So to my surprise, Obama's deficit reduction committee announced some ideas recently. http://www.foxnews.com/politics/2010/11/10/deficit-commission-recommends-changes-social-security/ . The reason it surprised me is that usually these types of committees don't amount to anything. But, since they are led by some former politicians, they are savvy and know that the first person to propose something sets the discussion for the future debate.
As for the actual merits of their proposals? I would love to hear from the expert on government spending, Mr BQ Budget Master.
Nothing I say here is the official position of the State of Wisconsin Department of Administration or the Doyle Administration or the incoming Walker Administration.
ReplyDeleteThis is a placeholder for later comments of a more detailed nature because I have lots to say:
1. Slamming tax deductions and credits - Great! This has needed to be done for a long time. Accompanied with overall rate reductions, that's sound tax policy.
2. Tax burden as a % of GDP is set too low at 21% maximum. we need to get up to 23-24% to be more reasonably sustainable.
3. Defense spending cuts are necessary since we are far out of whack with necessary levels. Proposed cuts are a decent starting point, but more needs to be done there.
4. Social Security cuts are reasonable and within the range of long discussed options by people who are actually serious about the subject. I don't support means-testing since that essentially turns Social Security into a welfare program, but that's a policy rather than a budget consideration.
5. Investment taxes will be increased. I've vacillated on this issue for years. I generally want to give preferential treatment to long term investment and tax speculation. Obviously, there is interplay between the two because speculation drives the prices which entice long term investment. I don't think it would be the end of the world if capital gains and dividend taxes increased, however. Considering how much revenue is to be had here, however, it is difficult to ignore when attempting to balance the budget.
6. Discretionary spending cuts are a little over the top considering that part of the budget is not the driver of the deficit. The driver of the deficit is that our tax revenues practically vanished with the recession.
Those are my very short thoughts at the moment. I will share more on Sunday when I have time to sit down and fully think about what these proposals might mean for the long run economic outlook as well as their direct effects on treasury bond rates.