Andrew Samwick, late of President Bush's Council of Economic Advisors, asks the right questions about President Bush's speech last night:
Where to begin?
I'll start by noting for the benefit of the folks working on the President's speeches that the sentence, "It's going to cost whatever it costs," gives the audience no confidence in the next statement, "We're going to be wise about the money we spend."
I was a fan of cutting other government spending before Katrina, and I am a fan of it now. I hope that the President is right that "we can handle it." The President will have to sort that out with the Republican leadership on the Hill, who seem to believe (quite counterfactually) that there is no more fat to trim. Leave that aside for the moment, and let's ask the following question:
If we can handle it now, why weren't we handling it before?
He adds:
If we have decided that rebuilding New Orleans to the tune of $200 billion is a national objective (and I haven't seen nearly enough debate on that subject in the Capitol), then we ought to fund it by reducing our consumption of everything else. The simplest way to do that would be to impose an income tax surcharge that funds the rebuilding over a given period.
***
Taxes may be bad, but deficits are surely worse. What's the explanation for why future generations should have to pay for this one, too?
One can raise legitimate questions in principle about whether this is the type of activity for which it is appropriate to engage in deficit spending. I think a case can be made that this may be, because of the "lumpiness" and unexpected nature of the liability, that may be appropriate to smooth over a period of time (like fighting a war or investing in capital projects).
But a larger point implied here seems like a sound one to me--one problem with running chronic deficits during ordinary times or on ordinary pork-barrel spending is that it makes it more difficult to justify additional deficits in times where deficit spending is appropriate (arguably such as fighting a war or rebuilding one of the nation's most important cities and ports). To paraphrase Spinal Tap, if you are already on "10" for deficit spending what do you do when you need that extra "push over the cliff"?
In related news, it is reported that Senator Coburn has already proposed paying for at least some of it through cuts from the highway bill:
Mr. Coburn said it was a "ludicrous claim" House Majority Leader Tom DeLay made earlier this week that he hasn't seen ways to offset the spending with cuts elsewhere.
In his weekly briefing, Mr. DeLay said it was appropriate to borrow money to pay for hurricane relief, and that the billions of dollars in transportation earmarks should be maintained.
"My answer to those that want to offset the spending is sure, bring me the offsets, I will be glad to do it, but no one has been able to come up with any yet," he said.
Mr. Coburn said he would "be happy to have that debate with Mr. DeLay."
He said he has identified $74 billion in cutting room and that one place to start is the $315 million the highway bill spent for a bridge in Alaska that will reach a community of several dozen people, "who have a wonderful ferry system right now."
Another problem with the theory of using deficit spending to pay for Katrina recovery is that we're already running a deficit much larger than the rebuilding price tag. Therefore, if we make cuts in spending that match the rebuilding, we're still deficit spending more than the recovery costs. So what, exactly, is the connection between this new spending and the cuts? We're deficit spending either way.
Fungibility of money and all that.
Running this kind of short-term debt makes the US more vulnerable to any collapse in the dollar or increase in interest rates -- for truly long term projects we should be using long term debt.
Here's a start: stop all tax cuts that are being phased in.
Congress is making me ill. Didn't the Republicans try to pass a balanced budget ammendment just 10 years ago? What the hell happened? I can see a bit of deficit spending in a recession, but this is sick.
I'm still waiting for a Dem who claims to be concerned about the deficit to advocate specific spending cuts (outside the military) instead of arguing that their boondoggle deserves more money. If deficits really are a problem, surely there's some spending that we could do without, right?
No, you don't get points for going after pork in a Repub district unless you're also going after pork in Dem districts. (Some of the monuments to "sheets" Byrd would be a nice start.)
Why should we advocate one position we do not support simply to make another position that we don't support work?
The two aren't necessarially exclusive.
In other words, you don't care about the deficit - you just want to raise tax rates.
Didn't suggest that they were, but let's be clear - are you admitting that the federal govt is taking in more dollars than it was? (That admission doesn't stop you from arguing that increasing tax rates would increase tax receipts even more.) If so, the increase in the taxable economy had a greater effect than the decrease in tax rates.
