I Coulda Had Free Crabs
A week or so ago ColumbusGuy and I were discussing the federal deficit, cutting military and domestic spending, and related trivial topics in the comments to LAGuy's post-election post. I declined his offer of a bet based on our mutual belief that the upcoming presidential deficit commission recommendations would never propose real spending cuts to the sacred cows of Social Security, Medicare and the military. Well, lo and behold:
"The discretionary reductions of $1.4 trillion would be split equally between defense and domestic programs" including reductions in Social Security and Medicare benefits. Heck, they even proposed eliminating some of the federal tax code features I hate the most: the mortgage interest and employer healthcare insurance deductions that subsidize some Americans at the expense of others for no good reasons, and proposed substituting lower marginal rates for all. Too bad they didn't propose eliminating the child tax credit and raising standard deductions, but it's close enough to my ideas that it's almost like I wrote the thing myself.
Hey, maybe there are a few grown-ups left in Washington. Not enough to get any of these ideas passed, I'm sure, but at least the conversation can start from reality.
On a related note, I always wonder what will happen to the more complex income state tax codes -- such as mine here in NY -- if they manage to suitably simplify the federal tax code. I can imagine a situation where you don't need an accountant to do your federal taxes, but still have to hire one because of my state income taxes.
posted by QueensGuy @ 1:57 PM
8 Comments:
Yes, I have to concede, I would have had to give you crabs. I feel a moral obligation to do so anyway.
I'm not very impressed by raising the retirement age--in 20 or 50 years. That's neither real nor serious. But if this isn't the typical lie these folks usually engage in, they're essentially proposing a flat tax. (I know they're not, but that's the direction).
The trick here is it's all or nothing. Reagan actually did this, and right away the accretions began to screw things up. The basic problem is Congress has a conflict of interest; it both raises revenue and spends it. If we had a flat tax with no exceptions and the only technical difficulty was defining what income was, that would do the trick--assuming honest judges and accountants.
Then we could have bloodsport over the spending, and at least half the battle will have been won.
Forgot to sign off:
SWMBCg,etc.
Flipping between liberal and conservative talk show hosts last night and this morning, it was fun to hear both sides lambasting the proposals.
I'm with you - I wish there really was a chance to eliminate, even over time, the mortgage interest deduction, especially in exchange for lower marginal income tax rates. The conservative radio host I heard said it would decimate the housing market, but how much worse could it get? Most people still fundamentally want to own their own home - they don't do it just for the tax break.
Taxing health benefits I agree with in principle, but in reality, would be very complicated to implement. I'm on the fence. Would the added paperwork be worth eliminating the ridiculous tax created incentive to shove compensation into health benefits?
I hope the ultimate deal on Social Security includes at least some opportunity for private retirement accounts.
There will never be a deal on Social Security. The only hope would be to shift it to a contractual obligation. Essentially, pass a law making it possible for SSA to write contracts with individuals to buy them out. That's about the only thing worth going into national debt over.
Meanwhile, while you're waiting for that to happen, buy ammunition and batteries, and bring documents.
"I hope the ultimate deal on Social Security includes at least some opportunity for private retirement accounts."
The odds on that happening went way down with the last market crash. Lots of folks suddenly realized that even if their equity-loaded 401ks tanked, their fixed SSI benefits would keep them out of bankruptcy. It would require some major educational efforts to correct that view and inform folks that there are defined benefit investments available
"Essentially, pass a law making it possible for SSA to write contracts with individuals to buy them out. That's about the only thing worth going into national debt over."
Hey, they commercials have already been pre-recorded. "Do you have a structured court settlement, but need money now to pay bills or make important purchases? Call Peachtree Funding and get cash now!"
Exactly. That's twice, three times as honest as what they're getting now.
I didn't know they had liberals on this blog. So, people are too stupid to have actual retirement accounts, as opposed to what Friedman accurately described as a regressive tax coupled to a regressive welfare program, but decoupled from any individual interest?
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