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October 11, 2004

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Brian

Are you denying that Bush has made the deficit/debt situation worse?

TM

I wonder how you got to that.

Brad DeLong

But Reagan raised taxes in 1982, 1983, 1985, and 1986...

No, I won't turn against Kerry if he breaks it. But there are earnest Dems like me who are scared that we'll have bad luck, need to break it, and not be able to convince Kerry to do so...

Brad DeLong

And let me lay down a marker: letting the Bush tax "shifts" sunset themselves is *not* raising taxes. It's just letting things take their natural course...

Publius

The second Kerry eliminates the dividend benefit he will raise taxes on roughly 50% of the tax-paying electorate. Hope he has fun with that.

As for the deficit/debt situation, I suppose on some level it is "worse" given that it has grown. However, a) it is still small in historical terms, b) the surplus projections were always bogus, c) the problem with more government spending is that it leads to more government and d) and any econ professor with two licks of sense will tell you that the formula is very simple: during a downturn, spend. During an upturn, save. What we have "spent" in terms of tax relief has paid dividends, and will continue to do so with the recent extension. And much like the balance sheets of the 90s, growth will easily balance out and surpass the "lost" revenue. The only x-factor is social security reform -- moving to an "ownership society" will incur large short term costs in exchange for long term solvency and security. Given that we will no longer have a trust fund to raid, the belt-tightening effects will be real.

But I digress. Kerry was out of his mind to say what he said, and simply proved that he will say anything he thinks will get him elected.

Brian

If you actually believe that, Tom, you are either so blinded by partisanship as to be almost incorrigible, or you simply haven't looked at the facts. My guess is the latter, since you seem to be a reasonable person.

Jim Glass

Taxes, taxes, taxes... People are worried that Kerry will/won't be able to raise taxes.

Hey, the unfunded entitlement liability is now $50 trillion (current value) and rising $1 trillion each year. And it begins to hit in a mere four years.

If you look at its makeup it's obvious that promised *benefits* are the killer, not lack of taxes. The benefits gap swamps the size of any tax cut/increase that we've experienced in our post-WWII lifetimes by like 4-1 or 5-1.

There is no way on this God's earth (or any other god's earth) that this gap is going to be closed *just* by raising taxes. Neither as a matter of economic reality, nor of any imaginably plausible political deal.

Nor *should* it as a matter of justice -- being that these entitlement programs were created on the premise that the old were the poorest demographic class, but now they are the *richest* and becoming *more so* compared to everyone else every year.

So when the heck are we going to bring the discussion of benefits up to catch up with the discussion of taxes?

To begin with, is Professor DeLong equally worried that Kerry won't be able to propose a reform and necessary reduction of benefits to the richest class?

Or shall we let things run their "natural course" by keeping current benefits schedules in place? So we transfer ever more every year to a group that is getting ever richer on its own -- through a combination of ever growing deficits and ever higher taxes on the poorer financing real-time transfers to the richer?

BTW, USA today has a really nifty interactive chart of the debt *and* a SS/Medicare benefits calculator at http://www.usatoday.com/news/graphics/debtcalculator/flash.htm

Check out how much more you are going to gain from Medicare than Social Security!

Anybody who moans about the entitlement funding gap while only talking taxes without talking benefits as well is simply posing, and is not to be taken seriously.

That pretty much covers every Democrat in public life I know. As far as benefit reform goes, they only want to run advertisements of Republicans pushing old people in wheelchairs over cliffs.

Republicans are willing to discuss benefit reform. All Democrats do is throw up one objection after another to whatever proposal is discussed.

Does Krugman or DeLong or Blinder or *anybody* on that side have any specific proposal for benefit reform that he is willing to put up for himself, instead of just objecting to everybody else's? If so, I haven't seen it.

Republicans are willing to discuss what matters regarding the $50 trillion debt -- benefit reform. They know the gap can't be closed without it and say so in public. The Democrats won't talk about it and won't admit it. That's why whatever problems the Republicans might have regarding that $50T, the Democrats are a lot *worse*.

TM

Uhh, Brian, if you are actually reading my post to say that I don't think the deficit has gotten worse under Bush, you are either blinded by partisanship or simply unable to read. I assume that is fun for you, but it is sort of a waste of my time. A hint - try working backwards. If a seemingly reasonable person says something seemingly unreasonable, cast about for other meanings that might make sense.

And the argument that sunsets are a naturally ocurring phenomenon is pretty slick. I can't remember offhand which provisions sunset when - I think the estate tax susnest in 2009 for example, which will be after Kerry's only term (does his pledge apply to two terms? More loopholes!)

JeanneB

I think we may all be missing the forest for the trees.

Won't Kerry's "tax on the rich" begin to hit the middle class as the Alternative Minimum Tax kicks in? What good are child-tax credits if the AMT cancels them out?

