http://economix.blogs.nytimes.com/2012/12/05/poverty-should-have-risen/
A provocative piece, but not the right way to approach the safety net in my opinion. By Mulligan's logic, there is no floor for how low someone's living standard can go--they will always be bearing a portion of the loss. I think the trick for minimizing disincentives is not only getting the floor right, but also creating an economic pathway so that the choice at the margin isn't between living at the poverty line and living just above it, but rather, living at the poverty line and advancing substantially beyond it.
Friday, December 7, 2012
Tuesday, November 6, 2012
Romney Tax Plan Musings
From http://www.bloomberg.com/news/2012-11-05/why-voters-should-fear-romney-s-tax-plan.html
"True, any across-the-board tax cut would give more money to the rich in dollar terms, because they pay most of the taxes in the first place. But Romney’s plan goes further. It would reduce the amount the richest Americans pay relative to their income more than for anyone else. Specifically, the richest fifth would go from paying 26 percent of their income in taxes to 22 percent. The middle fifth would go from 16 percent to 15 percent. The tax burden on the poor would rise."
I wonder if there's any kind of credible evidence as to whether the rise in job creation made by lowering the burden on those rich job creators by 15% would offset the disincentive to work created by raising taxes on the working poor...or maybe we don't really care if the poor would work less because wages would rise for the rest of us as labor demand catches up with/outstrips labor supply.
Also unclear if the tax burden rising on the poor takes into account benefits. That is, some analysts treat the benefits phase-out as an additional "tax" on the poor. If you look at it that way, the tax burden on the poor would increase even more dramatically, as the EITC and other benefits are scaled back. On the other hand, there wouldn't be as much of a penalty to working created by losing one's benefits, because there would be fewer benefits to lose under a Romney budgetary regime.
"True, any across-the-board tax cut would give more money to the rich in dollar terms, because they pay most of the taxes in the first place. But Romney’s plan goes further. It would reduce the amount the richest Americans pay relative to their income more than for anyone else. Specifically, the richest fifth would go from paying 26 percent of their income in taxes to 22 percent. The middle fifth would go from 16 percent to 15 percent. The tax burden on the poor would rise."
I wonder if there's any kind of credible evidence as to whether the rise in job creation made by lowering the burden on those rich job creators by 15% would offset the disincentive to work created by raising taxes on the working poor...or maybe we don't really care if the poor would work less because wages would rise for the rest of us as labor demand catches up with/outstrips labor supply.
Also unclear if the tax burden rising on the poor takes into account benefits. That is, some analysts treat the benefits phase-out as an additional "tax" on the poor. If you look at it that way, the tax burden on the poor would increase even more dramatically, as the EITC and other benefits are scaled back. On the other hand, there wouldn't be as much of a penalty to working created by losing one's benefits, because there would be fewer benefits to lose under a Romney budgetary regime.
Monday, November 5, 2012
Why I'm Voting For Barack Obama
The Economy
I think Obama has done a better job handling the economy than Romney or a Republican would do. While it has been a disappointingly slow recovery, I believe that when comparing the US to itself historically and to other international fiscal crises, we have met or outperformed expectations. While we can never know the counterfactual, I believe there is better evidence for Keynesian policies than there is for the vague trickle down, confidence-restoring argument Republicans make about conservative economic policy. Just look at Europe's austerity measures.
In addition to being bad for our social fabric, I believe that poverty and inequality take a toll on growth. I trust Democratic policies to be better for the middle class and for economic growth. (Links to a partisan site but a relatively well-researched article--here's a less lefty piece on tax rates and economic growth.)
Furthermore, I think Obama's prioritization of education and Race to the Top is important for our recovery, and I don't trust Romney to protect Title I spending or any spending at the federal level. Further reading: http://www.forbes.com/sites/susanadams/2012/08/29/where-unemployment-is-highest-education-is-a-big-part-of-why/
Deficit Reduction
I also believe that the Romney/Ryan plan for addressing the deficit would hurt the economy and disproportionately burden the poor (not to mention the math is dubious at best). I support some kind of Bowles Simpson agreement for long-term deficit reduction, and especially the part of Bowles Simpson that states that the whole plan presupposes significantly lower unemployment and higher growth than we currently have, and therefore unemployment and growth should be addressed before austerity measures. While some might say I've drunk the Paul Krugman Kool-Aid, I consider myself more of a technocrat than a total lefty on budget issues.