Perhaps I misunderstood. Maybe you want increased tax rates even if that results in less taxes collected.
I don't know why we even bother to have this argument every time some big appropriation bill comes around (highway bill anyone?). They won't cut spending; they don't care about having a deficit. We can have a big knock-down drag out about cutting spending and taxes (conservative/libertarian) versus increasing taxes and spending (liberal/statist) or increasing taxes and cutting spending or even what is most likely to happen cutting taxes and increasing spending. All of it doesn't matter. It WILL NOT CHANGE. People just do not care.
[for the record, I think cutting taxes and spending makes the most sense, but I recognize it will never, ever happen.]
We were told decreasing tax rates would increase revenues, yet that hasn't happened, and we are awash in red ink. You just want to be able to blame the failure of Republican policies on us. We aren't the ones cutting taxes and increasing spending at a phenominal rate.
And yes, the tax rates need to go back up, particularly those cuts that benefit the wealthiest, to pay the debt Republican policies have created. Or do you prefer to simply pass that along to the future?
Why is it so hard to grasp the concept that raising taxes leads to unemployment, poverty and more government spending(republican, democrat, independent and progressive Stalinist like Durbin) on worthless entitlement pork.
Tax receipts have, in fact, increased.
From CBO: "Receipts were almost 14 percent higher through the first 11 months of fiscal year 2005 than they were during the same period a year ago. Individual income tax receipts rose by $110 billion, or 15.3 percent, and receipts from social insurance taxes increased by $54 billion, or 8.1 percent. Receipts from corporate income taxes grew by $61 billion, or 42 percent."
... "The growth of those receipts also reflects tax-law changes enacted in 2002 and 2003."
http://www.cbo.gov/showdoc.cfm?index=6632&sequence=0
But what did Edward Bennett Williams say about the coach of his Redskins team? "I gave George Allen an unlimited budget, and he exceeded it."
There is no budget, regardless how big, that can't be overspent.
Says the CBO at the tail end of 2003:
"Tax revenues have now fallen for three successive years, a phenomenon not experienced since the Great Depression. Since they peaked in 2000, taxes have fallen by $242 billion, or 12 percent."
However, given your proposals, it's unreasonable to suggest that you'd increase spending less.
Like I said, let's see your CUT SPENDING proposals, not just "they're spending lots of money". If your pork proposals don't include states with Dem senators, you're not serious.
You are creating a real strawman for pork proposals. If you believe that a Republican majority in both House and Senate will allow only Republican earmarks to be cut you are fooling yourself. I would be more than willing to cut all of the pork, but you can't deal with the reality of a Republican controlled legislature that by common sense would make sure that they benifit more than Democrats in terms of earmarks. This isn't to defend Democrats who if the shoe was on the other foot would be profiting from their control, but the fact is that the Republicans control the legislature and have power CURRENTLY over the process.
As to spending cuts, we have seen some cutting of federal programs but most of that has only come from programs that affect the people hurt the most by Katrina. You have seen massive increases in the amount of corporate welfare and farm subsidiaries that benifit Republican interests. I personally think that those would be two places to start, and from reading a few lists by conservative authors, they even admit that corporate welfare has gotten exceedingly out of control.
(See Coburn's "death for abortionists" comment.)
You're inventing strawmen. I never said that Repubs would only allow Repub earmarks to be cut.
You're claiming that Dems are more serious than Repubs about fiscal issues. I'm testing that claim by asking how they're different and in which direction.
For example, if we assume (as you do) that Repubs are going to protect Repub pork, one way for Dems to be different and better is to be willing to cut both Dem and Repub pork. Your resistance argues that Dems are no different, which means that they're not better.
Farm subsidies? Feel free to point to a Dem senator from a farm state who is against those that benefit agri biz in his state. Feel free to point to a Dem senate candidate in a farm state who campaigns that way. Until you do, Dems are just like Repubs on this issue. Again, unless they're different, they can't be better.
Raising taxes will only encourage more spending.
So the proposition being expound here is: more spending will stop more spending. And less taxes will create more revenue.
And we're concerned about the rational bases for judicial decisions?