…because I’m an economist and a mom–that’s why!

The Art of the Economy

July 18th, 2009 . by economistmom


Managing the economic crisis has required a lot of creativity. California artist Scott Moore shared this amazing piece of artwork with me–what Scott named “The Money Game.” Even more interesting is seeing how Scott created it, here on his website. That’s a lot more fun to watch than the actual economic policymaking, isn’t it?

Some Easier (and Perhaps Smarter) Ways to Pay for Health Care Reform

July 17th, 2009 . by economistmom

Doug Elmendorf, director of the Congressional Budget Office, today testified before the Senate Budget Committee on the long-term budget outlook, which is bleak because both demographics (a growing elderly population) and trends in per-capita health costs (rising way faster than the economy is growing) are working against us.  Over the past couple years former CBO director (now Obama budget director) Peter Orszag had convinced Congress that the not-so-simple secret to achieving a more sustainable long-term outlook was to “bend the health cost curve”–i.e., flatten out its growth so that health costs would not rise so much faster than the economy grows.  Today Doug delivered some bad news about the potential cost-curve bending that could be achieved through the current crop of congressional proposals for health reform.

As CNN’s Jeanne Sahadi reported:

NEW YORK ( — The health reform bills released so far would increase government spending on health care without sufficiently reining in health care costs.

And at least initially they aren’t likely to significantly lower premiums for the majority of Americans with employer-sponsored health insurance.

That’s the sobering takeaway from testimony Thursday by Congressional Budget Office Director Douglas Elmendorf.

Elmendorf’s preliminary conclusions were based on a bill jointly released by three committees in the House this week and another bill passed by the Senate health committee on Wednesday.

“The creation of a new subsidy for health insurance … would by itself raise federal spending on health care. … [T]o offset that there have to be substantial reductions (on the tax or spending sides of the ledger],” Elmendorf told the Senate Budget Committee. “The changes we’ve looked at so far don’t represent the fundamental change on the order of magnitude that would be necessary.”

And Roll Call’s David Drucker highlighted a variety of reactions coming from key senators (emphasis added):

Senate Budget Chairman Kent Conrad (D-N.D.) suggested Thursday evening that Congress should steer clear of the health care reform bill being marked up in the House as well as the legislation approved by the Senate Health, Education, Labor and Pensions Committee on Wednesday…

“Everybody has said you’ve got to bend the cost curve in the right way,” Conrad told reporters on his way into Finance Chairman Max Baucus’ (D-Mont.) office to resume negotiations.

“The director of CBO said in very clear testimony, in response to my questions … [that] the other proposals bend the cost curve the wrong way — will increase costs.”…

Senate Majority Leader Harry Reid (D-Nev.) said mockingly earlier Thursday that Elmendorf should run for Congress. And Sen. Chris Dodd (D-Conn.), who managed the markup of the HELP bill, had a few choice words of his own.

“They don’t score the outcome,” Dodd said, arguing that CBO does not score cost savings from Congressional proposals to improve prevention and quality of care. “The only thing CBO does is tell you how much taxpayer money it will take to get these results. So with all due respect — and we all respect the CBO — it’s a game we have to play with them. We believe we’ve crafted legislation that does bend that [cost] curve.”

In CBO’s preliminary analysis of “Division B” of the House Tri-Committee health reform discussion draft, dated July 8, CBO (unofficially) estimated health cost savings of just $160 billion over ten years.  That obviously falls far short of covering the over $1 trillion cost of expanded health coverage under the proposal.  It also falls substantially shy of the $309 billion in “health savings” the Obama Administration proposed in their budget as part of health reform.  Of course, the Administration’s health reform reserve fund contained a total of just $635 billion as its “initial deposit,” and more than half of the funding was to come from higher taxes (specifically, the limit on itemized deductions for high-income households was to raise $267 billion, and other tax enforcement measures would add $59 billion more).

