Deficit commission: They’ve GOT to be kidding

A policy mess and a political non-starter. Charging admission to the Smithsonian? THAT ought to reassure the bond markets!

Simpson and Bowles seem to be determined to give the rest of the rich old white guys a bad name.

Can you say “dog’s breakfast“? I thought you could. This is much worse than I would have guessed.

* Reduce Social Security benefits.
* Charge veterans more for health care.
* Slash the mortgage tax deduction and the deduction for charitable giving.
* Eliminate the Earned Income Tax Credit, the centerpiece of welfare reform.
* Charge admission to the Smithsonian.

In order to:

* Reduce the top income tax rate to 23%.

Oh yeah, and eliminate funding for NPR but don’t scrap a single named weapons system.


This makes no political sense and damned little policy sense.

Update Original post was wrong about not killing any specific weapons systems: the plan calls for cancelling the V-22 Osprey, the Expeditionary Fighting Vehicle, the Joint Light Tactical Vehicle (JLTV), the Ground Combat Vehicle, and the Joint Tactical Radio. All programs worth killing, but all marginal. Can someone explain to me why we still need three strategic nuclear forces – bombers, land-based missiles, and sea-based missiles – when there’s no longer a power that might conceivably be able to carry out a disarming first strike?

Author: Mark Kleiman

Professor of Public Policy at the NYU Marron Institute for Urban Management and editor of the Journal of Drug Policy Analysis. Teaches about the methods of policy analysis about drug abuse control and crime control policy, working out the implications of two principles: that swift and certain sanctions don't have to be severe to be effective, and that well-designed threats usually don't have to be carried out. Books: Drugs and Drug Policy: What Everyone Needs to Know (with Jonathan Caulkins and Angela Hawken) When Brute Force Fails: How to Have Less Crime and Less Punishment (Princeton, 2009; named one of the "books of the year" by The Economist Against Excess: Drug Policy for Results (Basic, 1993) Marijuana: Costs of Abuse, Costs of Control (Greenwood, 1989) UCLA Homepage Curriculum Vitae Contact:

35 thoughts on “Deficit commission: They’ve GOT to be kidding”

  1. At least one theory going around is that this is not the dog's breakfast, but the sausage-making, and is intended to embody everything completely beyond the pale, so that commissioners can be browbeaten into accepting everything that ISN'T.

    Don't hassle me if that doesn't make any sense to you. I didn't want a stupid deficit commission in the first place.

  2. I guess we shall pay any price, bear any burden, meet any hardship, support any friend, oppose any foe, in order to assure that the rich don't have to pay taxes. If it were up to me, we'd be bringing back the 70% income tax bracket.

    But, I don't understand Mark's comment. The report linked to, on TPM, includes several Defense program cuts — not nearly enough to please me, to be sure — but, still, some.

    Mostly, though, I see a determination by the rich to foist more and more costs onto the people least able to pay. The idea that you can usefully reduce the cost of Medicaid, by compelling the often very poor beneficiaries to assume greater co-pays betrays a failure of empathy as much as a failure of policy imagination.

  3. I suspect Matt's right. This is the opening bid.

    Simpson: "I want plutocracy. And an ice cream cone, and lick my feet clean."

    Democrats: "Hah! You can't be serious. No ice cream!"

    Simpson: "Socialist!"

    Democrats: "That hurts our feelings."

  4. This is simply part of the Kabuki Theater acted out regularly in that place. Simply a ridiculously low bid with all kinds of funny stuff nobody wants to bid for on the table. Its a highly contested space and lots of posing, snorting, and pawing of ground must go in in front of the elaborate costumes too.

  5. Hey, the easy part is lowering income tax rates. The hard part is getting rid of various tax loopholes and deductions. That said, capping the mortgage interest deduction at $500,000 is a good thing, IMO.

    I'm less upset over the proposed changes to Social Security, which amount to lowering the benefit for the better off (nothing is preventing people from retiring at 65 instead of 67 and taking a lower benefit as it is) while keeping benefits higher for low income workers who really do need it.

  6. is reporting that the White House commission on reducing the federal deficit suggested killing the F-35B. I'm not sure how this fits in with your claim that it doesn't recommend scrapping a single named weapons system.

