Feeds:
Posts
Comments

Archive for November 29th, 2012

Unless the law is changed, big tax increases will be imposed on all taxpayers next year. This is the so-called fiscal cliff, and President Obama is using this unpalatable situation as an excuse to push for his class-warfare tax policy.

I talk about the political and economic ramification of this fight with Glenn Reynolds, author of the famous Instapundit blog.

As is my habit, there are a couple of points that deserve some elaboration.

  • Budget deals don’t work – I wrote about this issue back in 2010, but I think the most persuasive piece of evidence came from the New York Times, which inadvertently admitted that the only successful budget deal was the 1997 pact that cut taxes rather than raising them.
  • We should only raise taxes on those who say they want higher taxes – Since the Hollywood left (with some noble exceptions such as Jon Lovitz and Rob Schneider) is in favor of bigger government and higher tax rates, Glenn has suggested a restoration of the federal tax on movie receipts. That hasn’t worked very well in Spain, but I like the idea. In the same spirit, I’ve proposed a tax on CEO salaries since the big business community is trying to curry favor with the political class by endorsing tax hikes.
  • Republicans won this fight in 2010 when they had less power – The same fiscal cliff fight took place two years ago, before the Republicans controlled the House and when they had fewer seats in the House. Yet GOPers prevailed because Senate Republicans stuck together. It would be a sign on remarkable incompetence if they lost this year’s fight since they now have much more power.
  • Long-term incumbents get too comfortable with big government – I joked about politicians who come to Washington thinking it’s a cesspool, but eventually think it’s a hot tub, but that’s actually a very serious point. As I explain in this post, too many GOPers get corrupted by big government.
  • It’s simple to balance the budget with modest spending restraint – According to Congressional Budget Office data, we can make the Bush tax cuts permanent and balance the budget in just 10 years if lawmakers simply exercise some modest fiscal restraint and limit spending so it grows by an average of 2.5 percent yearly.
  • Most important, I sneak in an endorsement of my beloved Bulldawgs at the end of the interview – I’ve been very restrained and have not used this blog as a platform to celebrate Georgia being two wins away from the national title. Actually, the SEC Championship Game this weekend is the de facto national title game, though whichever team that prevails will have to take the pro forma step of mopping the floor with Notre Dame in January. This cartoon shows the state of play.

P.S. I appreciated Glenn’s reference to Lucy, Charlie Brown, and the football. To see my re-creation of that Peanuts classic, look at the cartoon in this post.

Read Full Post »

It’s not something I should admit since I work at a think tank, which is based on the idea that substantive analysis can impact public policy, but I sometimes think humor and anecdotes are very effective in helping people understand issues.

On the topic of unemployment insurance, for instance, I wouldn’t be surprised to learn that this Michael Ramirez cartoon and this Wizard-of-Id parody have been effective in helping folks grasp the unintended consequences of excessive government benefits.

And I bet this story from Michigan and this example from Ohio will ring a bell with many people because they have some relative or buddy who also has used government benefits as an excuse to stay unemployed.

So when I went on Fox to discuss the issue, I mentioned that I had a couple of friends who goofed off instead of looking for work because they got unemployment benefits.

But since I am a think-tank policy wonk, I also explain that even left-wing economists such as Paul Krugman and Larry Summers agree that subsidizing unemployment means more joblessness. The academic research on this topic is virtually unanimous.

Keep in mind, by the way, that the negative impact of unemployment benefits is just the tip of the welfare-state iceberg. Professor Casey Mulligan has some very good work about the negative impact of redistribution programs, and this chart shows how dependency programs create very high implicit marginal tax rates for the less fortunate.

P.S. My opponent got screwed in terms of airtime, something that I can sympathize with since I’m often the one getting the short end of the stick, even when appearing on overseas television. This previous debate on unemployment insurance, by contrast, was very balanced.

P.P.S. If you want an example of unintentional humor, you can watch Nancy Pelosi asserting that paying people not to work is an effective means of creating jobs.

Read Full Post »

Follow

Get every new post delivered to your Inbox.

Join 2,282 other followers

%d bloggers like this: