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Taxing and Spending
Conservative apostate Bruce Bartlett explains why he became an apostate:
During the George W. Bush years [supply side economics] became distorted into something that is, frankly, nuts — the ideas that there is no economic problem that cannot be cured with more and bigger tax cuts, that all tax cuts are equally beneficial, and that all tax cuts raise revenue....As a consequence, we now have a tax code riddled with tax credits and other tax schemes of
dubious merit, expiring provisions that never expire, and an income tax that fully exempts almost on half of tax filers from paying even a penny to support the general operations of the federal government.
Indeed, by destroying the balanced budget constraint, starve-the-beast theory actually opened the flood gates of spending. As I explained in a recent column, a key reason why deficits restrained spending in the past is because they led to politically unpopular tax increases. But if, as Republicans now maintain, taxes must never be increased at any time for any reason then there is never any political cost to raising spending and cutting taxes at the same time, as the Bush 43 administration and a Republican Congress did year after year.
The supply-siders are to a large extent responsible for this mess, myself included. We opened Pandora's Box when we got the Republican Party to abandon the balanced budget as its signature economic policy and adopt tax cuts as its raison d'être. In particular, the idea that tax cuts will "starve the beast" and automatically shrink the size of government is extremely pernicious.
In most countries, there's sort of a natural cycle to politics. For a while, voters elect liberals who promise lots of goodies but also raise taxes. People like the goodies, but eventually get tired of the taxes, and throw the bums out. Conservatives then take office promising to cut taxes and restrain spending growth. People like the low taxes, but eventually they get itchy for more goodies so they throw the bums out. Rinse and repeat.
Whether deliberately or not, Reagan and the supply siders killed this cycle. They decided they could stay in office forever by cutting taxes and increasing spending, thus pleasing everyone. It even worked for a while. In the ensuing 28 years Republicans held the presidency most of the time and controlled Congress for much of the rest.
But eventually the piper has to be paid. We still haven't quite come to grips with that, but we can't avoid it too much longer. Either we (a) slash government spending in ways that the public quite plainly isn't willing to do, (b) raise taxes in ways that the public isn't yet willing to do, or (c) allow the rest of the world to do it for us. I used to be more optimistic about the possibility of avoiding (c), but lately I've begun to wonder. I've read more than a few pronouncements over the past couple of years about the death of the tax revolt — I think I've even written a few myself — but I have to admit that it's not really looking all that dead these days. Not here in California, anyway.
On the other hand, Italy hasn't collapsed yet, and we're still several years away from being as bad off as they are, so we've got time. Maybe we'll come to our senses sometime in Obama's second term. Maybe.
Not quite
The hole in your theory is that in between budget busting Republicans, a Democrat fixed things.
We're moving in the wrong
tagged as:- solution
We're moving in the wrong direction. It is difficult to see how medicare is sustainable as a government program and is projected to consume nearly the entire federal budget by no later than 2080. We're adding to that problem with healthcare "reform". If Obamacare passes, it's difficult to see how America avoids a sovereign bankruptcy. A good start would be to phase out medicare, and gradually convert the 2.9% wage tax to a dedicated debt reduction fund.
It's not like old people are
It's not like old people are suddenly going to stop needing medical care even if we phase out medicare. Indeed, medicare costs grow slower the private plans, so even if all the elderly go to the private insurers, they'll still need an ever larger part of gdp to pay for it, and the situation remains unsustainable, except more-so.
Yes, but we can vastly
Yes, but we can vastly reduce what gets done or, at a minimum, what the public is liable for. Our system is poorly setup to prevent eldercare that will cost far more than it benefits, which is why such a disproportionate amount of our healthcare dollars are spent on patients in their last year of life.
You're a prime example of how we are moving in the wrong...
...direction. Tax cuts on the rich got your deficit up? Raise taxes on the poor. Your poor are already too heavily taxed? Divert the funds for their benefits to pay for the tax cuts for the rich. But what you must NEVER EVER do is to raise taxes on the rich. This is why SS and Medicare are in such straits now. Your solution: throwing the baby out with the bathwater is not nearly enough; we must drown the baby in it first.
I love the repeated message
I love the repeated message that the "poor are already too heavily taxed". Really? A negative tax is too much? It's like if you repeat this fiction enough you think it will come true.
Consider payroll and sales
Consider payroll and sales taxes, you blithering fool. The working poor aren't excluded from the former, and everyone pays the latter.
Wow, I had never considered
Wow, I had never considered that maybe, just maybe, the subsidies (food stamps, housing allowance, child credits, etc. etc.) that we give to the poor might outweigh any taxex they pay.
Jesus Christ dob, are you trying to set the world record for idiotic posts in one day? How many times do I have to point out obvious flaws in your thinking before you think before you type?