Sydney T

Stop talking like Kerry is going to win this thing.

Patrick R. Sullivan

Since Professor DeLong is on record calling for the federal govt to up its take of GDP to 30%....

Bill Arnold

TM, I think you're correct that "Kerry will keep this pledge because a Republican Congress will never pass these taxes. And, knowing that to be the case, he will never propose them." And I believe that that was part of Kerry's calculation at the time during the debate, that he knew that the Reps would control at least the House if he won. Gridlock is good. We all know it in our hearts. Single party control is bad.

martin

What about Bush's completely asinine promise that there will never be a draft under his watch?
Don't events rather than intent dictate that sort of thing?
Should a president really commit to such idiocy?

Ripper

Given recent combat experience, should their have been a draft in WWII? Is there a Laffer effect for the military? As you recruit people who are less and less willing on the curve don't you just tie up good equipment with mediocre, clockwatching soldiers?

martin

Yes. No. No. Ripper.

Cecil Turner

"What about Bush's completely asinine promise that there will never be a draft under his watch?"

What about Kerry's similar "asinine promise"? And isn't it even more asinine to claim that the opponent will do something both agree is unnecessary? Or to hijack a tax policy thread to talk about defense policy?

SaveFarris

martin,
the reason is because any sign of wavering or "maybe-ism" would have lead to breathless media coverage of "SEE?!? THOSE EVIL BUSHCO FOLKS ARE GOING TO DRAFT YOU!!!" They did the same thing to Arnold when he pleged to not raise taxes but left wiggle room in case of an earthquake or 9/11-style attack.

ryan

Martin,

Well, the military under Reagan was twice the size it is now, and there was no draft then. So is it that you figure the military is going to need much more than twice the number it has now, and within the next four years? Furthermore, Ripper's point as to a military Laffer curve is somewhat valid. The modern military is far more skilled than it used to be. To take the extreme example, during the Civil War, a draft might make sense -- you just need a whole bunch of bodies to hold rifles and shoot. You don't even have to spend much time teaching them to shoot, since the rifles aren't exactly accurate in the first place (and since the other side is standing in tightly packed formations). But a few weeks of training ain't going to cut it now. Some of the more skilled rates require two years of training -- you don't have that much time to spend on a drafted soldier. The opportunity cost of training becomes rather high, so you're left with a soldier with low morale AND training. Then you factor in the value of experience. Drafted troops are necessarily going to be shorter-term troops, and therefore on average less experienced. With all these problems, it's a wonderful the Pentagon hasn't come out very forcefully against a draft.

Oh wait. They have. Repeatedly.

martin

Turner-you didn't answer my question.
Ryan neither did you. I'm not talking about the whether we need a draft or not (personally I do-I think we should adopt the Israeli model)
My question is:
Whether a draft is necessary or not-should the Commander in Chief rule one out a priori?
Bush didn't say we don't need a draft now. He said there will be no draft "period."
Is that a wise statement to make?

Cecil Turner

"personally I do-I think we should adopt the Israeli model"

Yes, absolutely. Having the best military in the world is such a burden, let's try to find a way to muck it up. (/sarcasm)

"Is that a wise statement to make?"

Of course it is. The context is clearly the War on Terror (for Bush's conduct of which, the good Senator suggested a draft would be necessary). There's no plausible scenario in which a draft is indicated in the foreseeable future. We don't need to get all Zen about it and pretend to address all possibile futures. (Obviously if little green men from Mars invaded, we'd have to rethink the problem--but that isn't very likely.)

martin

Israel has the world's best military. The Israelis would kick our ass man for man.

martin

ok I take it back. I was just trolling. Bush remains an idiot, however.

Brian

"if you are actually reading my post to say that I don't think the deficit has gotten worse under Bush, you are either blinded by partisanship or simply unable to read."

For a moment, I thought that you were indicating that the worsening of the deficit situation wasn't Bush's fault. I knew that couldn't be right, so I asked.

Is there a problem?

Cecil Turner

"Is there a problem?"

If someone had said this to you, would it have made you testy?

"you are either so blinded by partisanship as to be almost incorrigible, or you simply haven't looked at the facts"
And no, the "if . . ." qualifier in front doesn't make it okay.

Brian

"If someone had said this to you, would it have made you testy?"

I'm testy about a lot of things.

"And no, the "if . . ." qualifier in front doesn't make it okay."

Why doesn't it? I wasn't entirely sure where he stood; as you may or may not have noticed, I don't always pick up on his sarcasm, for some reason.

Cecil Turner

"Why doesn't it? I wasn't entirely sure where he stood . . ."

In cases of doubt, Miss Manners suggests asking. Leaving personalities out of it is another good guideline. The standard courtesy test is to imagine yourself sitting in a living room having a quiet conversation. Or don't bother--it's not a big deal--and being rude to the host doesn't make him look bad.

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