I am encouraged by the recent action of the Fed (which was endorsed even by the more hawkish members of the board) to tie interest rates to other indicators of economic health, specifically inflation and unemployment. I support a dual mandate of the Fed, to control inflation while at the same time using its powers to promote full employment. I would like to see a deficit reduction package along these lines, addressing unemployment and growth targets first, then tackling our long-run debt problem. Further reading: http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/09/20/low-rates-until-unemployment-hits-5-5-a-fed-official-gives-his-plan-for-liftoff/
I think the Republicans beating the drum against spending on things like NPR is fear-mongering and distracting from the real problem at hand--addressing health care costs and to a lesser extent social security entitlements. Further reading: http://www.cbpp.org/cms/index.cfm?fa=view&id=3772&wpisrc=nl_wonk
Nevertheless, here's something from the other side, if you must: http://scholar.harvard.edu/mankiw/files/optimal_taxation_in_theory.pdf I remember a while back reading something I think from AEI about the corporate tax rate, and I keep going back and forth on that. I'm intrigued by how the Europeans do it--that is, our taxation scheme is actually more progressive than theirs (due to the regressive VAT), but they make up for it and then some on the spending side, for an overall more progressive redistribution. Then again, this: http://www.nytimes.com/2012/11/02/business/questions-raised-on-withdrawal-of-congressional-research-services-report-on-tax-rates.html?src=me&ref=general&_r=0
Health Care
No one thinks the ACA is perfect. It has some mixed evidence--expanded (private) coverage, but debatable effects on premiums. But I believe health care is the biggest threat to the US's long-run fiscal solvency, and I believe the ACA is a credible start to addressing that. This "robbing Medicare" argument is BS; I'm not an expert, but health policy wonks of all stripes support Medicare Advantage reform as a cost saving mechanism. Unlike Hillarycare, Obamacare got insurers, hospitals, doctors, seniors, and the chamber of commerce together in an unholy marriage, which is no small feat. The Gipper himself signed health care reform (Medicare Catastrophic, 1988) into law, but it was later repealed as seniors revolted against premiums that were actually tied to their ability to pay.
Republicans argue that we need reform, but not this reform, but what Romney is offering a) will probably not work; b) be inhumane; c) comes with very high stakes (you can weigh the pros and cons), and d) is highly unlikely to get the support needed to pass--as is always the case with healthcare reform.
The Environment
I mean, do I really even need to go there? I think the government has been and always will be in the business of picking winners and losers, and I'd rather they pick a Solyndra and a failed battery supply chain than do nothing to address the market failure that is our climate problem. If we can't price carbon appropriately, than supporting the nascent renewables industry is the next best thing, as they face barriers to entry like you'd expect in an energy market. That's not to say there aren't trade-offs, for the economy in the short term and the environment in the long run (fracking, anyone? I actually will take the lower carbon emissions over a tee-totaling attitude towards natgas extraction--I just trust the Dems to regulate it better.)
Social Issues
I mean, I really don't need to go here. I believe in a woman's right to choose, and even though a lot of this policy will be carried out at the state level, 1) court appointments and 2) srsly cnat vote for these ass jackets zomg legitimate rape what.
Foreign Policy
Yeah, he made some missteps on Israel early on, but I"ll take Hillary over some warmongering John Bolton any day.
But Don't Listen to Me...
Read the WaPo endorsement.
Maybe if You Were Voting for This Kind of Republican...
http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/09/21/where-are-the-pro-market-republicans/
http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/09/21/the-13-most-interesting-congressional-campaign-proposals/
http://tpmdc.talkingpointsmemo.com/2012/09/romney-47-percent-rankles-conservative-policy-wonks.php
But You're Not.
http://www.bloomberg.com/news/2012-10-25/moderate-romney-wouldn-t-make-it-past-inauguration-day.html
http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/10/04/which-romney-will-voters-get/
I think Obama has done a better job handling the economy than Romney or a Republican would do. While it has been a disappointingly slow recovery, I believe that when comparing the US to itself historically and to other international fiscal crises, we have met or outperformed expectations. While we can never know the counterfactual, I believe there is better evidence for Keynesian policies than there is for the vague trickle down, confidence-restoring argument Republicans make about conservative economic policy. Just look at Europe's austerity measures.
In addition to being bad for our social fabric, I believe that poverty and inequality take a toll on growth. I trust Democratic policies to be better for the middle class and for economic growth. (Links to a partisan site but a relatively well-researched article--here's a less lefty piece on tax rates and economic growth.)