But with a disappointing amount of health cost control achieved, with little enthusiasm for the President’s proposal to limit itemized deductions, and with continued reluctance on both ends of Pennsylvania Ave. to opt for the most sensible tax increase most consistent with health reform–limiting the exclusion for employer-provided health care–the House has turned to a high-income surtax to cover most of the cost of expanded coverage:  $544 billion of the $583 billion in total revenue offsets in the tri-committee proposal comes from the surtax.  The CNN article explains that this makes finding offsets for expanded health coverage difficult:

[W]hile taxing a portion of health benefits was a leading “pay-for” idea — at least in the Senate Finance Committee — the political pushback has muted its prospects for being a serious contender at this writing.

“Basically, the president is not helping us,” Senate Finance Committee Chairman Max Baucus, D-Mont., told reporters Thursday. “He does not want the exclusion and that’s making it difficult.”

In response, White House spokesman Bill Burton told reporters that Obama has consulted lawmakers of both parties about how to “save money and find revenue to pay for our health care reform. If that’s disagreeing with Baucus, somebody else will have to make that determination.”

The tricommittee House bill proposes to pay for half the cost of reform by taxing the richest households — imposing a surtax as high as 5.4% for income over $1 million, and imposing lower rates on households making at least $350,000.

Asked if cost containment becomes more difficult by relying primarily on Medicare cost savings without taxing employer-provided health benefits, Elmendorf said, “Tying one of the two hands behind one’s back makes the job that much harder.”

And Nancy Pelosi doesn’t even seem very thrilled about the high-income surtax, suggesting today that she’d prefer a smaller version (from a CQ story):

Pelosi said Thursday that if more cost savings can be produced in the House legislation, a proposed $544 billion tax surcharge on the wealthiest Americans could be scaled back. But it would not be eliminated, she said.“We have to have a revenue stream to pay for” the bill, she said. “If we don’t need it, we can use it to reduce the deficit.”…

“If we can get more [health cost] savings, perhaps we can cut [the surtax] at the high end,” Pelosi said.

It seems that finding these “CBO-scorable offsets” for the $1 trillion price on expanded health coverage is really hard and unpleasant–because the health cost savings are quite elusive without truly hard choices (i.e., “rationing”), and squeezing additional revenue via higher rates from a tax system that’s already full of inefficient holes only tends to magnify the inefficiencies.  I’ve said before that I’m surprised the high-income surtax is a serious proposal.  A better (more economically efficient and fairer) option would be a broader-based, but still progressive tax increase which would get everyone contributing to a health care system that benefits everyone.  And a really easy way to go for such an option would be to follow a “just don’t do it” strategy with the Bush tax cuts when they expire at the end of 2010.

The Joint Committee on Taxation provides CBO with the revenue estimates for proposed tax legislation, and by estimating the revenue provisions in the President’s budget, has already “scored” these “just don’t do it” tax options.  Here are just some examples (all figures are ten-year revenue gains):

  • Don’t permanently extend capital gains and dividends tax cuts:  +$224 billion;
  • Don’t retain the 10% tax bracket:  +$579 billion;
  • Don’t retain the 25% and 28% tax brackets:  +$449 billion;
  • Don’t extend marriage penalty relief:  +$306 billion;
  • Don’t extend the child tax credit:  +$243 billion;
  • Don’t make permanent 2009 estate tax law:  +$234 billion.

The President’s budget already allows the top-bracket Bush tax cuts to expire, raising around $600 billion over ten years compared with a policy-extended baseline.  But if all of the rest of the Bush tax cuts (including those listed above) were allowed to expire as well, this would raise an additional $2.1 trillion over ten years–double what is needed to cover the costs of expanded health coverage within the ten-year budget window, which is maybe a bit closer to what we would need to cover the costs more reliably over the longer term.  And the beauty of this is that Congress wouldn’t have to pass this, and the President wouldn’t have to sign this.  It seems a lot easier than everything else we’re trying to find as a “scorable offset” for health care reform.  And if we really cannot afford to extend the Bush tax cuts even before considering a major health reform, how could it possibly be affordable when we are trying to do a health reform that on net costs (rather than saves) a substantial amount of money?

