Fuck its silent in here.......

[Gilgamesh]

Related:

http://blogs.ft.com/martin-wolf-exchange/2010/07/25/the-political-genius-of-supply-side-economics/

Martin Wolf interestingly doesn't answer where the marginal rates should be. Yes, a knock on the right is that we always think taxes should be lower; a knock on the left is that they always think taxes should be higher. Also, Wolf suggesting that the conservative line is rooting for the government to default undermines his credibility.

He didn't say that's "the conservative line." He said:

According to my friend, Bruce Bartlett, a highly informed, if jaundiced, observer, some "conservatives" (in truth, extreme radicals) think a federal default would be an effective way to bring public spending they detest under control.

(Bold mine.)

Here's Bartlett...

http://capitalgainsandgames.com/blog/bruce-bartlett/1509/another-dumb-right-wing-idea-default-debt

Over the years I have heard a number of conservatives suggest that defaulting on the national debt wouldn't be such a bad thing. Today Prof. Glenn Reynolds of the University of Tennessee Law School (better known as "Instapundit") suggests the idea once again. Says Reynolds:

"SO HERE'S A QUESTION: Would a default on Treasuries accomplish what the Balanced Budget Amendment was supposed to achieve, by forcing the government to spend no more than it takes in? With more collateral damage, of course. . . ."

...

Mark Thoma thinks I am taking Reynolds too seriously. He's probably right that Reynolds himself was not serious in his suggestion. But I have heard the same idea advanced seriously on numerous occasions among conservatives. I would note that a Fox News poll on October 1, 2009 found two-thirds of Americans saying that the debt limit should not be increased.

The first comment on Bartlett's post points out:

Gingrich threatened debt default during the 1995 budget impasse. That gambit failed because everyone knew that the consequences would be so dire, there's no way the GOP could have stayed united behind it.

[/quote]

I wouldn't put it past this current crop of GOPers.  Defaulting is probably the best way to starve the best, in their minds.  We can deal with the monumental collapse of the world economy some other time.

[Gilgamesh]

An interesting collection of thoughts on the Laffer curve:

http://voices.washingtonpost.com/ezra-klein/2010/08/where_does_the_laffer_curve_be.html

Very interesting, but it would have been enlightening to see if any Dem politicians would volunteer to answer the question as well.

Related:

http://blogs.ft.com/martin-wolf-exchange/2010/07/25/the-political-genius-of-supply-side-economics/

Martin Wolf interestingly doesn't answer where the marginal rates should be. Yes, a knock on the right is that we always think taxes should be lower; a knock on the left is that they always think taxes should be higher. Also, Wolf suggesting that the conservative line is rooting for the government to default undermines his credibility.

I think my major criticism regarding the Republicans and tax policy is that we are hearing an awful lot of talk about the deficit of late and of the need to make sure bills are fully paid for before enactment (with which I agree wholeheartedly).  However, this stance taken by the Republicans is negated when they don't have an answer as to how they would pay for the extension of said tax cuts.

That's when I begin to smell hypocrisy.

What if despite a tax increase, government receipts fall? How do you pay for the drop in income?

I think your question presumes that I think a tax increase is the only effective way to control revenue.  In fact, a tax increase coupled with a drop in spending (in the big three [SS, Medicare, or Defense]) would be more than enough to bring our fiscal house in order.  I see no reason to believe otherwise.

[J. Walter Weatherman]

Related:

http://blogs.ft.com/martin-wolf-exchange/2010/07/25/the-political-genius-of-supply-side-economics/

Martin Wolf interestingly doesn't answer where the marginal rates should be. Yes, a knock on the right is that we always think taxes should be lower; a knock on the left is that they always think taxes should be higher. Also, Wolf suggesting that the conservative line is rooting for the government to default undermines his credibility.

He didn't say that's "the conservative line." He said:

According to my friend, Bruce Bartlett, a highly informed, if jaundiced, observer, some "conservatives" (in truth, extreme radicals) think a federal default would be an effective way to bring public spending they detest under control.

(Bold mine.)

Here's Bartlett...

http://capitalgainsandgames.com/blog/bruce-bartlett/1509/another-dumb-right-wing-idea-default-debt

Over the years I have heard a number of conservatives suggest that defaulting on the national debt wouldn't be such a bad thing. Today Prof. Glenn Reynolds of the University of Tennessee Law School (better known as "Instapundit") suggests the idea once again. Says Reynolds:

"SO HERE'S A QUESTION: Would a default on Treasuries accomplish what the Balanced Budget Amendment was supposed to achieve, by forcing the government to spend no more than it takes in? With more collateral damage, of course. . . ."

...