Furthermore, I think Obama's prioritization of education and Race to the Top is important for our recovery, and I don't trust Romney to protect Title I spending or any spending at the federal level. Further reading: http://www.forbes.com/sites/susanadams/2012/08/29/where-unemployment-is-highest-education-is-a-big-part-of-why/
Deficit Reduction
I also believe that the Romney/Ryan plan for addressing the deficit would hurt the economy and disproportionately burden the poor (not to mention the math is dubious at best). I support some kind of Bowles Simpson agreement for long-term deficit reduction, and especially the part of Bowles Simpson that states that the whole plan presupposes significantly lower unemployment and higher growth than we currently have, and therefore unemployment and growth should be addressed before austerity measures. While some might say I've drunk the Paul Krugman Kool-Aid, I consider myself more of a technocrat than a total lefty on budget issues.
I am encouraged by the recent action of the Fed (which was endorsed even by the more hawkish members of the board) to tie interest rates to other indicators of economic health, specifically inflation and unemployment. I support a dual mandate of the Fed, to control inflation while at the same time using its powers to promote full employment. I would like to see a deficit reduction package along these lines, addressing unemployment and growth targets first, then tackling our long-run debt problem. Further reading: http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/09/20/low-rates-until-unemployment-hits-5-5-a-fed-official-gives-his-plan-for-liftoff/
I think the Republicans beating the drum against spending on things like NPR is fear-mongering and distracting from the real problem at hand--addressing health care costs and to a lesser extent social security entitlements. Further reading: http://www.cbpp.org/cms/index.cfm?fa=view&id=3772&wpisrc=nl_wonk
Nevertheless, here's something from the other side, if you must: http://scholar.harvard.edu/mankiw/files/optimal_taxation_in_theory.pdf I remember a while back reading something I think from AEI about the corporate tax rate, and I keep going back and forth on that. I'm intrigued by how the Europeans do it--that is, our taxation scheme is actually more progressive than theirs (due to the regressive VAT), but they make up for it and then some on the spending side, for an overall more progressive redistribution. Then again, this: http://www.nytimes.com/2012/11/02/business/questions-raised-on-withdrawal-of-congressional-research-services-report-on-tax-rates.html?src=me&ref=general&_r=0
Health Care
No one thinks the ACA is perfect. It has some mixed evidence--expanded (private) coverage, but debatable effects on premiums. But I believe health care is the biggest threat to the US's long-run fiscal solvency, and I believe the ACA is a credible start to addressing that. This "robbing Medicare" argument is BS; I'm not an expert, but health policy wonks of all stripes support Medicare Advantage reform as a cost saving mechanism. Unlike Hillarycare, Obamacare got insurers, hospitals, doctors, seniors, and the chamber of commerce together in an unholy marriage, which is no small feat. The Gipper himself signed health care reform (Medicare Catastrophic, 1988) into law, but it was later repealed as seniors revolted against premiums that were actually tied to their ability to pay.
Republicans argue that we need reform, but not this reform, but what Romney is offering a) will probably not work; b) be inhumane; c) comes with very high stakes (you can weigh the pros and cons), and d) is highly unlikely to get the support needed to pass--as is always the case with healthcare reform.
The Environment
I mean, do I really even need to go there? I think the government has been and always will be in the business of picking winners and losers, and I'd rather they pick a Solyndra and a failed battery supply chain than do nothing to address the market failure that is our climate problem. If we can't price carbon appropriately, than supporting the nascent renewables industry is the next best thing, as they face barriers to entry like you'd expect in an energy market. That's not to say there aren't trade-offs, for the economy in the short term and the environment in the long run (fracking, anyone? I actually will take the lower carbon emissions over a tee-totaling attitude towards natgas extraction--I just trust the Dems to regulate it better.)
Social Issues
I mean, I really don't need to go here. I believe in a woman's right to choose, and even though a lot of this policy will be carried out at the state level, 1) court appointments and 2) srsly cnat vote for these ass jackets zomg legitimate rape what.
Foreign Policy
Yeah, he made some missteps on Israel early on, but I"ll take Hillary over some warmongering John Bolton any day.
But Don't Listen to Me...
Read the WaPo endorsement.
Maybe if You Were Voting for This Kind of Republican...
http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/09/21/where-are-the-pro-market-republicans/
http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/09/21/the-13-most-interesting-congressional-campaign-proposals/
http://tpmdc.talkingpointsmemo.com/2012/09/romney-47-percent-rankles-conservative-policy-wonks.php
But You're Not.
http://www.bloomberg.com/news/2012-10-25/moderate-romney-wouldn-t-make-it-past-inauguration-day.html
http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/10/04/which-romney-will-voters-get/
Wednesday, October 10, 2012
Casey Mulligan and the Redistribution Recession
Casey Mulligan wrote a book about how the redistribution occasioned by the social safety net is responsible for a plurality of the labor market distortions that have been depressing the economy since the Great Recession. I haven't read it yet, but if it's geared more toward a lay audience than his blog, I'll give it a try.