I Think I’ve “Arrived” (in the EconoBlogosphere at least)

July 16th, 2009 . by economistmom


I’m so thrilled and honored that the Wall Street Journal featured my blog as a “Top 25″ economics blog.  (And the graphic above, with mine on top(!), is what shows up when you visit the Real Time Economics WSJ blog today.)  My readership is way lower than the other blogs cited, but a big “thank you” to my small but devoted (and often highly-influential) following, which obviously includes some reporters at the WSJ.

Back to fiscal policy issues later today…I think I’m enjoying a little basking for now.  ;)

CBO on the House Tri-Committee Health Plan

July 15th, 2009 . by economistmom

The Congressional Budget Office has been working hard to shed “preliminary” light on various pieces of the House “Tri-Committee” health reform plan.

Yesterday’s analysis focused on the cost of the provisions designed to increase health insurance coverage.  As CBO director Doug Elmendorf summarized on his blog (emphasis added):

[O]ur preliminary assessment of the coverage provisions’ budgetary effects and their likely impact on rates and sources of insurance coverage for the nonelderly population [indicates that] enacting those provisions by themselves would result in a net increase in federal budget deficits of $1,042 billion over the 2010–2019 period. By 2019, CBO and the JCT staff estimate, the number of nonelderly people who are uninsured would be reduced by about 37 million, leaving about 17 million nonelderly residents uninsured (nearly half of whom would be unauthorized immigrants).

That implies a ten-year increase in budget deficits of about $28,000 per newly-insured person–to substantially increase coverage over the last 7 years of the ten-year budget window.  (The policy is estimated to achieve most of the increase in coverage by 2013-15.)  That’s about $4,000 per extra person-year of health insurance coverage.  Given that the average annual premium that employers pay for their employees’ health insurance is around $4,700 per person according to the National Coalition on Health Care, by that metric at least, the cost of this part of the health reform proposal (designed to increase coverage) seems pretty reasonable.

But a trillion dollars over the first ten years, when the policy doesn’t really kick in for a few years, is still a lot of money.  And the Obama Administration and Congress seem determined to offset this cost with a combination of tax increases and spending controls/cuts.  How are they doing in that regard?  More on that tomorrow.

From BudgetBob to SpongeBob

July 14th, 2009 . by economistmom


The latest project of Patrick Creadon, the director/producer of the fiscal policy documentary IOUSA (which featured my boss, Bob Bixby), premieres tonight at 9 pm on VH-1.  It’s a little different from Patrick’s last creation–although it still stars a “Bob”:

BURBANK, Calif., June 24 — On July 17, 1999 SpongeBob SquarePants premiered on Nickelodeon and signaled the birth of a series and character that would become one of the most beloved and popular in television history. To commemorate SpongeBob’s 10th anniversary, Nickelodeon is giving its fans the “Ultimate SpongeBob SpongeBash Weekend.” Airing from July 17-19, the 50-hour programming event hosted by Patchy the Pirate will include an unprecedented 11 SpongeBob premieres and a top-10 countdown of celebrities’ favorite SpongeBob episodes. Leading up to the anniversary, Nickelodeon’s sister channel VH1 will premiere Square Roots: The Story of SpongeBob SquarePants, the first original SpongeBob SquarePants TV documentary from critically acclaimed producers Creadon O’Malley (Wordplay, I.O.U.S.A), on Tuesday, July 14 at 9 p.m. (ET/PT)…

The Washington Post review of the SpongeBob documentary hints at some similarities between the two Bobs:

[SpongeBob creator] Hillenburg muses about President Obama’s fandom, pausing on that fact as if it’s some bizarre new coral. “That leaves me kind of speechless. There have been some administrations I wouldn’t have been happy to hear that from.”…

Perhaps the only Hollywood actor never to have compromised himself — the mega-celeb with the steeliest artistic spine ever — is an invertebrate. He remains the sponge with the ideals of an innocent…

…the folks behind “SpongeBob” are scheduled to ring the Wall Street bell soon: “Wouldn’t that be something — if the economy soared after SpongeBob rang the bell?”

