Tuesday, April 05, 2011

E.D. Kain's "An Alternative to the Ryan Budget"

Is must reading. So much so, that here is a big chunk of it: (emp in original)
Andrew Sullivan says that Paul Ryan’s 2012 budget is a Very Serious budget and if liberals don’t like it, well what’s the alternative? So just for fun, I hopped over to the New York Times’ budget calculator to try my hand at fixing the impending fiscal nightmare and saving the world from certain financial doom. Here is what I did.

I really didn’t cut any of the small potato stuff like government jobs or salaries. I didn’t reduce subsidies to farms (even though I don’t think that’s a bad idea) or touch any other discretionary spending except defense.

On defense, I reduced spending on nuclear programs, reduced troop levels to pre-Iraq levels, reduced the Navy and Air Force fleets, canceled weapons programs, and reduced the number of troops in Iraq and Afghanistan to 30,000 by 2013.

I ignored malpractice reform and didn’t increase the retirement age one bit. I did reduce the tax break for employer-provided insurance because that’s one of the major hurdles to fixing our broken healthcare system. I didn’t raise the Medicare eligibility age. I didn’t ‘voucherize’ Medicare or turn Medicaid into a slush fund for state governments. I did means-test Social Security, but it wasn’t necessary. You could take it or leave it really.

Then I returned tax rates to the historically low Clinton-era levels. I returned estate, capital gains, and income rates back to the Clinton-era levels. I raised the cap on payroll taxes on incomes above $106,000.

I skipped over the millionaire’s tax (though we certainly could impose one, we don’t need to) and decided to follow some of the advice of the Bowles-Simpson plan by removing loopholes in the tax code. I did not, however, lower rates as they suggested. Rates are low! Removing loopholes makes sense, but we don’t need lower taxes.

Nor did I remove the mortgage deduction or implement a national sales tax (though I think a national sales tax coupled with a millionaire’s tax makes a lot of sense, and would raise a lot of money). Instead, I opted for a carbon tax and a bank tax because I think we should put a price on carbon and on the risks bankers have been taking with our money.

And just like that, I closed up the deficit by 2015 and also by 2030. I didn’t have to fire a single teacher or privatize a single government program to do it either.

Basically, cutting back the military to pre-Bush levels, and reverting back to the Clinton-era tax rates is all you need to do to fix the deficit. There’s some tinkering you can do here and there to make it more sustainable, but that’s all in the margins. A national sales tax would be more recession proof, but we don’t need one. Fixing healthcare would be great, but it’s going to take a lot more than the Republican idea of gutting entitlements and leaving the poor out in the rain to fend for themselves.

Raise some revenue, cut some defense spending, and call it a day.

The rest is just fearmongering and tax cuts for the very, very rich at the expense of middle-class and working Americans. Surely we can do better than this Very Serious budget proposal.


Given Obama's mismanagement and misuse of the military, taking it away his new favorite toy (now that he's grown tired of his car companies) is almost appealing. Almost.

I agree on employer-provided insurance. Employer-provided insurance is a racket that benefits the insurance companies by setting up a situation where if you get sick and have to leave your job, you virtually always have to drop your health insurance because it doubles or triples in price without the employer subsidy. Very convenient for the insurance companies, having their sickest clients squeezed out when they become too sick to work.

Separate health insurance from employers, allow it to go national, and it will find its real market price, just like car and homeowners insurance. And you won't have to change insurance companies when you change jobs. And your insurance won't triple in cost if you lose your job.

As far as a carbon tax, lets see how the economy does this summer when gas goes up to $5.00 or more per gallon. That should be a preview of the effects of a carbon tax. I think it's going to raise the price of everything, suck away people's discretionary income, and deepen the depression.

No need for a bank tax to "put a price on ... the risks bankers have been taking with our money." Separate commercial banking from investment banking, only let the FDIC insure commercial banking, and stop bailing out the banks that screw up. That returns the risk to the bank where it belongs.

Nice to see Kain doing some more in-depth thinking instead of just posting breathless "look at this" blog entries about the latest left-wing troll-piece.

By Anonymous jms, at 4/05/2011 3:56 PM  

jms might take a look at Paul Krugman's NYTimes Blog on Ryan's proposal.

By Blogger Shag from Brookline, at 4/06/2011 1:59 PM  

Krugman seems to be running around the bill furiously looking for low-hanging fruit. Does he address any of my comment in particular, or are you just impressed by his work?

By Anonymous jms, at 4/06/2011 4:45 PM  

I'm impressed by Krugman's facts about Ryan's "think tank" support not jms' "wussful" thinking. And low hanging fruit beats jms' use of political manure. Will gas go up to $5.00 or more per gallon this summer or does jms need Zantac? Let's earmark his comment as summer expires to see how good a prognosticator he is. Meantime, we might learn why jms hates America's first African-American President. Was jms in a coma from 1/20/01-1/20/09 when Bush/Cheney climaxed with the Great Recession?

By Blogger Shag from Brookline, at 4/06/2011 5:57 PM  

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