  7. Good god, why do we need a *lower* top bracket? Is it the Deficit Reduction Comm'n, or the Taxes-on-Rich-Folks-Like-Ourselves Reduction Commission?

  8. I'd like to associate myself with David W. The mortgage tax deduction is an appalling subsidy mostly to the rich, under current law. I think there are public benefits to having an iron worker in Biloxi being able to buy a house, I cannot believe there are benefits to helping a podiatrist in Piedmont buy a $1,500,000 house instead of an $800,000 house. Capping it is a swell idea – I would do it with a tax credit rather than just limiting interest deduction, if I had my druthers. Similarly, the deduction for charitable giving tends to be a way to make lower-income people pay for the preferences of the well off. I like the Symphony as well as anyone, but I think I can pay for my share without a tax benefit. I'm also inclined to a steep gasoline tax.

  9. Here here regarding the mortgage interest deduction. That people think it actually helps the middle class is a testament to the power of Real Estate Industry propaganda. It is simply one more contributing factor into the price escalation of housing, and is grotesquely unfair to renters. That said, phasing it out is necessary to avoid undue disruption.

    As for the rest of it, meh! I don't understand why a commission whose SOLE PURPOSE is to reduce the deficit has any right to propose lowering taxes. And notice, the overall effect is that Social Security benefits are just reduced, whereas, every lost deduction is more than offset by a lower tax rate. If you are going to make the receipt of SS benefits progressive, the least you can do is make tax rates progressive. Instead, they are actually being flattened and reduced.

  10. @daveschultz: Interest deduction for a home is already capped.

    The fastest way to reduce the deficit is simple: return to the income tax rates (and maybe even code) circa 1955. Wait six years. Deficit will be gone, America will not be gone.

    Or we can continue down the supply-slide into oblivion.

  11. I think the negotiation they have in mind is to say "ok, nevermind about Social Security cuts … PROVIDED we get this leeetle teeensy cut in the top income tax rate".

    As Dick Cheney put it last time the R-team did well in House elections: this tax cut is our DUE!

  12. I blame Erskine Bowles. He is a true moderate Democrat. It is clear that he decided that he had to reach agreement with Simpson and so he totally caved, since Simpson is a far right extremist who opposes compromise on principle. Clearly appointing the commission to win the week months ago was a huge unforced error.

    I am shocked by the proposal to eliminate the EITC. I thought that was one anti poverty policy so clearly excellent as to be accepted even by Republicans.

    I am more and more puzzled by current usage of the phrase "welfare reform." I think that you (and Matt Yglesias) have decided that the consensus that welfare reform was an excellent thing is too strong to fight, so you have decided to redefine welfare reform to mean something which wasn't called welfare reform at the time. At the time, welfare reform referred to the replacement of AFDC with TANF. The same bill included sharp cutbs of foodstamps (because the public was convinced that the budget for "welfare" could and should be cut by several times the cost of AFDC). The EITC was not changed by the welfare reform bill. It had been increased years earlier. Notably, the 1993 bill which increased the EITC received zero Republican votes.

    I suppose it is reasonable rhetorical strategy to re-redefine "welfare reform" back to the original approach proposed by Clinton and then abandoned by Clinton when he caved just as Erskine Bowles just caved. The consensus that welfare reform was an improvement is so strong that it is probably wise not to fight it, even though the consensus is based only on the fact that the economy performed well in the late 90s.

    It is easy to see if the alleged benefits of welfare reform are do to the reform or the boom. One just has to look at evidence collected since 2000. For example, the severe poverty rate is now vastly higher than it was in 1975 (then it was less than 60% of the current rate). Anyone who didn't decide that the matter was settled forever by 2000 can see that the welfare reform bill was a catastrophe.

    I sometimes think that I am the only person who looks at post 2000 data on poverty (Kevin Drum did once commenting on a McClatchy article). I often think that I am one of very few people who understand that the poverty rate is not a complete description of poverty — that it's worse to have less than half of the poverty line income than to have 90% of the poverty line income.

    Maybe it's just my choice of words but when I googled "severe poverty rate" my blog post was the first google hit and the second and third linked to it. .