Mark Thoma thinks I am taking Reynolds too seriously. He's probably right that Reynolds himself was not serious in his suggestion. But I have heard the same idea advanced seriously on numerous occasions among conservatives. I would note that a Fox News poll on October 1, 2009 found two-thirds of Americans saying that the debt limit should not be increased.

The first comment on Bartlett's post points out:

Gingrich threatened debt default during the 1995 budget impasse. That gambit failed because everyone knew that the consequences would be so dire, there's no way the GOP could have stayed united behind it.

I wouldn't put it past this current crop of GOPers.  Defaulting is probably the best way to starve the best, in their minds.  We can deal with the monumental collapse of the world economy some other time.

Quote tag fixed'd

[morpheus]

Seriously folks, as long as the Fed can still print money, Federal default is about as likely as me giving up cheddar stacking.  The more likely outcome would be monetization and crazy-ass inflation.  As for the Laffer Curve questions... I think Mankiw summed it up pretty well.

My guess is that that the short-run answer and the long-run answer are quite different. For example, if you raised the top rate from 35 to, say, 60 percent, you might raise revenue in the short run. Over time, however, you would get lower economic growth, so the additional revenues would fall off and eventually decline below what they would have been at the lower rate.... I will pass on offering a specific number, as it would require more time and thought than I can offer just now, but I will opine that I think the long-run answer is actually more important for policy purposes than the short-run answer.

Another question I find interesting is: should we be trying to hit the revenue-maximizing point at all?  Is that really the point - are we trying to maximize revenue to the Federal government for the economy as a whole?

[Chuck to Chuck]

Seriously folks, as long as the Fed can still print money, Federal default is about as likely as me giving up cheddar stacking.  The more likely outcome would be monetization and crazy-ass inflation.  As for the Laffer Curve questions... I think Mankiw summed it up pretty well.

My guess is that that the short-run answer and the long-run answer are quite different. For example, if you raised the top rate from 35 to, say, 60 percent, you might raise revenue in the short run. Over time, however, you would get lower economic growth, so the additional revenues would fall off and eventually decline below what they would have been at the lower rate.... I will pass on offering a specific number, as it would require more time and thought than I can offer just now, but I will opine that I think the long-run answer is actually more important for policy purposes than the short-run answer.

Another question I find interesting is: should we be trying to hit the revenue-maximizing point at all?  Is that really the point - are we trying to maximize revenue to the Federal government for the economy as a whole?

No.  The point is: Cutting taxes will not raise revenue and anyone who says so is either delusional, just trying to get elected by offering free money, or both.

[Brownie]

Seriously folks, as long as the Fed can still print money, Federal default is about as likely as me giving up cheddar stacking.  The more likely outcome would be monetization and crazy-ass inflation.  As for the Laffer Curve questions... I think Mankiw summed it up pretty well.

My guess is that that the short-run answer and the long-run answer are quite different. For example, if you raised the top rate from 35 to, say, 60 percent, you might raise revenue in the short run. Over time, however, you would get lower economic growth, so the additional revenues would fall off and eventually decline below what they would have been at the lower rate.... I will pass on offering a specific number, as it would require more time and thought than I can offer just now, but I will opine that I think the long-run answer is actually more important for policy purposes than the short-run answer.

Another question I find interesting is: should we be trying to hit the revenue-maximizing point at all?  Is that really the point - are we trying to maximize revenue to the Federal government for the economy as a whole?

The controversial Arthur Laffer himself:

It's not tax cuts that pay for themselves. Tax cuts on the poor cost you lots of money. Tax cuts on the rich pay for themselves. Rich people can afford lawyers, accountants, and can defer income.

So, if Laffer and Fork agree that raising taxes on the bottom 80 percent would increase revenue and we all could agree that this would not be a good idea, maybe Morph's point (that maximizing revenue is not necessarily the end-all of tax policy) is the point that needs to be argued.

[J. Walter Weatherman]

Seriously folks, as long as the Fed can still print money, Federal default is about as likely as me giving up cheddar stacking.  The more likely outcome would be monetization and crazy-ass inflation.  As for the Laffer Curve questions... I think Mankiw summed it up pretty well.

My guess is that that the short-run answer and the long-run answer are quite different. For example, if you raised the top rate from 35 to, say, 60 percent, you might raise revenue in the short run. Over time, however, you would get lower economic growth, so the additional revenues would fall off and eventually decline below what they would have been at the lower rate.... I will pass on offering a specific number, as it would require more time and thought than I can offer just now, but I will opine that I think the long-run answer is actually more important for policy purposes than the short-run answer.