Oh, I wouldn't dare
Oh, I wouldn't dare challenge the current record holder. No, it's not you, I believe Al-bot of the Kevin's old digs wins that prize, but you're training hard, I think you have it in you. Me, I have this unfortunate habit of making good arguments that are only a little bit mendacious, so I'm out of the running.
James2,
Have you noticed that you tend to look at the wrong things and draw the wrong conclusions? Doesn't that bother you enough to change some things?
Tripp
Don't you have a to go
Don't you have a to go hammer out a blog entry that no one is going to read?
These days "the poor" is that 98% of the population...
...that doesn't qualify as rich. Working people are "the poor" and they pay payroll taxes. Of course, if you were following the string, you would know that the subject was payroll taxes.
Medicare has a dedicated
Medicare has a dedicated revenue stream of 5.8% of all wages in the largest economy in the world (including both employee and employer contributions) and is still chronically insolvent. At what point do you admit the problem is that the cost is just too high?
Most analyses indicate that
Most analyses indicate that health insurance reform is going to help ameliorate the problem of the rising cost of health care. Care to add a fact-based disputation, or are you content throwing around scare quotes and the like?
Points awarded for sticking to your guns and proposing that Medicare be phased out. It's a terribly policy proscription, but at least it's consistent with your amoral worldview.
Here's one policy paper:
Here's one policy paper: http://www.ncpa.org/pub/ba662
Pop quiz: Do you suppose Medicare has cost more or less than it was projected to? Do you think that result will carry over to ObamaCare or not?
In any event, I'm not sure why you say it's a terrible policy. The options are either to get the government out of the healthcare business, or accept that America will go bankrupt. Given the rate of Medicare expansion, it would literally be impossible to collect enough taxes to pay for it all. Senior citizens are effectively content to doom us all, because Armageddon will come long after they're gone.
That study doesn't even
That study doesn't even consider the effects of health insurance reform legislation. Reading comprehension failure on your part.
As far as getting the government out of the health care business, that's exactly the wrong proscription. If EVERY industrialized nation on earth can provide health care to all of its citizens, why can't we? You would condemn every indigent sufferer of a correctable, lethal medical misfortune to an early death rather than accept that governments can and do provide health care for everyone? You make me sick.
True, it doesn't. That's
tagged as:- solution
True, it doesn't. That's because the proposals are shifting constantly and there hasn't been enough time for meaningful studies to be done on what's being proposed this week. It will be at least a year before full studies can be done on the proposals being discussed. Proposing legislation with no time for reflected study and then claiming no study shoots it down is the height of dishonesty. Looking at Medicare-- which costs far more than ever anticipated-- is the best we can do for now.
"If EVERY industrialized nation on earth can provide health care to all of its citizens, why can't we? "
If we can do it, then why don't you start with Medicare? Get Medicare costs under control, then we'll talk. Medicare spending is actually growing faster than other forms of healthcare: http://meganmcardle.theatlantic.com/archives/2009/10/why_medicare_costs_... (she links to the CBO report)
"You would condemn every indigent sufferer of a correctable, lethal medical misfortune to an early death rather than accept that governments can and do provide health care for everyone? You make me sick."
If the government isn't doing it, nobody can do it? First, the increased competition which will happen once the Medicare monopoly is gone should reduce prices. Beyond that, there's also the option for state governments to act as laboratories (exactly as the framers intended) and for private charity. I propose a gradual phase-out because people planned their retirement depending on it, but we can give ample notice as we phase out.
Health insurance reform
Health insurance reform legislation includes measures to reduce the cost of Medicare, but you don't accept them as valid since they haven't been studied enough. Get off of it, there's not an area of public policy that has been studied further. You can't cite an analysis that demonstrates health insurance reform will add to the problem because there isn't one, because it won't.
The fact that you'd link to Megan McArdle as a source for anything other than bemused entertainment speaks volumes about either your credulity or your seriousness. The long and short of it is, Medicare costs are rising far more slowly than any other form of health care spending in the country, and are only rising as an absolute matter because of the large number of baby boomers now being enrolled.
As for telling indigent sufferers of medical misfortunes to hope for charity, that doesn't even merit a response. Your amorality is on full display.
Read the CBO report that was
Read the CBO report that was linked in McArdle's post: Medicare is growing as a percentage. Look, I'll do it for you: http://www.cbo.gov/ftpdocs/87xx/doc8758/11-13-LT-Health.pdf Table 2 for excess per capita cost growth. "Excess per capita" means that the increased absolute numbers don't matter-- as it says, it's per head.
So, how about you demonstrate that medicare spending can be reined in before we turn over even more of the health care system to an entity that has demonstrated it has no ability to manage it responsibly?
I'll cite the aforementioned
I'll cite the aforementioned examples of every other industrialized nation on earth, all of whom spend half of what we do on health care, cover everyone, and enjoy better health care outcomes. They fact that you think we can't do the same calls into question your judgment, not to mention your patriotism.
