Thursday, December 9, 2010

Politics and the Economy

Received this from Darren at RightontheLeftCoast:

Last week the American Enterprise Institute convened a debate between Rep. Paul Ryan and New York Times columnist David Brooks on the subject of limited government. As advertised, Rep. Ryan was to deliver the case for limited government and Brooks was to counter with the case for "energetic" government. The debate was triggered by the Wall Street Journal column co-authored by Rep. Ryan with AEI president Arthur Brooks and David Brooks's column responding to it. (Rep. Ryan continued the exchange here. Charles Murray commented here.)

As is clear from many of my links, I'm a big fan of Brooks, and I think people like Ryan and the AEI tend to way overshoot on "free market paradise." They also overestimate American's knowledge of just what they are voting on when they say they want "limited government." Without doubt, the Democrats way over-extend the reach of government and the welfare state. At the same time, the GOP's faith in the market and limits on regulation is so pie-in-the-sky that it puts a level playing field, the opportunity to compete, and quality of life for average Americans at serious risk. I simply don't trust either of them, as their ideologies blind them to hard core reality of everyday life. But I'd rather have Social Security, public pensions, Medicare, public education, school lunches, the FDA, the CDC, the NIH, PBS, and a well-funded infrastructure spending than not. At the same time, there is much frivolous spending that could be reigned in, and both the states and the federal government have to be rational about entitlements - and that includes public employee pensions that are far too generous.

At this point, I am rather disappointed in a deal that continues to hold down revenue and increase spending after all the hysterical campaign talk about the debt and deficit and sticking our grandchildren with the bill. In terms of tax rates, I would argue that 39% is too high for the top bracket, but that's only true if people are paying them - and members of the top tier have the greatest ability to lower their tax burden through deductions. So this argument about "rates" continues to be disingenuous. Thomas Friedman weighs in with a pretty succinct explanation for how we are still in the hole and we "keep digging." Both the White House and the GOP ought to be ashamed of themselves for this senseless inaction.


Anonymous said...

You want social security, public pensions, medicare, public education, and all the rest, but you don't want anyone else to be able to exclude themselves from all those things that you want, because you want them to help you pay for them. You're just as anti freedom as the religious right.

The republicans are not for limited government and free markets. Don't believe that garbage.

mazenko said...

What? Your position is extreme and not simply pro-freedom. In a democratically elected republic, decisions such as these are made by the people for the people, and we do not live in a loose confederation of individuals. Policies such as these have to function by majority rule in a legislative process, as giving people the option to opt out of everything is horribly inefficient. Some would choose not to pay for roads or police service or the military or public health regulation even though they benefit. In terms of Social Security, I neither pay into it, nor draw from it. My retirement will come from a pension which is at the control of the taxpaying voters. However, I trust the legislative process of the country as guided by the Constitution, knowing we don't, and don't want to, live the Wild, Wild West. Calling that anti-freedom is the ridiculous position of the young, naive anarchists protesting everything government, having grown up in a safe productive society and not being able to appreciate the comfort which we have collectively established for their right and freedom to complain about.

Anonymous said...

You choose efficiency over liberty. And you teach children for a living. No wonder things are so screwed up now, and getting worse all the time. Like most busybodies, you think that you know what's good for other people, and you think that you have the right to impose it on them. This is why society is in the shape that it is in. Not good, and worse is coming. Caused by people like you.

mazenko said...

Well, that's a pretty pessimistic attitude you have - that sort of fatalism hasn't ever been representative of the American spirit. I'm a little more faithful and hopeful for the triumph of liberty and the triumph of the American spirit.

Additionally, I tend to be libertarian on many issues and predominantly a Burkean conservative on fiscal issues and government responsibilties.

abellia said...

Why is 39% a bad rate? Why not 15%? Why not 65%, or 83%? Do you have any real basis for choosing one over the other? How about 0%? What's wrong with that?

This is the problem with the tax debate - you're talking about percentages instead of goals. What is the goal? If the government is allowed to create financial assets (which it is, either in the form of money or debt securities), then THE GOVERNMENT DOESN'T NEED YOUR MONEY.

Why then, would the government tax?

1) To control inflation.
2) To place a relative upper bound on wealth accumulation.
3) Just because it has since 1913 and the passage of the 16th amendment.

Forget the money - that's just numbers. You're on the right track when you talk about what a government should and shouldn't do, without regard to money.

mazenko said...

Well, to an extent, you are right on the numbers. I have never believed in higher or lower tax rates - simply effective ones. The government needs to tax at whatever rate will give it sufficient revenue to carry out the duties it has been tasked with by the electorate - in theory of course.

Historically, there are ceilings and floors for what have been the optimum rates to secure necessary revenue while not stifling economic growth. Thus, 39% operated effectively at times - though strength of overall economy and the role of deductions have to be taken into account. At other times 39% has seemed to be a drag on the economy.

The numbers matter only in that the government needs enough revenue to meets its legal responsibilities. And currently that is not happening. In some ways it is taxing too little and in other ways it is spending too much.

abellia said...

You missed one of my main points. The government doesn't need your money in order to spend. Period.

That aside. When do you think that the US was the most prosperous for a sustained period? Answer that and then go and see what the top marginal tax rates were during those times. You might be surprised.


mazenko said...

The government does need our money in order to provide the services we expect of it. And, of course, I realize the historical strength of the American economy from 1945-70 with top marginal rates of 80%. However, that was a different time with an economy that doesn't exist anymore. The US had no competitors as it pretty much singlehandedly rebuilt Europe and Asia. The rest of the world has caught up ... and those high marginal rates eventually became a drag with the inflation that came along. Additionally, the higher rates in the 1990s were also able to succeed simply because they didn't inhibit what was obviously a falsely inflated bubble economy.

abellia said...

Really, the government doesn't need your money. You seem like an open-minded person -- you might read some of this:




I'm not saying that tax rates should be higher (we're not having inflation, so people can use all the money they have), but I would argue that some steps should be taken to remedy the ever-broadening gulf between the very rich and the poor. Higher taxes on the very rich can serve this purpose. Lower taxes on the poor can as well (though less-well, as many pay little or no tax). Regulation of different sorts is also a possibility.