Now here’s a point of view that makes total sense to me. No wonder — it’s subtitled “A Pox on Both Parties.” This is Jeffrey Miron, Harvard economist and Cato Institute fellow:
Each party has valid concerns about the other’s approach to avoiding default, yet each is relying on counterproductive articles of faith.
To address the debt crisis, both sides must give up their cherished, but misguided, ideas.
The problem with the Democratic position is that it regards redistribution, rather than economic productivity, as the prime goal of government policy. The Democrats therefore want to address the deficit with higher taxes on “the rich,” not expenditure cuts.
This approach, however, cannot remotely address the long-term debt outlook; the available revenue from the wealthy is far too small. And higher taxes discourage economic growth, making deficits worse. Thus whatever the morality of soaking the rich, it will not work.
Likewise, Democrats refuse to accept that Medicare is the primary driver of the U.S. fiscal nightmare. [...]
A good approach to scaling back Medicare would be a substantially higher deductible. Imagine, for example, that every beneficiary paid an extra $2,000 out of pocket each year. This is affordable for most families, especially those a few years from retirement.
This one change in policy would save at least $100 billion a year. Better yet, Medicare beneficiaries would face the full price for more of their health care, while still having insurance against extraordinary expenditures. So they would pay more attention to prices and demand less health care, slowing the growth of health care costs.
And proposing real cuts in Medicare is the perfect opportunity for Democrats to steal Republican thunder. Many Americans believe that Democrats will do anything to forestall entitlement cuts, even if that means an exploding debt. [...]
For Republicans, the crucial mistake is their refusal to distinguish between the tax revenue that comes from higher rates and that which comes from fixing tax loopholes that inappropriately privilege certain consumption or production.
The Republicans are correct that raising tax rates is a terrible idea. By discouraging savings, work and investment, higher rates dampen economic productivity in the long run. [...]
But closing tax loopholes — lowering tax expenditure — is a terrific idea. Many tax expenditures distort economic decision-making and therefore slow economic growth. Crucial examples include the home-mortgage interest deduction and the preferential treatment of employer-provided health insurance. Thus Republican skepticism about explicit expenditure should apply equally to tax expenditure, regardless of the revenue implications.
To be sure, some “tax expenditure” is good for economic growth, so Republicans are right to be careful. Those features of the corporate tax code that permit rapid depreciation, for example, are beneficial because they encourage investment.
But blanket opposition to any additional revenue, or insistence that reduced tax expenditure be offset by lower tax rates, is ultimately counterproductive. [...]
Opposition to tax expenditures also allows Republicans to blunt Democratic concerns over balancing the budget “on the backs of the most vulnerable.” The home mortgage interest deduction, for example, is highly regressive; poor people do not own homes or itemize deductions. Scaling back such anti-growth tax expenditure is thus the right way to change the distribution of income: eliminate bad policies that favor the well-to-do.
Yes, these policy changes would “hurt” the middle class—but only by removing incentives that have encouraged and cushioned unwise decisions, like buying too much house and consuming unneeded health care. The sacrifice of subsidized folly is a good kind of sacrifice to have to make.
Ok, given the seriousness of Randys post I feel a little funny putting up this humorous one, but enjoy the joke on the Tigers Don Kelly for what it is.
I learned that I have inoperable cancer of the bile duct (cholangiocarcinoma) this morning. That unknown spot on my liver I mentioned somewhere around here three or four months ago unexpectedly grew 40%, the bloodwork that looked great then sucks now, and there are about twenty tiny new spots as well. The biopsy results came in this morning.
If anyone here knows anyone involved in cancer research or treatment of any kind, I’m searching for specialists in this rare cancer (1-2 cases per 100,000 per year) or ongoing studies of experimental treatments anywhere in the United States. May not prolong my life, but just might help save someone else’s.
My email address is: email@example.com
Hey – I’m even trying the Norman Cousins “Laughter is the Best Medicine” regimen from here on out. In the end, it may not make a big difference, but it beats debating who is responsible for the current fiscal crisis, and it should definitely improve the odds of going out smiling!
Here’s wishing all the best to each and every one of you here. It’s been a pleasure meeting you all online or in 3D.
The Ambient KngFish bar is open… Old Fashioneds for everyone!
The faces of the two old actors at the center of this film tell you so much.
1.) I don’t understand economics very well. (Even economists don’t seem to understand it very well, but that’s another story.)
2.) Therefore, in order to form an opinion I would need to depend on others’ explanations.
3.) The normal procedure is to get the explanatory basis for one’s opinions, and often the ready-made opinions themselves, from the “side” that you group with or agree with or share a worldview with. But I don’t group with or agree with or share a worldview with anybody, except perhaps for others who don’t group with or agree with or share a worldview with anybody.
4.) All the sources of information, explanation, and opinion on this issue seem filtered through . . . I was going to say “ideology,” but no, not even. They’re all filtered through a political agenda. It’s all about capturing the presidency in 2012, and how close the country can be pushed to the edge without going over, and who can be successfully blamed for the terrifying near miss (or, if we do go over some edge, who can be blamed for the catastrophe).
5.) Even though I agree with those who say our profligate ways have to end and that everyone will have to make some sacrifices, I will be very surprised if our new financial ruling class, those Chinese acrobats who keep the mesmerizing markets spinning with their feet above the fray, is included in “everyone.”
6.) I can’t stand Obama’s voice, and I can’t stand Boehner’s voice. I don’t hear a shred of sincerity in the calculated posings of any of them. I’m a dropout from politics because I have gone beyond ambivalence to equal-opportunity loathing. Or shall we say global loathing. Like global warming.
7) My late next-door neighbor Mamie Harmon, who used to say she lived through the Depression largely on bananas, once exclaimed that what this country needs is another Depression. Is that the only thing that will squeeze the bullshit out?
George and Gracie start and end this breaking the 4th wall and talking to us from 1929…
“I love the Chinese for this.”
“Happy birthday, America!”
(from a 1981 notebook of mine)
Who ever visited the horizon? That would make a great travel brochure, à la Donald Evans:
. . . you’ve seen it from afar . . . now, at last, discover its elusive delights . . . It’s living right on the edge in Horizon’s sophisticated night clubs . . .
(more? please continue.)