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.