Friday, November 12, 2010

The Catfood Commission

My reaction to the preliminary report of the Catfood Commission has been restrained hostility. The only good thing I saw about it was that it illustrated a methodology which left no “scared cows” and which must be the model for making any real progress on balancing the budget. Other than that, with its 75% spending reduction and only 25% tax increase component, it appeared to me to be a “bipartisan” plan only by the Republican definition of the word.

One person said, and I can’t find the quote now, that it would pare government down to one that would “merely fight wars and defend the border.” Based on present performance I would rephrase that little piece of hyperbole as, “lose wars and pretend to defend the border.”

Another person commenting said he was fine with dropping the mortgage interest deduction because, “I’ve never figured out why renters should get screwed.” My guess is he’s a renter, but he’s incorrect in any case, as are those who claim that renters don’t pay property tax. They do, because their landlords pay property tax and pass it on to them in their rent. Their landlords also have mortgages and, since the property is income-producing, those are business loans and the interest is tax deductible. That tax deduction affects their rent, and if the home mortgage interest deduction goes away it is the homeowners who will be getting screwed.

I’m loathe to comment on the Social Security part because it will sound like I’m grinding my own axe, but earning their nickname is hardly praiseworthy. Social Security needs some adjustment, to be sure, but it is not part of federal revenue and the topic does not belong in a discussion of the federal deficit. As to adjusting it, lifting the income cap on the deduction is fine, but raising the retirement age and this business with the COLA is… Well, I’m trying to watch my language.

Lowering income tax rates and eliminating deductions and loopholes sounds very well, it’s called “simplification of the tax code” and we’ve done it before to very good effect, but lowering taxes and making them less progressive while pretending to raise them is not only Republican, it’s downright Rovian.

Paul Krugman, predictably but in this case quite elegantly, expresses his outrage in the New York Times today

Matters become clearer once you reach the section on tax reform. The goals of reform, as Mr. Bowles and Mr. Simpson see them, are presented in the form of seven bullet points. “Lower Rates” is the first point; “Reduce the Deficit” is the seventh.

So how, exactly, did a deficit-cutting commission become a commission whose first priority is cutting tax rates, with deficit reduction literally at the bottom of the list?

I probably should point out that Dr. Krugman is a bit more coherent on this subject today than he was yesterday, but then so am I. That’s why I waited until today to write about it, and why I’m not poking any fun at him for his sputtering yesterday.

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