Here's more Mankiw, from the Martin Wolf post I linked above...

http://blogs.ft.com/martin-wolf-exchange/2010/07/25/the-political-genius-of-supply-side-economics/

Indeed, Greg Mankiw, no less, chairman of the Council of Economic Advisers under George W. Bush, has responded to the view that broad-based tax cuts would pay for themselves, as follows: "I did not find such a claim credible, based on the available evidence. I never have, and I still don't." Indeed, he has referred to those who believe this as "charlatans and cranks". Those are his words, not mine, though I agree. They apply, in force, to contemporary Republicans, alas,

From the post Wolf links to:

I used the phrase "charlatans and cranks" in the first edition of my principles textbook to describe some of the economic advisers to Ronald Reagan, who told him that broad-based income tax cuts would have such large supply-side effects that the tax cuts would raise tax revenue. I did not find such a claim credible, based on the available evidence. I never have, and I still don't.

The book made clear that the critique applied to a particular reason to favor the tax cuts, not necessarily to the policy of cutting taxes. There are many reasons a person might favor tax cuts besides the belief that tax cuts are self-financing. I hope it is not too pedantic to point out that there is a big difference between rejecting a policy and rejecting one argument made by some proponents of the policy.

...

My other work has remained consistent with this view. In a paper on dynamic scoring, written while I was working at the White House, Matthew Weinzierl and I estimated that a broad-based income tax cut (applying to both capital and labor income) would recoup only about a quarter of the lost revenue through supply-side growth effects. For a cut in capital income taxes, the feedback is larger--about 50 percent--but still well under 100 percent. A chapter on dynamic scoring in the 2004 Economic Report of the President says about the the same thing.

[Brownie]

Seriously folks, as long as the Fed can still print money, Federal default is about as likely as me giving up cheddar stacking.  The more likely outcome would be monetization and crazy-ass inflation.  As for the Laffer Curve questions... I think Mankiw summed it up pretty well.

My guess is that that the short-run answer and the long-run answer are quite different. For example, if you raised the top rate from 35 to, say, 60 percent, you might raise revenue in the short run. Over time, however, you would get lower economic growth, so the additional revenues would fall off and eventually decline below what they would have been at the lower rate.... I will pass on offering a specific number, as it would require more time and thought than I can offer just now, but I will opine that I think the long-run answer is actually more important for policy purposes than the short-run answer.

Another question I find interesting is: should we be trying to hit the revenue-maximizing point at all?  Is that really the point - are we trying to maximize revenue to the Federal government for the economy as a whole?

No.  The point is: Cutting taxes will not raise revenue and anyone who says so is either delusional, just trying to get elected by offering free money, or both.

But Chuck, the question is whether raising taxes will increase revenue? And how high should taxes be raised? And even more abstractly, at what level are taxes not confiscatory?

The current tax structure has been in place for nearly a decade. By letting the tax cuts expire, that is a de facto tax increase. Are we comfortable with this?

[R-V]

An interesting collection of thoughts on the Laffer curve:

http://voices.washingtonpost.com/ezra-klein/2010/08/where_does_the_laffer_curve_be.html

Very interesting, but it would have been enlightening to see if any Dem politicians would volunteer to answer the question as well.

I had the same thought. Why not ask Mike Gravel? He's not busy.

[J. Walter Weatherman]

An interesting collection of thoughts on the Laffer curve:

http://voices.washingtonpost.com/ezra-klein/2010/08/where_does_the_laffer_curve_be.html

Very interesting, but it would have been enlightening to see if any Dem politicians would volunteer to answer the question as well.

I had the same thought. Why not ask Mike Gravel? He's not busy.

Let's ask him.

What's your take, Mr. Gravel?

[Gilgamesh]

Seriously folks, as long as the Fed can still print money, Federal default is about as likely as me giving up cheddar stacking.  The more likely outcome would be monetization and crazy-ass inflation.  As for the Laffer Curve questions... I think Mankiw summed it up pretty well.

My guess is that that the short-run answer and the long-run answer are quite different. For example, if you raised the top rate from 35 to, say, 60 percent, you might raise revenue in the short run. Over time, however, you would get lower economic growth, so the additional revenues would fall off and eventually decline below what they would have been at the lower rate.... I will pass on offering a specific number, as it would require more time and thought than I can offer just now, but I will opine that I think the long-run answer is actually more important for policy purposes than the short-run answer.

Another question I find interesting is: should we be trying to hit the revenue-maximizing point at all?  Is that really the point - are we trying to maximize revenue to the Federal government for the economy as a whole?

No.  The point is: Cutting taxes will not raise revenue and anyone who says so is either delusional, just trying to get elected by offering free money, or both.

But Chuck, the question is whether raising taxes will increase revenue? And how high should taxes be raised? And even more abstractly, at what level are taxes not confiscatory?

