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And you thought Newtie's latest thoughts on abolishing the Congressional Budget Office were pulled out of his ass? (As usual.)
Nope.
Because if he knows nothing else, he certainly knows where the big dollars (and the missing tax payments) are. (And he'll have to abolish the Tax Policy Center (TPC) and all the rest of the government's accounting mechanisms as well.)
On a personal note, I'm beginning to understand the emotions behind the French Revolution now. And I knit.
Money At The Top
A bit more on the subject of whether there’s significant money to be raised through higher taxes on the very rich. As it happens, there’s a recent analysis from the nonpartisan Tax Policy Center that bears quite closely on this subject.
The TPC analysis points out that before the 1981 tax cuts there used to be a larger number of tax brackets, with a number of brackets well above the current 35 percent maximum. And it asks how much revenue would be raised if those above-35 brackets were still in place; that’s quite close to the question of how much money might be raised through higher taxes on the very rich.
Their answer is that in 2007 the higher brackets would have raised an additional $78 billion, or a bit over half a percent of GDP. By the way, that estimate takes into account the likely “elasticity of taxable income”, i.e., the disappearance of some income from the tax rolls either through reduced actual earnings or through avoidance.
So, what I did was to apply that revenue as a percent of GDP to CBO projections of GDP over the next decade. And what this says is that going back to pre-Reagan-type higher-income taxation would yield about $1.1 trillion over the next decade.
That would not by itself close the budget gap – but as I’ve been saying, no one thing would. And, you know, $1.1 trillion here, $1.1 trillion there, and soon you’re talking about real money.
Seriously, the notion that denying health care to the near-poor is a serious deficit-reduction policy, but raising taxes on the very rich is not, is not something you can justify at all on the basis of the actual numbers. Anyone who says different is practicing, well, class warfare.
Brad DeLong quotes Floyd Norris from the pages of the New York Times, who quotes Brad DeLong about the dangers overseas. Can Germany be getting a little bit of revenge now? Is it time to take cover yet? Stay tuned.
For well over a century it was taken for granted that the first job of central banks was to stem panics. It was, as the phrase went, to be a lender of last resort.In Europe, it is high time for such men, or women, to be found.
Until now.
As Europe’s financial situation has gotten worse and worse, the European Central Bank has moved grudgingly….
Implicit in the German prescription is the message that the sinners who spent and borrowed too much deserve to be punished. They can regain competitiveness with structural reforms — which Germany will happily help to devise — over a sustained period….
Implicitly, Germany is threatening that countries which do not do as they should will be forced out of the euro zone and left to fend for themselves. It is a threat that led Greek and Italian politicians to cede power, but will it persuade most of the people to go along with unpopular changes? If they rebel, and in the end Germany does pull the plug, Germany will be among the big losers….
There is a real risk of moral hazard in central bank bailouts. The theory offered by Bagehot in the 19th century called for banks to make loans on securities that are of high quality and will be liquid when the panic passes, but not on low-quality securities. Telling the good from the bad during a panic is not always easy. But we have until now assumed that a central bank would find bonds issued by its own government to be good paper, and investors could act accordingly.
It may be true that the European Central Bank lacks specific legal authority to perform as a central bank should in a crisis. But there is nothing new to that. Brad DeLong, an economist at the University of California, Berkeley, points to comments made in 1844 by Sir Robert Peel, then Britain’s prime minister, explaining why he had not sought specific legislation to authorize the bank to step in during a panic:
“My confidence is unshaken that we have taken all the precautions which legislation can prudently take against a recurrence of a pecuniary crisis,” he wrote in a letter. “It may occur in spite of our precautions; and if it does and if it be necessary to assume a grave responsibility, I dare say men will be found willing to assume such a responsibility.”
Paul Craig Roberts, who looks like he's been breathing laughing gas (or he can't contain his mirth at the intellectual blankness of his interviewer), prepares us for even worse news.
Are you ready?
There's lots of amusing insider talk available at the Department of "Huh?!" at this link from a Paul Krugman tweet. It's almost the place to be (to be in the know) all the time.
Enjoy your Sunday!
As for me, I'm going back to yoga.
Ommmm.
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