Getting the President’s attention, never compromising, ideals of an innocent, and ringing a bell (sounding an alarm?) in a way that might help the economy?  Are they talking about SpongeBob, or about BudgetBob Bixby?… ;)

David Leonhardt’s “Club Wagner”

July 13th, 2009 . by economistmom


Bruce Bartlett recently called my attention to this new club he thinks I should be a member of–the NY Times’ David Leonhardt’s “Club Wagner.” As David explains on his Economix Blog:

It’s a (fictional) organization of people willing to acknowledge a basic economic reality: Taxes in the United States must rise.

At their current levels, taxes are too low to cover the kind of government that Americans have made clear they want — a government that includes Medicare, Social Security, a strong military and numerous other programs.

Our club is named after Adolf Wagner, a 19th-century German economist who predicted that taxes would rise as societies became wealthier. “As people grew more affluent,” as the writer Matt Miller has explained Wagner’s Law, “they’d want more of what only government could provide — a strong military, public order, good schools and assorted welfare benefits, services that private citizens would have trouble arranging for on their own.”

Will spending also need to be cut? Yes, especially health care spending. But spending cuts won’t be enough. Taxes will also need to account for a larger part of tomorrow’s gross domestic product — just as they account for a much larger share of G.D.P. now than they did a century ago. Done right, tax increases do not have to stifle economic growth.

David lists the “charter members” of Club Wagner (including Bruce) on that July 7th post, but then he added more members the next day after Bruce submitted some fast nominations.  Bruce is obviously one of the most active members of the (clearly multi-partisan) club, but that’s because they haven’t added me yet.  Anyone familiar with my work and obsessions over the past, oh, maybe 8-9 years knows I’ve been an (unofficial) card-carrying member of the (fictitious) club for years.  For example, on tax day 2006 (while I was working at the Brookings Institution) I took the opportunity in a Boston Globe op-ed to…. complain about the Bush tax cuts (what a surprise!).  But in that column I also reminded readers that taxes pay for things that we value and that we might even need more than tax cuts:

…[E]ven with our imperfect tax system, the revenues provided by taxes strengthen, not weaken, our nation’s economy. They fund essential public goods and services, they contribute positively to national saving, and many of the things that they fund — from highways and schools to biomedical research and national parks — indirectly create private wealth as well. As Justice Oliver Wendell Holmes put it in 1927, ”Taxes are what we pay for a civilized society.”

And I’ve always thought that if taxes are indeed what we pay for a “civilized society,” then as our economy becomes “richer” over time, we should be willing (and in fact, eager) to pay for a more civilized society.  No?

Bruce Bartlett Says Republicans Are Rolling Over on Tax Policy

July 10th, 2009 . by economistmom


In a Forbes column that remarkably echoes my blog post from a couple days ago, Bruce Bartlett argues that the Republicans are going to get what they deserve:  a big tax increase on the rich–just the kind of tax increase they most detest.  Bruce explains that the Democrats want to pay for health care reform but can’t seem to agree on a specific revenue-raising approach.  When forced to come up with specific tax increases, the Democrats’ tendency is to favor the “soak the rich” strategy, which does play well with the American public these days given the increase in income inequality over the past 15 years and the current state of the economy.  Republicans, meanwhile, are effectively “rolling over” by failing to step forward and reach out with any kind of alternative way of raising revenue that they, and maybe a lot of Democrats, too, would prefer.

