Free Markets, Free People

The progressive deficit plan, ala Krugman

In case you’re interested a group of progressive think tanks has produced an eighty-something page deficit reduction proposal.  Paul Krugman says he’ll have to study it, however:

It’s at least as responsible as any of the other plans being advanced, with a very different emphasis: more reliance on revenue, no attack on Social Security. Some of the revenue comes from indirect taxes — green taxes and fuel taxes — but the rest comes from measures that would raise taxes mainly on upper-income Americans.

I guess agreement or disagreement rests in your definition of the word “responsible”.  Let me just say I disagree.  A quick look at the plan (here, PDF) shows it’s pretty much the same old stuff.  Cap-and-trade, raise the income cap on Social Security, tax the crap out of the “rich”, an increased fuel tax and keep at least 50% of the electorate off the tax rolls.  Meantime cut the bejesus out of defense spending – one of the few actual constitutionally allowed federal government expenditures – and lay all those “savings” on health care and infrastructure.

Well here, let’s use their own 5 step plan:

1. Jobs first. Jobs and economic growth are essential to our capacity to reduce deficits, and there should be no across-the-board spending reductions until the economy fully recovers. In fact, efforts to spur job creation today will put us on a better economic path and create a solid revenue base. We believe there should be no consideration of overall spending reductions until unemployment has fallen to 6% and remained at or below that level for six months (Irons 2010a).

No “across-the-board spending reductions” until the economy fully recovers.  Really?  So the assumption here is in many areas of government, there is no “fat” that can be cut and thereby reduce spending?  That’s just nonsense and it puts into immediate question the credibility of this report.  Of course, unsurprisingly defense is not one of those areas which shouldn’t see such across the board spending cuts.

So immediately we have a “keep spending” recommendation until they deem the economy to be fully recovered (what’s that point, 5% unemployment?  3% GDP growth?) with economic predictions saying that we may not see joblessness reduced significantly by 2012.  So far, unimpressed.

2. Stabilize debt. Over the long term, national debt as a share of the economy should be stabilized and eventually brought onto a downward trajectory.

Well duh.  The key question here, given the “let’s keep spending” recommendation above is what constitutes the “long term”?  My guess is “never”.

3. Build on economy-boosting investments. We must build and maintain initiatives that directly support long-term job and economic growth. Failing to invest adequately in these efforts – or sacrificing them to short-term deficit reduction – would be a dereliction of sound public management.

Are you snickering yet?  Or are you already in the full out belly laugh mode?  If you are then you spotted the code words to “keep on spending” didn’t you?  So we have goal 1 – keep spending until the economy recovers and goal 3 – keep spending, er “investing” in stuff that will directly support “long-term job growth” even at the expense of deficit reduction.  But, wait, goal two – stabilize that debt folks.  How do you do that in light of 1 and 3?

4. Target revenue increases. Revenue increases should come primarily from those who have benefited most from the economic gains of the last few decades.

Tax the rich. Wow … that’s new. Don’t forget cap-and-trade and increased federal fuel “fees” as well.

5. No cost shifting. Debt reduction must be weighed against other economic priorities. Policies that simply shift costs from the federal government to individuals and families may improve the government’s balance sheet but would worsen the condition of many  Americans, leaving the overall economy no better off.

See unfunded mandates.  See ObamaCare.  See any number of “target revenue increases”.  See the nonsense?

Krugman goes on to say:

I’ll need to work through the proposal, but one thing it clearly does is to explode the myth that there is no alternative to the Bowles-Simpson-type regressive proposal.

What myth?  Did anyone honestly believe (or say) there wasn’t an alternative?  The fact that one exists doesn’t make it worth a damn though.  It simply exists.  Lots of  “alternatives” exist for all sorts of things.  The fact that they exist doesn’t make them credible or viable.  And my cursory reading of this paper presents nothing new and most of which has already been rejected by much of the American public.

And my favorite:

And it’s definitely worth noting that even with the revenue measures in the progressive plan, the US would have lower overall taxation than almost any other advanced country.

You mean like Greece and Ireland, Paul?  Japan? 

What a ridiculous argument for paying more taxes.   The problem in America, Mr. Krugman, isn’t that Americans are taxed to little – its because the politicians in our government spend too freakin’ much.  There’s not much in that plan that addresses that basic problem, is there?  And that’s why it’s as worthless as Krugman’s commentary.



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22 Responses to The progressive deficit plan, ala Krugman

  • My read of the “progressive” BIG FIVE.
    1. BIG Government spending is required to create jobs.
    2. Maybe…some day…if possible…we need to set the level of government debt…ha…ha, ha…ha, ha, ha
    3. BIG Government spending is required for a healthy economy.
    4. Redistribute more wealth.
    5. Make sure people are not empowered, and remain dependent on the Collective.
    Really seems familiar, somehow…

    • 4. Target revenue increases. Revenue increases should come primarily from those who have benefited most from the economic gains of the last few decades.

      Gee. I’m not sure how government employees are going to take to this idea.

      • At some point(s), really productive people will just find someplace else to produce.
        On the other hand, really HIGHLY PAID parasites will always find ways to get BETTER COMPENSATED (i.e., automatic advancements in their GS ratings, more benefits, etc) unless they are stopped.