  13. What do you people not get about trickle-down economics? Why the hell is it such a sin to be rich? I'm not rich by any stretch of the imagination, but I certainly am not going to hate on the next man or woman for being filthy stinkin' rich and I most certainly don't want to see them taxed at any higher rate than the rest of us, because as rich people get rich and spend money poor people get jobs and get money. It's so freakin' simple. Why can't you people get it?

  14. > What do you people not get about trickle-down economics?

    I do not understand why some people continue to claim, in the face of the overwhelming evidence of the last thirty years, that supply-side economic ideas are about anything other than making the already-wealthy wealthier.

    They have been tried.

    Variations of them have been tried.

    In every case, they made the rich richer without improving the lot of anyone else.

    Under George W. Bush:

    Republicans claimed that tax reductions for the wealthy would reduce unemployment.

    They did not.

    Republicans claimed that tax reductions for the wealthy would stimulate economic growth.

    They did not.

    Republicans claimed that tax reductions for the wealthy would increase investment in American industries.

    They did not.

    Republicans claimed that tax reductions for the wealthy would result in broad-based prosperity, "floating all boats".

    They did not.

    Do you see a pattern?

  15. Their entire worldview depends on them not seeing the pattern.

    We need to go around them. I hope the President has learned this. He can make happy talk if he feels he must, but he should stop putting any actual energy into "bipartisanship."

    We have no partner for peace.

  16. I don't think anyone has said it is a "sin" to be rich. Taxes are not a punishment meted out for being rich, but are instead a reflection of the real societal benefits that go disproportionately to the rich.

    'How so?' one (e.g., Bux) might ask, with the claim that the rich get nothing more from our society than do the rest of us. And so it might seem, until you word it differently: the rich have FAR more to LOSE than the rest of us do, if the society becomes unsustainable, and therefore, the rich have (or should have) a much greater incentive to maintain that stability, as it is much more valuable to them. Therefore, the rich should be paying more for their privilege of living in a place where their wealth is even possible. That the rich also have the ability to pay is just a coincidence, not the reason for their payment.

  17. thank god there are so many more others out there. I run into the "why punish people for being successful" rhetoric all the time from friends of friends and some within my family, and I've run out of energy to respond to trickle-down fools.

  18. Bux: "Why the hell is it such a sin to be rich?"

    The "wealth" of many of the Rich consists of stealing from the rest of us. See mortgage banking and securitization for examples. See health insurnace. See the oil companies. See military-industrial complex.

  19. The idea that reducing income tax on the rich will create jobs is silly on it's face.

    The owner of a business has a choice to make: Take profits out as income or leave it in the business to help it grow. If the tax rate is low the insentive is to take the income. If the tax rate is high it is more advantageous to spend it on the business and take the deduction. Obviously if the money is being spent growing the business more work will need to be done and someone will be needed to do that work. As well, equipment and supplies will be needed so of course that will generate more jobs from suppliers and contractors.

    If any of our "conservative" minded friends can find the hole in this simple logic please point it out to me because I've never understood how this "trickle down economics" works even as a simplistic theory much less in the real world where it has so monumentally failed for decades.

  20. Bux, we're hardly calling for the elimination of the Kulaks here. I for one am perfectly happy that success is rewarded; seems like a sound notion. The problem is, failure is also rewarded, and especially mediocrity. The very rich are getting much, much richer – the portion of the nation's wealth owned by the top 1% has doubled in the last decade or two, and that multiple, that rate of increase of their share, just gets higher as you go into loftier and smaller elites – as I recall the numbers, the top 1% now get 20% of the income and have 40% of the wealth, and the top 0.1% have about half that. In fact, the only people who've seen income gains in the last generation are in the top few percent.

    So: "well done" to those titans of industry who've helped our economy grow. Even, a grudging "well played" to the vampire squid who've realized massive gains without actually accomplishing anything real for anyone. The former deserve their gains, and the latter won't be denied them. But must they get all of our society's gains? Shouldn't other Americans see some real benefit from the growth of our economy, when it is growing? Shouldn't the wealthy, who have thus far felt the economic weather much less keenly than those with lower incomes and less education by any proportionate measure you'd care to name, bear some of the burden when the economy isn't growing?

