Wednesday, November 10, 2010
Early report on the Deficit Commission (Catfood Commission) work. So far, so good. This seems realistic.
We pretty much have to whack across the board to make any impact at all, and this proposal does. WaPo article. The flatter tax structure is good, and the cut in corporate tax rates to 26% is good. That would help with job creation and to generate investment.
So, scream on. There is no way to get this done without raising taxes on the middle class, and that includes a lot of current retirees. One thing about this proposal is that it suggests throwing just about everyone in the barrel.
Bayh has already come out supporting the basic approach. I suspect he is going to run for president in 2012, and I'm interested.
Further update, a graph taken from the proposal:
The "current policy" line includes the doc fix fix, the extension of at least most the Bush tax cuts, etc. That is the path we are on.
This does the trick mostly and would eventually create a huge number of new jobs. It can't do it all - a lot of legislative change is needed in the environmental law/energy areas - put it would make it almost as profitable to run a company in the US as in say, Sweden or Denmark.
If you're not going to compete with Sweden or Denmark, you are not going to compete.
I haven't looked at it in detail, but this seems to me like a poison pill defense. Wrap a bunch of economy- and job-killing proposals up with some plausible debt-reduction ideas, and dare the Republicans to vote "no".
"Reform and Simplify the Tax Code
Broaden base, lower rates, and bring down the deficit.
Make America the best place to start and run a business and create jobs.
Cap revenue at or below 21% of GDP."
are Democratic in origin, I don't know how to respond to you.
Cutting my SS by 10% and taxing the whole payment is okay with me as well. All in all it'll cut my after tax income by 5-10% and I can live with that if other old codgers are giving their fair share as well.
Ending the real estate loan interest deduction in one fell swoop will finish off the real estate market. I don't think that one will or should fly.
If they want to really cut DOD, then combine the services. I know many of my old Navy squadronmates would shudder in horror at the thought. But it would reduce an enormous amount of duplication and competition for funds. Not to mention cut the number of flag officers by 2/3rds. I know how the military makes its budgets and it is not pretty. It is designed to spend more every year no matter the need. I'm a hawk, but a cheap hawk.
The three year freeze on federal spending and budgets sounds good and is certainly doable. (Maybe not politically possible though.)
It at least gives a platform to launch the debate from. It is a debate the American people, particularly the TEA Partiers, want to have. If nothing comes of this but talk and delay, real cost cutters will be elected in droves in 2012.
This would also fix the biggest problem we face right now: the number of people who Pay No Tax At All. Actually, they do pay tax because everything they buy has taxes buried in it (unless they buy directly from overseas) but they don't see it that way, and so feel free to vote for people who tax others to give them stuff.
Conservatives of all stripes: push to reduce the No Tax At All fraction of the population.
I've concluded that deductions for state and local taxes are a subsidy that keeps taxpayers from feeling the effect of high-cost state and local government. I'm glad to see those deductions removed. And the GOP should say plainly that the Feds cannot subsidize free-spending state governments out of the general revenue.
I understand the jealousy behind the "eliminate the mortgage deduction" concept, but that jealousy is wholly assumptive of a casino-based housing market. A normal hosing market doesn't generate lots of equity extraction mortgages.
Ultimately, I don't see any reason the accounting standards for a household should be any different than the accounting of a business.
I still can't trust their analysis, though. Anybody who claims that raising rates on cap gains and dividends from their current levels will increase revenue is smoking something. And that calls the whole thing into doubt.
Links to this post: