But Republicans are terrorists (literally, not figuratively). The majority of Congressional Republicans endorsed terrorist attempts to overthrow the US government, and are backing the leader of the terrorist movement as their next presidential candidate. Saying "US governance is shaky" is being generous.
If you really want to increase tax revenue, none of your proposals do much. There simply aren't that many people in the top tax brackets.
If you want a dent in GDP, you're going to have to notice that the median taxpayer is paying <8% income tax (12% marginal, but after the increased standard deduction and 10% initial bracket...). This is SIGNIFICANTLY lower than it was back in the late 90s.
I don't disagree with the macro analysis here but I think Noah is making a seriously confused political argument.
Both parties should want fiscal austerity because both parties want inflation to come down. And since we have divided government, it can't be implemented entirely through spending cuts (as the Republicans would prefer) or entirely through tax increases (as the Democrats might like). There has to be negotiation to reach agreement on some combination of the two.
That has absolutely nothing to do with the House GOP's threat of debt default, which shouldn't be entertained under any circumstances. Biden needs to move ahead with minting the platinum coin, and if there's any doubt about the legality of that approach he'll need to invoke the Fourteenth Amendment as a backup.
This isn't an alternative to sensible bipartisan negotiation; it's the °prerequisite° for sensible negotiation.
Another reasonable tax increase: raise the cap on payroll taxes. Currently, higher income Americans stop paying FICA taxes above about $150k. Remove that cap or make it way higher to better fund Social Security.
My subscription doesn't run out til Jun 17 yet Substack pops up a message as if I do not have a valid subscription forces me to login again and then says everything is ok.
Same problem occurs on Pielkes substack and it is irritating.
Running out of money in the SS trust fund isn't a problem. We'd just continue to pay benefits as we do now, supplement SS contributions from general revenu. I have no problem raising contributions to keep SS solvent, but I promise you, no one in either party will tell seniors: we're cutting your benefits cause the trust fund is broke.
The problem with your thesis is that the US is just about the worst place in the developed world to be poor, and the best place to be rich.
I can only conclude the American tax and transfer system is too ungenerous and should be expanded further, and if it involves increasing the tax take, so be it.
Re: "In general, fiscal deficits are inflationary." That's not true. In the 1950s and 1960s, we had balanced budgets and inflation. We even paid down the World War II debt and experienced inflation. Economic expansion is inflationary, particularly expansion in the real economy of goods and services rather than prestige goods. Austerity is just an excuse to confine economic growth to goods that do not require input goods or services to create. Austerity benefits those who use money to keep score, while it harms those who use it to buy things like food, clothing and shelter.
It seems profoundly immoral to me to raise taxes on the younger working population to finance retirement benefits which those younger working people themselves will likely never see.
As regards dealing with the crisis, the platinum coin is an obvious gimmick. The better alternatives are
* Disregard the ceiling and issue new debt. Dare the Repubs to challenge it, and the SC to enforce a default
* Premium bonds. Issue new debt with a high coupon rate, sell it at a premium and retire old debt. It's no more artificial than the devices that are already in use.
The second is safer, but the first would be a clear statement of unwillingness to negotiate with terrorists.
Where to cut spending: subsidized insurance for disaster payments. Ethanol subsidy/mandate. Enforcment of Jones Act, NEPA.
Really a tax but, impute employer cost of health insurance as income and allow people to switch to ACA. Higher water charges from federal water projects,
Tax increase idea: what about amending IRC § 102 to say gifts and inheritances over a certain de minimis amount are taxable income? It might gain traction because the messaging in favor of the change could be simple. E.g., "you earn your money working, so you have to pay tax on it, but if someone's income is just gifts and inheritances from their rich parents, they don't pay a dime of income tax."
The demand for austerity would be less laughable if you, or anyone in economic chattering classes, had a remotely plausible explanation for the uptick in inflation that austerity is supposed to control. You don't, no one does: This is largely because, as best I can tell, no one has done any of the necessary empirical research, which would involve an effort to determine who is raising prices, why they are raising them, who is benefitting from those price increases, and who is being hurt by them.
You can't possibly make rational, coherent policy aimed at curbing inflation if you don't really understand much of anything about it. The theory you and others advance to explain it -- "too much federal deficit spending" -- is just obviously wrong, or, more charitably, not really right enough to justify policies that, ultimately, wind up screwing the very people most likely to be adversely affected by the "inflation" you're trying to bring under control.
Thanks for that pie chart, it is awesome! I’m so tired of bickering about income tax rates and discretionary spending when there are bigger fish to fry. If really want to implement austerity, I would do this: (1) put a sliding scale on payroll tax rates and contribution limits to force them to equal Social Security plus Medicare. Implement a VAT or national sales tax with a sliding scale rate to pay for the red pie slice (deficit), and (3) implement a temporary tax to draw down our existing debt in 10 or 15 years. This would create an incentive for lawmakers to drive efficiencies in all costs and creatively look for ways to increase revenues in order to keep the payroll and VAT rates low to spur growth and for political reasons.
