
But in a for-profit health care environment, if you have the bad fortune to be injured (or sick), it is like walking around with a target on your back that says, “Come extract money from me.” Apart from the anxiety of surgery, the number of people billing me is unnerving; I have spent (literally) several hours on the phone with my health care provider clarifying which of the 32 bills (and counting) I am actually supposed to pay, and in what amounts.

While the GOP was pitching hissy fits, I was paying out — literally — thousands of dollars in copays.

How was that health care reform?
The profit motive appears to have accelerated.