DOA Deficit Commission

November 13, 2010 Leave a comment

Most economists agree with this view on income taxes.  I agree with the view on social security.  Let higher income groups pay more social security taxes and plenty of taxes on their social security earning.  Above a certain income and wealth level people should not get social security.

…There is no — zero — evidence that income taxes at current rates are an important drag on growth.

Oh, and they’re talking about raising the retirement age, because people live longer — except that the people who really depend on Social Security, those in the bottom half of the distribution, aren’t living much longer. So you’re going to tell janitors to work until they’re 70 because lawyers are living longer than ever.

Still, I guess this is what it takes to get compromise, if by compromise you mean something the center-right and the hard right can agree on.

Update: It’s here. And it really is that bad. The idea that co-chairs of a commission whose charge is fiscal sustainability should take it upon themselves to (a) declare that federal revenue must not exceed 21 percent of GDP — that’s right, putting a cap on receipts and (b) call for reducing the top rate from 35 to 23 is just awesome.

via Economics and Politics – Paul Krugman Blog – NYTimes.com.

Filed under Economy, National, Taxes and Fees

Simon Johnson Confirms the New House Budget Committee has a Bad Start

November 8, 2010 Leave a comment

Seems like it is very hard to find a fiscal conservative who will take on the continuing problem of the “too big to fail banks” and failure to confront escalating Medicare (the program we all love) costs.

Only in American could self-styled “fiscal conservatives” say that “America is eager for an adult conversation on the threat of debt,” but then decline to discuss the first order problem that has brought us here and threatens us going forward: Dangerous systemic risk brought on by the reckless behavior of big banks. No “fiscal conservatives” showed up for the legislative fight to rein in big banks – none, and now Spencer Bachus (presumptive incoming chair of House Financial Services) says that restrictions on big banks should be further lifted (quoted in the FT today, p.15).

We can reasonably draw only one conclusion: Paul Ryan and his colleagues are not real fiscal conservatives.  This is further confirmed by the following:

1. Paul Ryan’s main short-term suggestion in his FT piece today is: Cut taxes.  Anywhere else in the world you would be laughed out of the room for suggesting this as the first step towards bringing a government’s fiscal house to order.

2. For concrete proposals on spending cuts, Mr. Ryan refers us to the Republican “Pledge to America“.  But that Pledge has no such detail on anything that would make a first-order difference, i.e., add all their proposals together and it wouldn’t even make a noticeable dent in the government debt path.  If a politician can’t summarize his main suggestions in an op ed, there are no real suggestions.

3. Mr. Ryan is right to bring up the need to make small adjustments to Social Security; this has been done before and makes sense. But the major budget buster in the CBO baseline, as you get out to 2030, is Medicare.  What exactly is Mr. Ryan proposing in terms of controlling those costs? On current demographic and technology projections – with the existing cost structure – even if you cut benefits substantially, Medicare becomes unaffordable.  Who will be squeezed over time – beneficiaries, providers, or payers – and how exactly? This will be a tough and emotional conversation – the lobbies here are almost as powerful as banks – but Mr. Ryan is not even starting us in the right direction.

via Paul Ryan Is Not A Fiscal Conservative « The Baseline Scenario.

Filed under Economy, Finance, National

No One Really Wants to Cut Spending, Just Taxes

November 7, 2010 Leave a comment

This explains pretty much a pattern for both political parties–calling for spending cuts, but never the political sensitive programs.  This means that it will be very hard for the parties to get together to overcome unemployment and make a long-term plan to draw down the deficit.

…despite their professed commitment to cut government spending, most Republicans in Congress refuse to propose specifics that would actually cut spending in any significant way. Recognizing the extreme unpopularity of cutting Social Security and Medicare, and the aversion of their base to military cuts, these self-styled fiscal conservatives often take entitlement and defense spending off the table, removing nearly 60 percent of the federal budget from scrutiny. Of the remaining spending, another sizable portion goes to debt payments — which are untouchable — and most Republicans also take homeland security and other security spending off the table, leaving only a small fraction of the total federal budget from which to find cuts.

Despite this stark reality, Republicans still try to claim the mantle of fiscal responsibility, and are forced to fumble, hem and haw when pressed on how they would actually cut spending.

via ThinkProgress » Pawlenty Inadvertently Explains How House Republicans Are ‘Lying To You’ About Spending Cuts.

Filed under Economy, Finance, National, Politics

Political Life is Hard for this Mayor

October 18, 2010 Leave a comment

The mayor of San Gabriel, arrested Friday for allegedly taking a woman’s purse and driving away with her clinging to the side of his sport-utility vehicle, said in a statement that the entire incident was a misunderstanding.

via San Gabriel mayor accused of stealing purse calls incident a ‘great misunderstanding between friends’ | L.A. NOW | Los Angeles Times.

Filed under National

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