What would thoughtful Republicans and Democrats likely prefer?  Maybe a broadening of the tax base that would allow revenues to rise without having to raise tax rates, accomplished by eliminating or reducing economically inefficient “tax expenditures” (such as the exclusion for employer-provided health care).  Maybe an expansion of the tax base to include things we don’t feel so bad about discouraging–such as carbon emissions, or personal consumption.  Bruce highlights Len Burman’s proposal for an add-on value added tax to pay for health care reform.  But before we have to go to those nobler, more fundamental changes in tax policy, or resign ourselves to the pat “tax the rich” Democratic response, I think these comments of Bruce hint at a much easier and obvious first step:

Even many liberals think that it is a bad idea to use soak-the-rich taxes to pay for health reform. “Financing a mass program with a class tax is not a good idea,” says Joseph Thorndike of Tax Analysts. “It obscures the connection between taxes paid and benefits received–a connection that’s necessarily tenuous for many government programs, but not for health care. It also undermines the notion that taxes are the price we all pay for civilized society, not just the price that some other (rich) guy has to pay.”

In the end, higher tax rates on the rich are inevitable if only because of expiration of the Bush tax cuts next year. Since that would just return rates to where they were in the 1990s when growth was robust, any claim that this will destroy the economy should be taken with many grains of salt.

Combining these two observations:  (1) that the “soak the rich” strategy could undermine support for any new health care plan (or even government programs more generally), and (2) that higher taxes on the rich are “inevitable” because of the scheduled expiration of the Bush tax cuts (and that returning to Clinton-era tax policy is no big deal), with the fact that increasing taxes only on the rich isn’t likely to produce enough revenue anyway, should lead us to fully notice/see the big elephant in the room (or on the beach as in the amazing image above!):  we need to at least consider letting all of the Bush tax cuts expire as scheduled.

The Republicans should realize that ironically, their calling for the expiration of the full complement of Bush tax cuts could turn out to be the easiest “compromise” position they could take on tax policy at this time.  And the Democrats should realize that they aren’t really as fond of the Bush tax cuts as they have lately been pretending to be just because President Obama promised to keep most of them in place.  Letting the Bush (deficit-financed) tax cuts expire, instead of turning them into the Obama (still deficit-financed) tax cuts, would raise more than enough revenue to pay for a health care reform with significantly expanded coverage, leaving some left over to help close the fiscal gap that already exists because of existing commitments.  And because the Bush tax cuts were broadly distributed to all taxpayers and yet highly regressive (providing the largest percentage increases in after-tax income to the richest of households), letting them all go away would be a broadly-distributed, highly-progressive way of raising revenue.   The Bush tax cuts are scheduled to expire under current law on December 31, 2010, at which point most economists believe the recession will be over.  And this would be a progressive and not economically harmful tax increase which would fund a progressive and badly needed health care reform, and yet would be a tax increase that Congress would not even have to vote on, and President Obama would not even have to sign.

It’s true that we’ll likely need to do more than return to Clinton-era tax policy to make a federal revenue system that’s sustainable over the longer term, because remember, even the “current law” baseline leaves us with a significant fiscal gap (3.2% of GDP over 75 years, according to CBO) and we’re now talking about expanding health care coverage.  So additionally we will need to consider more fundamental tax reform, including reducing tax expenditures and expanding the federal tax base to cover environmentally-harmful activities and/or economically-harmful excessive consumption.  But to me it’s clear that the big elephant already standing in the room (or on the beach) is (still) the Bush/Obama tax cuts.

The Dems’ Progressive Case for PAYGO

July 9th, 2009 . by economistmom

House Majority Leader Steny Hoyer and Congressman George Miller laid out the “progressive case for PAYGO” on the Huffington Post today:

Today, recommitting ourselves to paying for what we buy is crucial to rolling back deficits once again — and equally crucial to achieving progressive goals for all Americans.

There has long been a misconception that fiscal discipline is somehow only a conservative position. The truth is that PAYGO has long been embraced by progressive members of Congress. They are well-represented among the more than 160 House Democrats who have already co-sponsored the President’s PAYGO legislation.