Medicare has a NPV 34
tagged as:- solution
Medicare has a NPV 34 trillion dollar deficit over the next seventy-five years: http://www.gao.gov/financial/fy2007/07frusg.pdf
Rather than waving your hands and saying that of course we can do it, how about offering a realistic solution? Anything you can do to fix medicare inside of adding a public option can be fixed without adding a public option, and it's highly irresponsible to get the US Government even more into the healthcare business when, again, it has run up such high deficits trying to do so.
"You can't cite an analysis
"You can't cite an analysis that demonstrates health insurance reform will add to the problem because there isn't one, because it won't."
Missed this part the first time: There's not a study on the current version of the bill, because the current version of the bill is hours or days old! Once an actual proposal is out there and some time passes, there will be studies and who knows what they'll show? Obviously, we're going to have to take it slow so there's time to do studies.
Good post, KD
I just don't see a way out of it. Taxing the rich at the same rate as under Reagan would go a long way, but I can't imagine that happening.
Taxing and Spending
In essence, beginning with the Regan administration, the Republican party decided that the key to electoral success was eating our seed corn--the hard earned reputation of the U.S. for fiscal responsibility. Because of the reputation, the capital markets have thus far been willing to finance a lower-taxes/higher-speninding policy. But that can only continue for so long.
But the need for fiscal consolidation should not be used as an excuse to go slow on health care reform. The U.S. has by far the most expensive health care system in the world, but only middling average care: excellent for a substantial minority, middling for most, and quite poor by advanced economy standards for another substantial minority. Adopting France's health care system wholesale would cut our costs by 40 percent with no sacrifice--maybe a gain--in health outcomes. All countries face the long-term problem of a secular rise in health care costs, driven by advanced in medical technology. But cost is a reason to go quick on reform and universal coverage, not something addle-brained like abolishing Medicare.
Kevin, It sounds like you
Kevin,
It sounds like you are finally coming around to my prediction, and unfortunately that makes me pretty unhappy.
My prediction is some kind of breakdown or revolution between 2017 and 2021 . The only thing that I can imagine changing the path we are on is some kind of champion, and he would have to come from the ultra-rich, and he would have to rally other noblemen around his cause. Obama is not the man, because he does not have the power, even while being President of the United States.
Our problem is that the so-called nobleman (the ultra-rich) of today ain't acting too noble. Seriously. The ball is in their hands, and peak oil along with the rise of China will come whether we like it or not. The question is "How noble will our noblemen be?"
Tripp
@Trip... You hit it right on
@Trip...
You hit it right on the head... The wealthiest elites staged a coup in 1980 and have reaped the rewards ever since. Both right and left were handily pitted against each other so no one would notice the man behind the curtain stacking billions while systematically dismantling our economic foundation for personal gain.
The irony is that there is no greater supporter of "one world govt" then the elite ruling class of the US. With their unlimited wealth, nothing is more appealing then a "flat world" where they can move "resources" freely as needed in order to maximize profit for themselves. Since Reagan, the rich have grown orders of magnitude richer while the poor have became utterly destitute and the middle class has been destroyed. Meanwhile idiots on the right who are peasants hurl epithets and accusations of "one world govt!" at their equally ignorant left wing counterparts who then engage them on minutiae while the amoral ruling class, utterly absent of any ideology, continues to solidify power.
It was already too late in 1980. The ability of Goldman Sachs to not only force through a stimulus package, but manipulate the media into making people think its a good thing, and come out the other end with more skeletons buried, increasing profits, dirtier than ever balance sheets and crushed competition - all while sucking back a tax payer handout - is the final sign of how lost we really are.
Anyone who labels themselves "conservative" and argues for the right these days, and is worth less than $100,000,000, is a poor deluded fool headed rapidly for a rude awakening.
About payroll and sales taxes
If social security and medicare are called social insurance by people like Al Franken, then they aren't really taxes, but are premium payments. If you don't like the way payroll taxes are set up, take it up with FDR. Also, large chunks of the working poor get their payroll taxes refunded by the EITC. With sales taxes, large portions of the working poors' expenditures are exempt from many sales tax regimes. Rents and food purchases are largely exempt from sales taxes in many states.
If it's insurance, how do I
If it's insurance, how do I go about canceling my policy? I will be perfectly happy to waive my right to medicare, medicaid, social security, and any other "insurance" funded by payroll tax in exchange for no longer paying the premiums. We can even forget about the money I've already paid in. No other form of insurance is mandatory. Payroll taxes are just that: Taxes. What's more, half the cost is hidden because the employer pays it (which drives down wages). So, how about it?
[Before anybody says car insurance: You can choose not to own a car, a choice I've made for myself. There is no form of insurance that lacks an opt-out for.]
