Blog: The Fine Print / Open, Accountable Government

More Meditations on the Hamilton Project

Jun 13, 2007 by Matt Lewis

One last thought on the Hamilton Project- I believe they do not serve the cause of fighting inequality. Stay with me on this one. Take this statement: Industrial policies and direct market interventions can try to change the before-tax distribution of income. But ultimately such policies harm the economy—for example, excessively high living-wage laws can result in large job losses for low-skilled workers. Factually, I believe the statement is wrong. Government intervention in markets can promote the common good. Everything that's known about health care provision is a case in point.

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Giving Up on the Hamilton Project

Jun 13, 2007 by Matt Lewis

The Hamilton Project's new paper on tax reform is a mixed bag. The section on the tax gap is pretty good, and it makes some interesting points about how unpaid taxes seem to make the tax code more regressive. But the section on deficits- which leads the paper, reflecting the Hamiltonian philosophy of fiscal responsibility uber alles- is a disappointment. The paper's authors just don't want to understand what's driving up health care costs. Instead, they sound the familiar refrain about cutting benefits:

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Blue Dogs Seek to Seize Fiscal Responsibility Mantle

Jun 12, 2007 by Adam Hughes*

The Washington Post reports today that the Democratis Blue Dog Coalition plans to introduce legislation shortly to impose caps on some spending, enshrine pay-as-you-go rules in federal law and authorize automatic spending cuts to enforce them ... amend the U.S. Constitution to require a balanced budget and to create an array of budget provisions that would focus more attention on what it sees as pork-barrel spending.

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Monthly Budget Review: June, 2007

Jun 7, 2007 by Adam Hughes*

CBO's Monthly Budget Review has been released: The federal government incurred a deficit of $152 billion during the first eight months of fiscal year 2007, CBO estimates, $75 billion less than the shortfall recorded through May of last year.

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The Equality Quagmire (Made Worse) By Robert J. Samuelson

Jun 6, 2007 by Dana Chasin

In a no-need-to-read piece in today's Washington Post, someone named Robert J. Samuelson makes a hash out of a barely-discernible thesis relating in some way to rising inequality in America and why it really isn't such a bad thing:
  • "It has not prevented most Americans from getting ahead."
  • "On the whole, the economy that produces these growing inequalities outperforms the one that created [sic] more statistical equality."
Not sure which tense that sentence was in, but it's not as mind-numbing as this one, for those who like brain teasers:

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    GAO Still Not Pleased With Long-Term Fiscal Outlook

    Jun 4, 2007 by Adam Hughes*

    The Government Accountability Office (GAO) has released the latest version of their "The Nation's Long-Term Fiscal Outlook" report today. As with previous reports, GAO finds little change in the long-term outlook and warns that current fiscal policies are unsustainable (duh!). Despite re-stating the important fact that current policies are unsustainable, the report also helps to distinguish what is driving long-term imbalances. Instead of lumping Social Security and Medicare together and labeling the problem as an "entitlement" one, the GAO report highlights health care costs generally as the major obstacle. The relevant paragraph from the report states: Although Social Security is a major part of the fiscal challenge, it is far from our biggest challenge. Spending on the major federal health programs (i.e., Medicare and Medicaid) represents a much larger and faster growing problem. In fact, the federal government's obligations for Medicare Part D alone exceed the unfunded obligations for Social Security. Over the past several decades, health care spending on average has grown much faster than the economy, absorbing increasing shares of the Nation's resources, and this rapid growth is projected to continue. For this reason and others, rising health care costs pose a fiscal challenge not just to the federal budget but to American business and our society as a whole. Under the leadership of Comptroller General David Walker, the GAO continues to bring an important and under appreciated voice to long-term fiscal policy debates. The short report is worth a read: GAO: The Nation's Long-Term Fiscal Outlook

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    Administration Drops Opposition to Data Collection Program

    Jun 1, 2007 by Craig Jennings

    About a year ago, we reported on the administration's opposition to continued funding of the Survey of Income and Program Participation, or "SIPP." SIPP, you may recall is an ongoing program that ""collect[s] source and amount of income, labor force information, program participation and eligibility data, and general demographic characteristics to measure the effectiveness of existing federal, state, and local programs." It is an indi

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    OECD Report: Inequality Threat to Propsperity

    May 31, 2007 by Craig Jennings

    The Organisation for Economic Co-operation and Development released its biannual Economic Survey of the United States this week. The report itself will make for good summertime reading on the beach, but it's mention of income inequality makes it especially exciting. Policies and global trends that have made the economy more open, flexible and dynamic — thereby boosting productivity and overall prosperity — may have increased inequality. If unaddressed, concerns about inequality have the potential for eroding support for such policies.

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    More on the Inherent Superiority of Government

    May 31, 2007 by Matt Lewis

    A follow-up post to the one on Bryan Caplan's assault on government: I think I may have confused what normal people mean by efficiency with what economists mean by efficiency- that is, an efficient decision is one whose benefits exceed both the opportunity and out-of-pocket costs. Caplan, I presume, means that government services let people consume irrationally. People don't have to pay for the service, so they consume more than they would otherwise. This is irrational, I guess.

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    Giving Equal Treatment to Work and Wealth

    May 30, 2007 by Adam Hughes*

    The Wall Street Journal reported yesterday ($) on a plan in Congress to require private brokerage and financial companies to report the "basis" amount of securities that were sold in a given year. This plan was released last week by the Senate Finance committee and it is estimated that it will bring in $11 billion in unpaid capital gains taxes each year - a small, but substantial portion of the overall tax gap related to non-wage income. This is a straight-forward commons sense idea that would help to equalize the treatment of work and wealth in the U.S., at least within the IRS. Currently, payroll taxes (and to a large extent income taxes) are easily calculated directly by the IRS because employers are required to report the amount of income they pay their employees to the IRS. Because of this system, it is very difficult to cheat or make a mistake on your payroll or income taxes and easy for the IRS to catch you if you do (unless you are self-employed, in which case you are reporting your own income to the IRS). But there is no similar requirement for reporting of capital gains taxes (or loses). When individuals report their capital gains or losses, say, from selling shares of stock in a company, they need to calculate the difference between what they paid for the stock, and what they sold it for. The amount they paid for the stock is called the basis. It is much more difficult for the IRS to verify the individual has calculated their tax liability correctly because it does not receive confirmation of the basis for sales of stock and other securities. This plan would help prevent individuals from intentionally cheating or making a mistake in their capital gains and loses by providing the IRS with a way to check individual returns. It would require reporting requirements for income made from wealth to match the reporting requirements for income made from work. While the $11 billion per year brought into the government is actually a small amount compared to the overall tax gap, this proposal would collect sufficient revenues to pay for the entire SCHIP reauthoization bill being debated this year. There are no details on how soon the plan would be introduced as legislation, but with both Finance Committee Chair Max Baucus (D-MT) and Ranking Member Charles Grassley (R-IA) supporting the plan, it is likely it will be broadly supported in the Senate.

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