      • 4. Target revenue increases. Revenue increases should come primarily from those who have benefited most from the economic gains of the last few decades.

        I distinctly remember the Clintoon administration wailing, during the 90s, that not everyone was participating in the tech revolution, so some of those “excess” goodies should be redistributed to the non-productive and those not willing to develop their own computer skills.
        Just like statists, to reward reticence and lack of motivation.

  • The mere title “The progressive deficit plan, ala Krugman” was enough to do me in.  To paraphrase a memorable movie moment, You had me at The!

  • Hmph.  Is it just me, or could any of us have written this plan?  That is, it’s nothing different from the standard liberal “plan” that has brought us misery since the late ’60s.

  • The concern that increasingly occurs to me is that my wife and I will soon be classified as rich, assuming we aren’t already.  We’re DINKS – double income, no kids – and therefore can’t access the EITC like many of our friends.  Fortunately we live in Texas and therefore have no state income tax, but still…

  • “And it’s definitely worth noting that even with the revenue measures in the progressive plan, the US would have lower overall taxation than almost any other advanced country.”
    It’s asinine statements like this that take the cake and reveal his willing slave (or planned exempt elitist) mentality.   The childish follower “everybody’s doing it!’ mentality that screwed Americans during the Age of Enron.
    With that kind of reasoning, it would be acceptable if  the US declared it would henceforth horse whip adulterer’s because that would be kinder and more enlightened than the stoning or decapitation they’d receive if they were found guilty in Sharia guided Islamic countries.

    • Is it true though? My understanding is that our tax rates are not actually that low, if you use NY or CA as comparison rather than Texas.

  • there should be no across-the-board spending reductions until the economy fully recovers

    So Obama freezing federal government employees pay for two years must not be “across the board” … rather a minimal start, but given the “no lobbyist” pledge, I’m sure there will be exceptions … by the boatload.

    • Only Federal unionized employees and other discernible pro-Democrat voting blocks,  will be exempt man, you know how this works.
      And would someone, Krugman perhaps, he’s a whiz, explain the following statement –
      “The freeze is expected to save more than $5 billion in savings over two years, $28 billion over five years and more than $60 billion over 10 years, White House officials said.” 

      How in the holy hell, does a 2 year pay freeze save money over the NEXT 10 YEARS.   Joseph on a hobby horse! are these people THAT stupid, or do they think WE are, which is it?
      Shoot!  Why don’t they project it out to 100 years and show some REALLY big savings!  Why are they so being so cheap with time when we can clearly fund the entire government by merely projecting the savings from freezing pay for the 200 million Federal employees for the next 2 years out over the next 100 years?

      • Probably because of the automatic pay increases that will not occur and compound over the following eight years. Make me dictator and I’ll cut 60B/month.

        • I’d bet you are correct – I was trying to figure out the angle on it, and being a stupid tax paying citizen working in the non-union private sector it never occurred to me that there WERE such forms of pay increase…..And therein lies a significant problem…
          Any one else out there in the private sector getting guaranteed pay increases for the next 10 years?   Show of hands please?
          Uh huh….and the fact that they can cite that as a ‘savings’ is further big government horse hockey and people will just nod their head and say “see they’re trying to fix the problem!” instead of slamming their foot down and yelling “that’s part of the freaking problem!”

        • Man, how can I get some of this automatic pay increase?

  • I am going to assume these guys are arguing in good faith, but I am not sure the assumption that any cutting of government spending will plunge us into a recession is exactly true. Yes, cutting the spending will affect things, but so does the animal spirits of the public who is rightfully anxious over the ever increasing deficit and debt (for fear of future taxes and/or collapse.) Japan has been spending for a decade without much success – but they did get debt/GDP up to 200%!
    Again, I think the country needs a series of big reforms, spending cuts, and tax cuts that produce some shock and awe. These penny packet things Obama does is not working. 2-year pay freeze announced by itself, for example. Its good, but its just a piece of news floating amidst the wikileaks flotsam and jetsam.
    These policies don’t need to be enacted in some 2,000 page bill, but could be rolled out to better effect than a business tax credit here, and a pay freeze there. I think the pay freeze was done mainly to put the GOP on the defensive. “We already did that”

    • I think a major part needs to be deregulation. Regulation acts as additional taxes, from the perspective of buisness. Deregulate to allow more oil drilling, etc., and cut buisness costs even without lowering actual taxation.

      As far as government spending, all such spending is either based upon taxes, future taxes, or future debasement of the currency. Increased .gov spending is the worst way to stimulate the economy.

  • if either party had any serious desire to reduce the deficit the first thing they should do is end refundable tax credits.  Why do i get a rebate when i don’t even pay anything into the system in the first place.

    • To encourage you to vote for whoever is at the helm of course, it doesn’t work for conservatives, but they keep trying, and it works wonders for the liberals.

  • Just how much acid does Krugman put in his morning coffee? I’ve never suffered from vertigo but this guy seems to be on a permanent spin cycle!

    • He looks like a demented Christmas elf about to use his little tappity hammer on his co-workers.