Why is PAYGO important for progressives? For one, the investments that matter most — clean energy technology, affordable higher education, and health care access — demand long-term commitment, year after year. None of them are one-time payments. But the deeper our deficit gets, the more and more interest payments on our debt will crowd out spending on everything progressives value…

Additionally, PAYGO would apply to new entitlement and new tax cuts but not to programs that are funded through the annual appropriations process…

Should Republicans come back into power, they’d find a PAYGO law to be a powerful bulwark against reckless debt-financed tax cuts. President Bush was able to push through his unaffordable tax cuts only by waiving PAYGO. The costs were not paid up-front, by those who reaped the benefits — instead, the costs will be borne, with interest, by our children. With a PAYGO law in place, future tax cutters would have to explain just which programs they would cut in order to send a windfall to the wealthy…

Well, OK, I guess only future tax cutters “would have to explain”… When the Democratic Congress passes extension of the Bush tax cuts and when President Obama signs it into law, I guess they’ll just be the tax cutters of the past.

The Great Big Offset Right Under Our Noses

July 8th, 2009 . by economistmom

Congress is apparently still trying to figure out how to pay for health care reform, having turned up their noses at President Obama’s suggestion for a revenue offset (a scaling back of itemized deductions for high-income households).  The news reports from the Hill over the past couple days tell of “more than two dozen offsets discussed” to cover the costs of health reform (expected to fall in the neighborhood of $1 to 1.5 trillion over ten years).  As reported in the BNA Tax Daily yesterday (emphasis added):

Lawmakers have spent much of June discussing programmatic health care changes and how to finance them, but have so far been unable to agree on revenue-raising offsets…Lawmakers originally insisted they would only look for tax code changes within the health care system to pay for the overhaul, but in recent days have said they might need to step into the greater universe of revenue-raising provisions.

And another report claims that House Ways and Means Chairman Charlie Rangel may revive a favorite offset idea of his:  an income surtax on “the rich”–more specifically referred to in this report as “households with incomes above $250,000 per year.”  It’s reported that a similar plan Rangel “floated” in 2007 was for a 4 percent surtax on incomes above $200,000, which would raise over $800 billion over ten years.  Actually, this type of proposal was not only “floated” but repeatedly introduced by Rangel as part of Democratic alternatives to various tax bills when the Congress was controlled by the Republicans.  (I know; I was working for Rangel during those times.)  The thing is: we were able to repeatedly offer up this offset, because it never passed.  It was just the kind of proposal that required little serious thought but sent the right political message.  Now that the Democrats are in charge all over the place, the politicians might actually take the idea more seriously–and also more seriously reject it.  The size of the surtax needed to cover the cost of health care reform could cause sticker shock.  And more significantly, it seems downright silly to be going after $800 billion through a surtax, which only partially makes up for the $2 trillion (over ten years) in revenue given away by extending the (not-so) “middle class” bulk of the Bush/Obama tax cuts.  Doesn’t it?

Seems to me this is another “reverse Nike”–where we can find what we seem to so desperately be looking for in an offset by saying “just don’t do it” to the deficit-financed extension of the Bush/Obama tax cuts–that thing right under our noses.

Al Franken on the Bush Tax Cuts

July 7th, 2009 . by economistmom


It’s a big day for Al Franken, and I’m really happy for him. I’ve always been impressed with his level of knowledge and way of explaining fiscal policy. I’ve met and talked with him twice–once at a black-tie affair about a dozen years ago (funny story about that) and again at a book signing several years ago where my daughter Emily (now just 16) was his youngest fan (somewhere I have a photo of the two of them that I’m going to have to dig up). I’m hoping Franken will bring some of both his intelligence and his wit to the Senate floor in the coming years, especially when it comes to talking about fiscal responsibility and tax policy.