"The ball is in their hands,
"The ball is in their hands, and peak oil along with the rise of China will come whether we like it or not."
Peak oil? Seriously?
Are you also a Truther? Or a Birther? Because those theories make as much sense as peak oil.
The fact that there's a
The fact that there's a finite amount of oil in the earth eludes you? Or is it the fact that there's an even smaller, finite amount of oil whose stored energy is greater than the energy cost of extraction?
Peak oil is absolutely inevitable, absent a radical shift away from burning petroleum for energy. Reasonable people can disagree over whether the peak is in a decade, a hundred years, or happened a couple of years ago, but to pretend there is no peak is entirely foolish. Of course, that also describes just about every comment you've contributed to this blog, so there's no big surprise there.
Oh, you want to be able to
Oh, you want to be able to opt out and free ride on everybody else if you turn out not to be as lucky as you assume you will be? Whine, whine, whine.
Call it a tax if you want, but it isn't much different from payroll deductions for group insurance or a pension plan.
No, I would waive my right
tagged as:- result
No, I would waive my right to collect as well. In exchange for no longer being forced at the barrel of a gun to pay premiums (and, ultimately, all taxes are enforced by, among other things, the threat of state violence and confinement), I would be happy to waive my right to receive under the insurance programs. As I said above, I would even be willing to give up what I've already paid in.
If SS/Medicare was truly an insurance program, there would be no problem with this. If SS/Medicare is an unsustainable ponzi scheme, then leaving the 'insurance' would be forbidden by law. Given that it is forbidden by law to leave, except for certain religious objectors, the conclusion that it is an unsustainable ponzi scheme naturally follows.
High School Logic
If SS/Medicare is an unsustainable ponzi scheme, then leaving the 'insurance' would be forbidden by law. Given that it is forbidden by law to leave, except for certain religious objectors, the conclusion that it is an unsustainable ponzi scheme naturally follows.
Seriously, the 15 year olds in my Geometry class could tell you that
A-->B does not necessarily imply B-->A
Alejandro: Phase out
Alejandro:
Phase out Medicare? I would give you points for honesty, if it wasn't such a horrific policy choice.
The reason Medicare was created in the first place is that old people are a market that private insurance companies won't touch with a ten foot pole. No free market magic is going to change that.
Without Medicare, the vast majority of the elderly would be left uninsured, aside from maybe bare bones policies with payment caps.
That would mean all but a few very wealthy seniors would have no financial or health security. Any expensive illness would either kill or bankrupt a senior with a typical level of savings.
Anonymous, we don't know
Anonymous, we don't know what the eldercare health market would be like in the absence of medicare in the modern era, because medicare has crowded it out for the past forty years. Imagine if the government had opened a car company in 1965 and forbidden anybody else to compete in the less than $50,000 market by law. Would you expect cars that cost less than $50,000 to be better or worse than they are now? That's where we are with medicare.
Your analogies are horrible
Seriously, the last person that got me this riled up was Luther. When did Medicare force companies not to compete for eldercare insurance? Private companies dont insure old people because there is no profit margin in it. You keep making false comparisons in your arguments and I can't decide whether you are being disingenuous or just unable to use logic. Either way, you should do more thinking and less typing.
There's no profit in it
There's no profit in it because it has to compete with a government beast that has a dedicated revenue stream of nearly 6% of the wages in the biggest economy in the world. The amount of money poured down the medicare money pit is so great that competition is effectively impossible.
Health Insurance Premiums
tagged as:- result
Alejandro,
I'm 53 & in good health, haven't needed medical care in over a year & what I needed then was trivial. The cost to add me to my wife's insurance is $560/month, & BTW her insurance is sh*t, I know this as I pay the bills. What if I was 73 & in marginal health, what do you suppose the premium might be then? (No, I don't have a clue)
Italy not collapsed?
A 72-year-old career white-collar criminal as premier (and popular!) An ascendent nativist political party happy to trade in the worst racial stereotypes, with a nascent grey-shirted street cadre meant to keep cities 'safe'. Widespread illegal waste dumping -- much of it toxic -- across the south (thanks, Camorra!) Endemic and widespread sweat-shop labor creating some of the most expensive luxury goods on the planet. A port -- Naples -- which is a main spigot for hard drugs from Asia and counterfeit and "duty-free" merchandise -- clothes and electronics -- from China. A chronically over-burdened (sometimes compromised) police and judiciary. An urban murder rate south of Rome that makes Philadelphia look like Stockholm.
Honestly, how much more do you need before you get to collapse? Do we want to edge any further down that road?
Go read Robt. Saviano's Gomorrah, eye-opening and hair-raising. As fine an indictment of finance capitalism and free-market trade, which all of the above is in service of, as you'll find.