Meanwhile, here's a post from his blog, in which he writes, "Helping the poor and unemployed is intrinsically valuable, but is not free. It has made labor more expensive and depresses employment." I didn't understand the entirety of the post, but if his conclusion is true, then I think the most pressing problem facing our country is inequality. I'd like to hear Mulligan's take on the policy implications of his research, but if what is required to get our economy back on track is policies that will cause pain to a lot of people in the short run, politically and ethically we need a spirit of shared sacrifice that right now is completely absent. I think there's room to get there without greatly decreasing the productivity of the capitalist class.
Am I begging the question that ripping the bandaid off is a better approach than the slow pace of healing we're on now? Probably yes.
Meanwhile, here's a post from his blog, in which he writes, "Helping the poor and unemployed is intrinsically valuable, but is not free. It has made labor more expensive and depresses employment." I didn't understand the entirety of the post, but if his conclusion is true, then I think the most pressing problem facing our country is inequality. I'd like to hear Mulligan's take on the policy implications of his research, but if what is required to get our economy back on track is policies that will cause pain to a lot of people in the short run, politically and ethically we need a spirit of shared sacrifice that right now is completely absent. I think there's room to get there without greatly decreasing the productivity of the capitalist class.
Am I begging the question that ripping the bandaid off is a better approach than the slow pace of healing we're on now? Probably yes.
Douthat, Again
http://campaignstops.blogs.nytimes.com/2012/10/09/douthat-liberalisms-glass-jaw/?nl=todaysheadlines&emc=edit_th_20121010
"The steadily worsening deficit picture, meanwhile, has been a reminder that an expanding government balance sheet only makes sense if you can persuade taxpayers to pay more to cover it, which Obama’s party hasn’t done. More importantly, given the limit to how much money can be extracted from the wealthy, it only makes sense if you persuade middle class taxpayers to pay more, which Obama’s party hasn’t even tried to do."
To what extent is this a problem with liberalism, versus a problem with our political culture in general? First, "an expanding government balance sheet" hasn't applied to Obama's unrealistic promise to expand the liberal agenda. On healthcare, Obama needed to convince voters that the country could be paying much less for healthcare, not more, in spite of expanded coverage--and then complete the hat trick by crafting and passing legislation that controlled costs rather than exacerbated them. While costs have risen in the short term, the evidence is still out on whether Obamacare can in fact bend the cost curve down the road.
The only flagship liberal project that has significantly grown under Obama, that I can think of, is SNAP. The crux of the expanding government balance sheet comes from decades-old entitlements that, policy-wise, liberals and conservatives alike realize are unsustainable. Where Douthat is right, however, is that liberalism has failed to make a persuasive case for the level of taxation I think is necessary for our modern government. Where I once again differ with him is that this is as much or moreso a factor of both parties being dragged to the right, as it is a factor of some intrinsic failing of liberalism.
"The steadily worsening deficit picture, meanwhile, has been a reminder that an expanding government balance sheet only makes sense if you can persuade taxpayers to pay more to cover it, which Obama’s party hasn’t done. More importantly, given the limit to how much money can be extracted from the wealthy, it only makes sense if you persuade middle class taxpayers to pay more, which Obama’s party hasn’t even tried to do."
To what extent is this a problem with liberalism, versus a problem with our political culture in general? First, "an expanding government balance sheet" hasn't applied to Obama's unrealistic promise to expand the liberal agenda. On healthcare, Obama needed to convince voters that the country could be paying much less for healthcare, not more, in spite of expanded coverage--and then complete the hat trick by crafting and passing legislation that controlled costs rather than exacerbated them. While costs have risen in the short term, the evidence is still out on whether Obamacare can in fact bend the cost curve down the road.
The only flagship liberal project that has significantly grown under Obama, that I can think of, is SNAP. The crux of the expanding government balance sheet comes from decades-old entitlements that, policy-wise, liberals and conservatives alike realize are unsustainable. Where Douthat is right, however, is that liberalism has failed to make a persuasive case for the level of taxation I think is necessary for our modern government. Where I once again differ with him is that this is as much or moreso a factor of both parties being dragged to the right, as it is a factor of some intrinsic failing of liberalism.
