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.

As BNA ($) reports today, the administration is looking at ways to make EITC eligibility easier to figure out. According to the article, the IRS estimates that more than 22 million individuals and families received EITC benefits in the 2005 tax year, yet roughly 25 percent of those eligible do not claim it, due in part to the tax credit's "labyrinthine computations" currently needed to determine eligibility. In an effort to address this problem, the administration proposes to reform EITC eligibility as follows:

• allow separated spouses to claim the EITC

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

Since it's Friday and we've had a slow week here at the Budget Brigade, I wanted to put up a little light-hearted reading today. Enter this article from The Hill newspaper about an effort by the advocacy group People for the Ethical Treatment of Animals (PETA) to give a tax credit to - get this - vegetarians. The logic goes like this. According to researchers at the University of Chicago, becoming a vegetarian would reduce carbon emissions 50 percent more per person than switching to a hybrid car. This certainly seems logical since a recent U.N. report cited the livestock industry as "one of the top two or three most significant contributors to the most serious environmental problems, at every scale from local to global," including global warming. One problem though. Let's suppose you stop eating meat - no more steak dinners at Morton's, sausages on the grill, or chicken burritos at Chipotle. How much will your individual decision in this case actually reduce the level of activity of the livestock sector? How many fewer cows, chickens, pigs, etc, would be slaughtered and shipped around the country? Probably not too many. The estimates of reduction in emissions from this choice is an aggregate number - the average of each meat-eater's contribution to the emissions of an entire industry - not the actual reduction by each individual's decision to stop eating meat. To have an actual impact on emissions, a large enough number of meat-eaters would have to act in conjunction with each other over a long-enough period of time to be able to shrink the size of the livestock sector. Given that meat consumption has doubled over the last fifty years, my guess is you'll have to convince a whole bunch of your friends to join you at the salad bar. A hybrid car, on the other hand, actually reduces your own physical emissions immediately. You don't have to wait for your neighbor to trade in his Hummer for a Prius for your individual decision to make a (albeit very small) difference. I'm not saying I think you should keep eating meat - that's really up to you. I just wanted to point out the relative benefits of a tax credit for hybrid cards vs. for being a vegetarian. Besides, this line of thinking probably isn't that important anyway beacuse I don't think you could really implement this type of credit - how in the world would the government be able to verify that you, in fact, had not eaten meat?