Here’s a great example of his talent.  From his book Lies, and the Lying Liars Who Tell Them (2003), Franken tells his tale of the Bush tax cuts, in a one-act play:

The Waitress and the Lawyer A One-Act Play
by Al Franken (from an idea by George W. Bush)

Set: A clean, well-lit diner. It’s eleven at night.

allison, a slim, well-dressed lawyer in her middle thirties, sets herself down at the counter. donna, a plump waitress in her late .twenties, approaches with a pot of coffee and a friendly smile.

donna: Can I help you, sug?

allison: Yes, please. Double cappuccino and a biscotti.

donna: Sorry. How ’bout coffee and a slice a pie?

allison: No pie for me. I’m on a diet.

donna: You, on a diet! If I had your figure, I’d have pie for breakfast, lunch, and dinner.

(They share a laugh.)

allison: Oh, what the hell! That lemon meringue looks great. Besides, it’s gonna be a long night.

donna: You workin’ the night shift, too?

allison: Well, in a manner of speaking. I’m a tax attorney and April’s my busiest month.

donna: Well, don’t look for any business from me. Thanks to President Bush, I won’t be paying any taxes this year.

(allison laughs as donna pours her a cup of joe.)

allison: You mean income taxes, Donna? Do you mind if I call you Donna? I read your name tag.

donna: Sure, sug.

ALLISON: Donna, how much do you make?

DONNA: Well . . .

allison: C’mon, just between us gals.

donna: Twenty-five thousand.

allison: Wow. That puts you in the top 10 percent of all waitresses. And how much in tips?

donna: That’s including tips. I report every cent. In this country, if you play by the rules and work hard, you can make a better life for yourself.

(allison laughs again, spraying her coffee all over the counter.)

allison: I’m so sorry.

donna: Don’t worry about it, sug, I’ll wipe that up. But what’s so funny?

allison: It’s just that what you said is so sweet and naive. Sure, you’re getting a $365 cut in your income tax, but you’re forgetting the $3,825 that was withheld in payroll taxes.

donna: Oh, I don’t mind the payroll taxes, because I’ll get back every cent in Social Security and Medicare when I retire.

allison: Honey. Bush raided the Social Security and Medicare trust funds to pay for my tax cut.

DONNA: He did?

allison: Yes. He took a $4.6 trillion ten-year projected sur­plus and turned it into a $1.8 trillion deficit. Let me show you what I’m talking about.

(allison empties the salt shaker onto the counter.)

allison: Let’s say this pile of salt is the surplus that we had under Clinton. And . . .

(allison tears open a packet of sugar and pours it on the counter, as well.)

allison: And this pile of sugar represents the Bush defici—

(donna eyes the growing mess, half listening.)

donna: Would you mind not doing that?

allison: Sorry. My point is that eventually someone is going to have to replace all that sugar in the packet and, well, clean up the mess. And I’ve got a feeling it’s going to be you or your kids. You have kids?…

[Allison explains how a bunch of government programs that benefit Donna are being cut, summing up:]

allison: … So, let’s see. After-school— $700. Medicaid—$2,896. Housing—$1,464. So, less your $365 tax cut, you’re down $4,695…

(The two women avoid each other’s eyes. Finally donna raises the coffeepot.)

donna: Can I top that off for ya?

allison: No, thanks, Donna. I should get back to work.

donna: So, I take it you’re not votin’ for Bush next time.

allison: Are you kidding? I make $250,000 a year. I love Bush.

donna: How big is your tax cut?

allison: I’m gonna get $6,000. Which is about sixteen times as much as you. And, of course, the program cuts don’t affect me. But the big payoff comes when my mother passes away. She’s on life support.

donna: I’m so sorry.

allison: Are you kidding? If she can hang on till 2010, I’m getting $12 million. Tax free. That’s about a six-million-dollar tax break.

donna: Oh, the repeal of the death tax. I saw that on Fox, too. I guess that’s fair, because that money was already taxed once when it was earned.

allison: My mom? Work? Oh, no, no. It’s mostly capital gains. Never been taxed, and now it never will be. Unlike your tips. Speaking of which, how much do I owe you?

donna: Well, let’s see. They just raised the sales tax. I guess $4.87…

So, I wonder if now Senator Franken feels the same way about the now-soon-to-be Obama tax cuts? It’ll be fascinating (and entertaining) to watch.

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