Monday, October 1, 2012
This is why Brooks pisses me off
- treating "psych" factors like he's in the vanguard of people thinking about it
- implying a causal impact between chidlhood trauma and adult outcomes, which there undoubtedly is, but some of those multipliers will be due to correlation.
- telling policymakers to get out of their silos and sit in a room together and tackle some problem.
Wednesday, September 26, 2012
What constitutes a government benefit?
http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/09/26/do-96-percent-of-americans-receive-government-benefits/
This issue of how to talk about what constitutes a government benefit really interests me. On the one hand, you have direct benefits, generally for those who wouldn't have a tax liability and are net takers rather than payers. Then you have those who get tax expenditures, and may still be net payers, but with a lower tax liability than they would have if they didn't get a special deduction. (I agree that this constitutes "spending" as much as a direct program, because to the extent that the $ is fungible, paying less in vs. paying more in but getting a direct payment out has essentially the same effect. But, the net taker/payer issues still stands even with this reading.) Then you have the roads and farm subsidies and so forth that everyone benefits from with varying degrees of directness.
The discourse (such as it is) right now centers on who receives benefits, when what people are actually fighting about to me seems closer to people who are net takers vs. net payers. Attacking Republicans for hypocrisy over who receives benefits is a bit of a straw man in this way, because I think what most of them are really talking about is the latter issue. That's not to say there isn't hypocrisy in that position; just that it requires a different tack than simply pointing out that 96% of Americans receive benefits.
To me, the heart of this issue is the age-old puritanical story of who a "deserving" recipient of government spending is. Is it the person who still pays in, but for just social policy reasons, receives some of that money back? Can it be the person who doesn't pay in because they make too little money, and is a net receiver of government spending? I believe that person can still be deserving of government spending. The EITC is a good example of a program that tries to suss out further what qualities make someone deserving--in this case, it's someone who works, but whose wages are too low to subsist at a standard we as Americans believe our society should support.
This touches on broader economic theory, of how good a job the market does of rewarding productivity through wages--i.e., the justification for why an NFL quarterback makes 100 times the base salary of a Chicago public school teacher. A position against the "deservingness" of an individual who works but makes too little to subsist and is therefore a net taker might be based on economic efficiency or the invisible hand or what have you, but I think most people would agree that the market is not doing an adequate job allocating resources when someone performing a job somebody has to do can't actually survive humanely on the wages. This to me makes the case for government spending on that person, to correct a market failure. My understanding of the intersection between classical economics and fiscal policy is tragically primitive considering my education, but this is a topic I would love to spend some time chatting about with a real economist.
This issue of how to talk about what constitutes a government benefit really interests me. On the one hand, you have direct benefits, generally for those who wouldn't have a tax liability and are net takers rather than payers. Then you have those who get tax expenditures, and may still be net payers, but with a lower tax liability than they would have if they didn't get a special deduction. (I agree that this constitutes "spending" as much as a direct program, because to the extent that the $ is fungible, paying less in vs. paying more in but getting a direct payment out has essentially the same effect. But, the net taker/payer issues still stands even with this reading.) Then you have the roads and farm subsidies and so forth that everyone benefits from with varying degrees of directness.
The discourse (such as it is) right now centers on who receives benefits, when what people are actually fighting about to me seems closer to people who are net takers vs. net payers. Attacking Republicans for hypocrisy over who receives benefits is a bit of a straw man in this way, because I think what most of them are really talking about is the latter issue. That's not to say there isn't hypocrisy in that position; just that it requires a different tack than simply pointing out that 96% of Americans receive benefits.
To me, the heart of this issue is the age-old puritanical story of who a "deserving" recipient of government spending is. Is it the person who still pays in, but for just social policy reasons, receives some of that money back? Can it be the person who doesn't pay in because they make too little money, and is a net receiver of government spending? I believe that person can still be deserving of government spending. The EITC is a good example of a program that tries to suss out further what qualities make someone deserving--in this case, it's someone who works, but whose wages are too low to subsist at a standard we as Americans believe our society should support.
This touches on broader economic theory, of how good a job the market does of rewarding productivity through wages--i.e., the justification for why an NFL quarterback makes 100 times the base salary of a Chicago public school teacher. A position against the "deservingness" of an individual who works but makes too little to subsist and is therefore a net taker might be based on economic efficiency or the invisible hand or what have you, but I think most people would agree that the market is not doing an adequate job allocating resources when someone performing a job somebody has to do can't actually survive humanely on the wages. This to me makes the case for government spending on that person, to correct a market failure. My understanding of the intersection between classical economics and fiscal policy is tragically primitive considering my education, but this is a topic I would love to spend some time chatting about with a real economist.
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