But Republicans are terrorists (literally, not figuratively). The majority of Congressional Republicans endorsed terrorist attempts to overthrow the US government, and are backing the leader of the terrorist movement as their next presidential candidate. Saying "US governance is shaky" is being generous.
If you really want to increase tax revenue, none of your proposals do much. There simply aren't that many people in the top tax brackets.
If you want a dent in GDP, you're going to have to notice that the median taxpayer is paying <8% income tax (12% marginal, but after the increased standard deduction and 10% initial bracket...). This is SIGNIFICANTLY lower than it was back in the late 90s.
Raise taxes on everyone, that's the only way.
I don't disagree with the macro analysis here but I think Noah is making a seriously confused political argument.
Both parties should want fiscal austerity because both parties want inflation to come down. And since we have divided government, it can't be implemented entirely through spending cuts (as the Republicans would prefer) or entirely through tax increases (as the Democrats might like). There has to be negotiation to reach agreement on some combination of the two.
That has absolutely nothing to do with the House GOP's threat of debt default, which shouldn't be entertained under any circumstances. Biden needs to move ahead with minting the platinum coin, and if there's any doubt about the legality of that approach he'll need to invoke the Fourteenth Amendment as a backup.
This isn't an alternative to sensible bipartisan negotiation; it's the °prerequisite° for sensible negotiation.
At the end of paragraph three, I think you meant to write that the Democrats like tax increases.
Another reasonable tax increase: raise the cap on payroll taxes. Currently, higher income Americans stop paying FICA taxes above about $150k. Remove that cap or make it way higher to better fund Social Security.
My subscription doesn't run out til Jun 17 yet Substack pops up a message as if I do not have a valid subscription forces me to login again and then says everything is ok.
Same problem occurs on Pielkes substack and it is irritating.
Running out of money in the SS trust fund isn't a problem. We'd just continue to pay benefits as we do now, supplement SS contributions from general revenu. I have no problem raising contributions to keep SS solvent, but I promise you, no one in either party will tell seniors: we're cutting your benefits cause the trust fund is broke.
The problem with your thesis is that the US is just about the worst place in the developed world to be poor, and the best place to be rich.
I can only conclude the American tax and transfer system is too ungenerous and should be expanded further, and if it involves increasing the tax take, so be it.
Re: "In general, fiscal deficits are inflationary." That's not true. In the 1950s and 1960s, we had balanced budgets and inflation. We even paid down the World War II debt and experienced inflation. Economic expansion is inflationary, particularly expansion in the real economy of goods and services rather than prestige goods. Austerity is just an excuse to confine economic growth to goods that do not require input goods or services to create. Austerity benefits those who use money to keep score, while it harms those who use it to buy things like food, clothing and shelter.
It seems profoundly immoral to me to raise taxes on the younger working population to finance retirement benefits which those younger working people themselves will likely never see.
As regards dealing with the crisis, the platinum coin is an obvious gimmick. The better alternatives are
* Disregard the ceiling and issue new debt. Dare the Repubs to challenge it, and the SC to enforce a default
* Premium bonds. Issue new debt with a high coupon rate, sell it at a premium and retire old debt. It's no more artificial than the devices that are already in use.
The second is safer, but the first would be a clear statement of unwillingness to negotiate with terrorists.
Where to cut spending: subsidized insurance for disaster payments. Ethanol subsidy/mandate. Enforcment of Jones Act, NEPA.
Really a tax but, impute employer cost of health insurance as income and allow people to switch to ACA. Higher water charges from federal water projects,
Probably worth mentioning how progressives can have their cake and eat it too by raising the earnings cap on social security taxes
Tax increase idea: what about amending IRC § 102 to say gifts and inheritances over a certain de minimis amount are taxable income? It might gain traction because the messaging in favor of the change could be simple. E.g., "you earn your money working, so you have to pay tax on it, but if someone's income is just gifts and inheritances from their rich parents, they don't pay a dime of income tax."
The demand for austerity would be less laughable if you, or anyone in economic chattering classes, had a remotely plausible explanation for the uptick in inflation that austerity is supposed to control. You don't, no one does: This is largely because, as best I can tell, no one has done any of the necessary empirical research, which would involve an effort to determine who is raising prices, why they are raising them, who is benefitting from those price increases, and who is being hurt by them.
You can't possibly make rational, coherent policy aimed at curbing inflation if you don't really understand much of anything about it. The theory you and others advance to explain it -- "too much federal deficit spending" -- is just obviously wrong, or, more charitably, not really right enough to justify policies that, ultimately, wind up screwing the very people most likely to be adversely affected by the "inflation" you're trying to bring under control.
Thanks for that pie chart, it is awesome! I’m so tired of bickering about income tax rates and discretionary spending when there are bigger fish to fry. If really want to implement austerity, I would do this: (1) put a sliding scale on payroll tax rates and contribution limits to force them to equal Social Security plus Medicare. Implement a VAT or national sales tax with a sliding scale rate to pay for the red pie slice (deficit), and (3) implement a temporary tax to draw down our existing debt in 10 or 15 years. This would create an incentive for lawmakers to drive efficiencies in all costs and creatively look for ways to increase revenues in order to keep the payroll and VAT rates low to spur growth and for political reasons.