  21. In Raymond Chandler's masterpiece The Long Goodbye, Bernie Ohls explains to Philip Marlowe exactly why it's such a sin to get rich:

    “There ain’t no clean way to make a hundred million bucks,” Ohls said.

    “Maybe the head man thinks his hands are clean but somewhere along the

    line little guys got pushed to the wall, nice little businesses got ground out from

    under them and had to sell out for nickels, decent people lost their jobs, stocks got

    rigged on the markets, proxies got bought up like a pennyweight of old gold, and

    the five per centers and the big law firms got paid hundred grand fees for beating

    some law the people wanted but the rich guys didn’t, on account of it cut into

    their profits. Big money is big power and big power gets used wrong. It’s the

    system. Maybe it’s the best we can get, but it still ain’t any Ivory soap deal.”

  22. I'm on the same side as Kathleen and the rest of you other than Bux, but I disagree with Kathleen's reasoning. She is right that "the rich have FAR more to LOSE than the rest of us do, if the society becomes unsustainable, and therefore, the rich have (or should have) a much greater incentive to maintain that stability, as it is much more valuable to them." But that is not a reason that "the rich should be paying more for their privilege of living" here; it is a reason that they should be willing to pay more. The reason that they should pay more is, pace Kathleen, because of their ability to do so. They don't have to like it.

    Also, the fact that this is "a place where their wealth is even possible" is irrelevant.

  23. Two things on being rich:

    1 – A good case can be made that they aren't actually deserving in the first place.

    2 – If there are programs that are in the public interest to fund, then the sacrifice should be spread out evenly. And by sacrifice I mean real, practical sacrifice. So, the rich can afford to pay a lot more without really feeling it.

  24. Indeed, they HAVE got to be kidding; Tax increases, 'budget cuts', and the budget not projected to come anywhere near balancing, when a simple projection says that just ceasing to INCREASE spending would balance the budget in a few years time.

    There are no real budget cuts being proposed, only slight reductions in projected increases. Which increases were probably boosted in anticipation of their being cut back anyway…

  25. The across the board tax rate reduction reflects a zeroing out of ALL tax deductions. Just a heads up, but no wealthy individual paid the full 35% rate, due to the many ways to reduce their taxable income. With 23%, at least the conversation can be relatively accurate and understandable.

  26. A really, really good take down of the deficit commission that avoids all the hand wringing over its individual pieces:

    Basically, the commission isn't putting forward a serious deficit reduction proposal because it avoided serious proposals regarding 98% of the problem, which is health care. Instead, it is proposing small government and that wasn't its mission. It has the best graphic ever on federal spending and the source of the deficit.

  27. I'm still unclear why "increase taxes 50%, cut spending 10%" counts as a "small government" proposal.

  28. Now I've stopped back a couple times looking for the blinding revelation of a sensible explanation of the conservative holy grail of "trickle down economics" and how it is supposed to create jobs when it is painfully obvious to anyone who has ever run a business that cuts in income tax actually take away insentive for businesses to create jobs.

    So give guys. What is the magic that should (but never seems to) make the gears of economic activity fire into action? Republicans have been promising this modern miracle for decades and congress and presidents have dutifully given the richest among us the opportunity to show how the invisible hand will bring us all prosperity and we always get zip. In fact the best deal we've seen in 30 years was when Clinton and the Democrats raised the rate and the economy boomed and the rich were crying all the way to the bank. I was doin' pretty OK too.

    And then explain how the Social Security that I paid an elevated rate into almost all of my working life (so it wouldn't go belly up) and is totally solvent, shouldn't pay me a fair return. Hell, I paid double because I was self employed.

    Come on guys. Put up or shut up!

    Sorry if I'm reading a bit hostile here but I did ask politely earlier in the day. At least as much politeness as someone who has been listening to people who are peeing in my pocket and telling me it's raining all my life can muster.

  29. OK guys. It is late here on the east side of the pond. I'll check back in the morning. Nite nite.

    To clarify: I want someone from the right to explain how reducing income tax on high earning business owners, thereby ecouraging them to take money out of their business creates jobs. Explain in plain english how "trickle down economics" is anything but BS.

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