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Hi, from 36,000 Feet–Again

January 13th, 2011 . by economistmom

I’m over Missouri now, about to fly into Kansas, on my way to Los Angeles for this Tax Policy Center-Loyola Law School conference on tax expenditures tomorrow.  (I’m flanked by daughters #2 and 3, flying on my favorite way to travel to the west coast:  Virgin America–which I’ve blogged from before, albeit a couple thousand feet lower.)

Here are my presentation slides I’ll be speaking from tomorrow.  I’ll report on the rest of the conference later this weekend.  My daughters and I will be taking a little detour to San Francisco, just for fun, before we head back home.

6 Responses to “Hi, from 36,000 Feet–Again”

  1. comment number 1 by: AMTbuff

    Your slide 6 states that Obama’s bipartisan commission’s spending cap of 21% or GDP is unrealistic and that you believe 21% is a floor. If so, what’s the ceiling? That’s a question I have yet to hear any progressive answer directly. American voters do not favor a sky’s the limit approach to spending.

    The adult conversation we need to have is not about taxes, it’s about spending. Are we going to agree to spend 18%, 21%, 24%, or what? Since deficit spending = future taxes, the tax discussion is secondary. Spending is the one and only issue.

    Tea party people may be unrealistic about the degree of spending reduction they claim to advocate, but at least they are talking about the correct issue. Other countries have already enacted spending cuts far beyond what American politicians consider feasible. When the bond market crashes, those cuts and more will be not just feasible, they will be inevitable.

  2. comment number 2 by: SteveinCH

    Exactly right. The notion of a cap is absolutely necessary. If you don’t agree on 21 percent, let’s try a different number.

  3. comment number 3 by: AMTbuff

    Likewise, conservatives need to state their floor under tax receipts as a percentage of GDP, whether it’s 18% or 21% or whatever. The gap between the tax floor and the spending cap should be less than 2% if we are going to reassure the bond market and avoid a crash.

  4. comment number 4 by: SteveinCH

    Right again. Personally, I was pretty comfortable with the Bowles-Simpson 21 percent cap on spending and grudgingly comfortable with the 21 percent floor on taxes.

    I’d love to see your 2 percent gap be a 1 percent gap just because I think there will be parts of the cycle where we’ll want to have the gap be higher but again, a good subject for debate if politicians were ever able to have the right debate.

  5. comment number 5 by: Arne

    I think the whole floor/ceiling concept needs some clarity on how strict it would be. As Diane’s slide 7 shows, we had a 7 percent swing because of the economic meltdown. As the Marron and Toder post shows, the definition of what to include can make a big difference on whether you really get the results you want.

  6. comment number 6 by: ST Dog

    21% is way too high for the spending cap.
    Non war, federal spending spending should be less than 10% of GDP. During war spending for the war can increase, then following the war the spending return to pre-war levels.

    Taxes should be equal to spending unless there is debt to be paid, at which time excess taxes should be used to repay the debt. That excess should be at a rate shuch that the debt is retired in a defined timeframe within a 20% tax cap (so 10% of GDP to pay the debt)

    Most federal spending needs to devolve to the states to decide and control. Pick most any issue the federal government attemts to solve, and you’ll find the one-size fits all solution from the feds is not as effective as many solutions tailored at the state/county/city levels would be. What works in DC doesn’t work in a small southern town, any more than the invers would. What works in GA is probably not the best solution in CA or ME.

    This is common sense as we all know what works for the family 3 doors down, with 5 kids, doesn’t work so well for the childless couple across the street. Basic principles do, put the detailed implementation differs. Federal programs try to use the same solution for both.