The current tax structure has been in place for nearly a decade. By letting the tax cuts expire, that is a de facto tax increase. Are we comfortable with this?

It's not a de facto tax increase.  It's a reflection that when these tax cuts were passed into law, the Senate parliamentarian knew that they couldn't pay for themselves and that a sunset provision, per the Byrd rule, should be applied.

Again, I think it's disingenuous to suggest that the opponents of these tax cuts are seeking to maximize revenue to the federal government.  If anything, the government's finances should be in balance and that any proposal should be paid for before enactment.

And to say that a 39 percent marginal tax rate at the high end of the spectrum is confiscatory is absurd.  Tax rates, for decades prior to that level, were in excess of 50 percent.  Now, I'm not arguing that we should return to those levels, but merely responding to your contention.

[Chuck to Chuck]

The current tax structure has been in place for nearly a decade. By letting the tax cuts expire, that is a de facto tax increase. Are we comfortable with this?

I blame the congress and president that didn't have the balls for permanent tax policy when they voted it in.  Am I in favor of current tax policy?  No.  That's what I voted against the guys that created the policy.

[Quality Start Machine]

Seriously folks, as long as the Fed can still print money, Federal default is about as likely as me giving up cheddar stacking.  The more likely outcome would be monetization and crazy-ass inflation.  As for the Laffer Curve questions... I think Mankiw summed it up pretty well.

My guess is that that the short-run answer and the long-run answer are quite different. For example, if you raised the top rate from 35 to, say, 60 percent, you might raise revenue in the short run. Over time, however, you would get lower economic growth, so the additional revenues would fall off and eventually decline below what they would have been at the lower rate.... I will pass on offering a specific number, as it would require more time and thought than I can offer just now, but I will opine that I think the long-run answer is actually more important for policy purposes than the short-run answer.

Another question I find interesting is: should we be trying to hit the revenue-maximizing point at all?  Is that really the point - are we trying to maximize revenue to the Federal government for the economy as a whole?

The controversial Arthur Laffer himself:

It's not tax cuts that pay for themselves. Tax cuts on the poor cost you lots of money. Tax cuts on the rich pay for themselves. Rich people can afford lawyers, accountants, and can defer income.

So, if Laffer and Fork agree that raising taxes on the bottom 80 percent would increase revenue and we all could agree that this would not be a good idea, maybe Morph's point (that maximizing revenue is not necessarily the end-all of tax policy) is the point that needs to be argued.

Huh?

I'll assume a typo.

The Bush cuts need to expire. The idea of keeping them in while waging two wars was asinine at the time, insane now.

[Brownie]

Seriously folks, as long as the Fed can still print money, Federal default is about as likely as me giving up cheddar stacking.  The more likely outcome would be monetization and crazy-ass inflation.  As for the Laffer Curve questions... I think Mankiw summed it up pretty well.

My guess is that that the short-run answer and the long-run answer are quite different. For example, if you raised the top rate from 35 to, say, 60 percent, you might raise revenue in the short run. Over time, however, you would get lower economic growth, so the additional revenues would fall off and eventually decline below what they would have been at the lower rate.... I will pass on offering a specific number, as it would require more time and thought than I can offer just now, but I will opine that I think the long-run answer is actually more important for policy purposes than the short-run answer.

Another question I find interesting is: should we be trying to hit the revenue-maximizing point at all?  Is that really the point - are we trying to maximize revenue to the Federal government for the economy as a whole?

No.  The point is: Cutting taxes will not raise revenue and anyone who says so is either delusional, just trying to get elected by offering free money, or both.

But Chuck, the question is whether raising taxes will increase revenue? And how high should taxes be raised? And even more abstractly, at what level are taxes not confiscatory?

The current tax structure has been in place for nearly a decade. By letting the tax cuts expire, that is a de facto tax increase. Are we comfortable with this?

It's not a de facto tax increase.  It's a reflection that when these tax cuts were passed into law, the Senate parliamentarian knew that they couldn't pay for themselves and that a sunset provision, per the Byrd rule, should be applied.

Again, I think it's disingenuous to suggest that the opponents of these tax cuts are seeking to maximize revenue to the federal government.  If anything, the government's finances should be in balance and that any proposal should be paid for before enactment.

And to say that a 39 percent marginal tax rate at the high end of the spectrum is confiscatory is absurd.  Tax rates, for decades prior to that level, were in excess of 50 percent.  Now, I'm not arguing that we should return to those levels, but merely responding to your contention.

But it is. The taxes you're paying today < the taxes you're paying tomorrow.

[Chuck to Chuck]

But it is. The taxes you're paying today < the taxes you're paying tomorrow.

Next time, vote for Gore.