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Posts Tagged ‘Bruce Bartlett’

I testified earlier today before the Joint Economic Committee about budget process reform. As part of the Q&A session after the testimony, one of the Democratic members made a big deal about the fact that federal tax revenues today are “only” consuming about 15 percent of GDP. And since the long-run average is about 18 percent of GDP, we are all supposed to conclude that a substantial tax hike is needed as part of what President Obama calls a “balanced approach” to red ink.

But it’s not just statist politicians making this argument. After making fun of his assertion that Obama is a conservative, I was hoping to ignore Bruce Bartlett for a while, but I noticed that he has a piece on the New York Times website also implying that America’s fiscal problems are the result of federal tax revenues dropping far below the long-run average of 18 percent of GDP.

In a previous post, I noted that federal taxes as a share of gross domestic product were at their lowest level in generations. The Congressional Budget Office expects revenue to be just 14.8 percent of G.D.P. this year; the last year it was lower was 1950, when revenue amounted to 14.4 percent of G.D.P. But revenue has been below 15 percent of G.D.P. since 2009, and the last time we had three years in a row when revenue as a share of G.D.P. was that low was 1941 to 1943. Revenue has averaged 18 percent of G.D.P. since 1970 and a little more than that in the postwar era.

To be fair, both the politician at the JEC hearing and Bruce are correct in claiming that tax revenues this year are considerably below the historical average.

But they are both being a bit deceptive, either deliberately or accidentally, in that they fail to show the CBO forecast for the rest of the decade. But I understand why they cherry-picked data. The chart below shows, rather remarkably, that tax revenues (the fuschia line) are expected to be back at the long-run average (the blue line) in just three years. And that’s even if the Bush tax cuts are made permanent and the alternative minimum tax is frozen.

It’s also worth noting the black line, which shows how the tax burden will climb if the Bush tax cuts expire (and also if millions of new taxpayers are swept into the AMT). In that “current law” scenario, the tax burden jumps considerably above the long-run average in just two years. Keep in mind, though, that government forecasters assume that higher tax rates have no adverse impact on economic performance, so it’s quite likely that neither tax revenues nor GDP would match the forecast.

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Welcome Instapundit readers. I also have written about whether Obama is a socialist, which is a good companion to this post.

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That seems like a joke question, but it’s an apparently serious belief of Bruce Bartlett, a former supply-sider and Bush Administration official who has flipped sides and joined the left.

I’ve known Bruce for decades and he’s a fun guy to hang out with, but he’s gone hard left in recent years, pimping for a VAT and urging GOPers to sell out on health care.

But now he is officially crazy, because he wants us to believe that Obama is a conservative, or at least a moderate conservative.

Bruce cites five reasons in his article for this bizarre hypothesis.

1. “His stimulus bill was half the size that his advisers thought necessary”

This is a rather strange assertion. Obama flushed $800 billion down the federal toilet on a fake stimulus, but we’re supposed to believe he’s a “moderate conservative” because he didn’t waste even more of our money.

2. “He continued Bush’s war and national security policies without change and even retained Bush’s defense secretary”

Okay, maybe this is true. I’m not competent to make any sweeping judgments on foreign policy.

3. “He put forward a health plan almost identical to those that had been supported by Republicans such as Mitt Romney in the recent past, pointedly rejecting the single-payer option favored by liberals”

This is an indictment of Romney and other squishy Republicans, not a sign of Obama’s moderate conservatism. Obama has radically expanded the role of government in a sector that already has been screwed up by government intervention. If this is conservative, I’m a communist.

4. “He caved to conservative demands that the Bush tax cuts be extended without getting any quid pro quo whatsoever”

Bruce is simply wrong. Obama wanted all of the “middle class” tax cuts extended, and he had to strike a deal with GOPers about “tax cuts for the rich.” To be fair, Obama’s position was at least somewhat moderate at the time, but he’s since come out of the pro-tax closet as part of the budget negotiations.

5. “And in the past few weeks he has supported deficit reductions that go far beyond those offered by Republicans.”

Bruce must be smoking crack. If Obama really wanted maximum deficit reduction, he could have supported the Ryan budget or the Republican Study Committee plan, both of which contained more deficit reduction than anything Obama has ever supported. But Bruce is making it seem as if the conservative position is maximum deficit reduction when the real goal is restraining the size of government. By Bruce’s absurd logic, doubling all taxes would be the conservative choice since “deficit reduction” theoretically is maximized.

I actually feel guilty about this blog post. I suspect Bruce doesn’t really believe what he writes and is just seeking attention. But I couldn’t resist.

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Writing for Forbes, Bruce Bartlett puts forth an interesting hypothesis that healthcare legislation could have been made better (hopefully he meant to write “less destructive”) if the GOP had been willing to compromise with Democrats:

Democrats desperately wanted a bipartisan bill and would have given a lot to get a few Republicans on board. This undoubtedly would have led to enactment of a better health bill than the one we are likely to get. But Republicans never put forward an alternative health proposal. Instead, they took the position that our current health system is perfect just as it is.

Bruce makes several compelling points in the article, especially when he notes that it will be virtually impossible to repeal a bad bill after 2010 or 2012, but there are good reasons to disagree with his analysis. First, he is wrong in stating that Republicans were united against any compromise. Several GOP senators spent months trying to negotiate something less objectionable, but those discussions were futile. Also, I’m not sure it’s correct to assert Republicans took a the-current-system-is-perfect position. They may not have offered a full alternative (they did have a few good reforms such as allowing the purchase of insurance across state lines), but their main message was that the Democrats were going to make the current system worse. Strikes me as a perfectly reasonable position, one that I imagine Bruce shares. But let’s further explore Bruce’s core hypothesis: Would compromise have generated a better bill? It’s possible, to be sure, but there are also several reasons why that approach may have backfired:

1. It’s not clear a policy of compromise would have produced a less-objectionable bill. Would Senate Democrats have made more concessions to Grassley and Snowe rather than Lieberman and Nelson (much less whether the “concessions” would have been good policy)? And even if Reid made some significant (and positive) concessions, is there any reason to think those reforms would have survived a conference committee with the House? Yet the compromising Republicans probably would have felt invested in the process and obliged to support the final bill – even if the conference committee produced something worse than the original Senate Democrat proposal.

2. A take-no-prisoners strategy may be high risk, but it can produce high rewards. In the early 1990s, the Republicans took a no-compromise position when fighting Bill Clinton’s health plan (aka, Hillarycare), and that strategy was ultimately successful. We still don’t know the final result of this battle (much less how events would have transpired with a different strategy), but if the long-term goal is to minimize government expansion, a no-compromise approach is perfectly reasonable.

3. A principled opposition to government-run healthcare will help win other fights. The Democrats ultimately may win the healthcare battle, but the leadership will have been forced to spend lots of time and energy, and also use up lots of political chits. Does anyone now think they can pass a “climate change” bill? The answer, almost certainly, is no.

4. A principled approach can be good politics, which can eventually lead to good policy. Democrats wanted a few Republicans on board in part to help give them political cover. The aura of bipartisanship would have given Democrats a good talking point for the 2010 elections (“my opponent is being unreasonable since even X Republicans also supported the legislation”). That fig leaf does not exist now, which makes it more likely that Democrats will pay a heavy price during the mid-term elections. It is impossible to know whether 2010 will be a 1994-style rout, or whether the newly-elected Republicans will quickly morph into Bush-style big-government conservatives (who often do more damage to liberty than Democrats), but at least there is a reasonable likelihood of more pro-liberty lawmakers.

When all is said and done, Bruce’s strategy is not necessarily wrong, but it does guarantee defeat. Government gets bigger and freedom diminishes. For reasons of principle and practicality, Republicans should do the right thing.

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