TE;MC

That's my TL;DR equivalent for the disturbing blasts of WTF that National Public Socialist Radio throws at me in the early morning.  Too Early;More Coffee.

The WTF this morning is some economic forecast group changing their growth forecast down from 3.2-ish to 2.85-ish (again, TE;MC).  Weird thing is that job growth is up, unemployment down, in this lower growth forecast.  Consumer spending down, though.

Do you see the WTF?  How the hell were we supposed to have gotten that jobless spending growth in the earlier forecast?  Did the yacht bubble not happen?  Does this jump out at anyone else as somehow just facially wrong?  Not incorrect wrong--Celine Dion's cover of "Highway to Hell" wrong.

Trying not to "me too" what is already just being killed elsewhere

Seriously.  I'll be adding the Great Orange Satan to my blog roll, too.  Benen's WaMo blog and GOS do broad coverage of so much stupid, and BJ and Krugthulu hit their marks hard.  So rather than do a "me, too" that could have gone into any of their comments, I'll pick on different stupid.

Edit: speaking of killing it, Boehner is absolutely crucified by Political Correction.  Seriously, find some time to at least scroll through to see just how hard a take-down it is, even if TL;DR.

And this is frivolous stupid to cover because he won't win.  Which he?  The stupid flavor of the week who won't win.  No, not The Donald the Birther.  Herman the [atrocious] pizza man.  He won't win the nomination, but he did get the nod at the South Carolina geek show.  One of his idiot positions is advocacy of the "Fair [sic] Tax".  Stupid policy is stupid, especially when stupid policy is a bad prescription for the actual current crisis.

The "Fair [sic] Tax" is a consumption tax in the form of a retail sales tax.  A consumption tax could also be implemented by exempted savings or investment, as through an IRA, but then you wouldn't get to offer up the red meat of killing the IRS.  Never mind that the Dept. of Treasury would need to implement a new bureaucracy to institute this fevered fiction. 

Today I'll look past the touted fiction of the tax rates necessary to meet our revenue needs (probably 50%-ish by most realistic estimates) and how retail sales taxes and their kissing cousin the Value Added Tax, are easily and notoriously evaded.  I'll just look at the main benefit promised, and how it's a load of horse shit.

The problem with the current income tax system, we're told, is that savings and investments are taxed twice, once when the money was earned in the first place, and a second time on the earnings from the investment.  If the money was just spent for current consumption instead of investment, it's only taxed when earned.  To me, income is income is income, and it ought to be part of the tax base, but we'll let that pass, as well as the nonsense that any more is taxed than the accretion on top of the invested principal.  A consumption tax, it is promised, is supposed to put the decision to save or invest on an even footing with current consumption.

The principles are connected with academic principles that as a body are called "commodity taxation."  If you have two types of goods with differential taxation that are roughly interchangeable, the higher tax on one will shift the preference of the consumer towards the other.  Ideally, and I don't disagree with this, the tax system ought not favor one consumption choice over another.

So isn't the "Fair [sic] Tax" a wonderful curative that will spur our savings and investment rates?  Depends whether you have any awareness of macroeconomics and our current macroeconomics.  We're in a liquidity trap, and there's the classic babysitting co-op example.  If saving for the future is valuable enough, the paradox of thrift can reduce current aggregate demand for consumption.  The central-banking response would be to lower interest rates so that future use of saved or invested assets is not as valuable in comparison to current consumption.  Or increase the inflation rate by loosening the money supply so that the saving isn't worth as much.

We don't have enough demand for consumption right now.  Corporations and entrepreneurs are sitting on cash and unused capacity.  Only current demand for goods and services will turn that around.  So what is the curative proposed by a moron?  Making current consumption less desirable.  Awesome!  You know what's even more awesome?  That to correct for the dip in current consumption that idiocy would add on to the current hell we would have to implement policy moves that would offset the savings incentives that the "Fair [sic] Tax" is supposed to provide.  Yep, lower interest rates and/or turn to inflation [like all the times it's been helpful in economic history, not the three times it's been a disaster], and all of the sudden putting savings/investment on an even footing doesn't deliver as promised.

Which would all be a fun frivolity if there weren't the enormous transition costs and inefficient transition rules.  Oh, and Herman, have fun not being electable as dog catcher when you have to explain that the entire principal amount of a home mortgage would be includable in income the moment hardworking Americans sign the paperwork on their American dream.

But he won't be the last idiot to sign on.  Mark my words.

Either Doug Holtz-Eakin doesn't understand government revenues, or

he's just a liar.

The bottom line is that a small minority is paying for all of the government Americans enjoy. Why is it fair that they be required to pay more?

Remember social insurance levies, Dougie?  Sales taxes?  The argument that I'm sure you join in on that corporate taxes are borne by labor and/or consumers?  Federal Income Taxes are not the only way people pay for government services.

Lies go in, lies go out.  Never a miscommunication.

Is this how the zombie apocalypse begins?

National Public Socialist Radio is reporting (with soundclip) that Boehner promises no debt ceiling increase without 2 trillion of new spending cuts.  And tax increases are off limits.

This is like a threat to shoot me in the head if I don't weave a basket, and I can't use my arms or my feet to do so.  If this is a serious threat, this is more anarchistic than those bandanna-ed WTO protesters of old.  If it isn't, this is such a giant pander that it should be named Tsing-Tsing.

Would the people who keep worrying loudly and publicly about a Greek-style currency run on the dollar please stop trying to instigate one?

Before I could mildly hedge and retract, I was shown why I shouldn't.

I had my little rant this morning:

That is the nature of government. It is a solution to collective action problems. The questions are who the "we" is, what "our" problems are, and what acceptable means to solve the problems are. Generally the third question is argued as a rear-guard action when the first two arguments have been lost.

I was going to, on reflection, back off on the last point.  You can have a big boat view of who our society is, agree on the problem and its seriousness, and still have disagreements on the best means to solve that problem.  However, often enough it is true that the means arguments are chosen as means to not solve problems.  Abdication to market forces, for example, is often a decidedly inadequate means to solve a problem, offered in hope that people forget that there is a problem.  No dice.  We have Medicare because market forces were not working for seniors in the 60's; the medical marketplace has not become any friendlier.

Krugman's razor slices to the bone again:

Here’s an analogy: think of Medicare as a footbridge that is deteriorating and will eventually become unsafe. You could propose structural repairs to fix its faults; Ryan doesn’t do that. Instead, he proposes knocking the bridge down and replacing it with trampolines, in the hope that pedestrians can bounce across the stream. And the Post declares that he deserves credit for pointing out that the bridge is falling down, and proposing a solution. Um, we knew that the bridge was in bad shape — and his solution is a fraud.

So, no, I'm not retracting.  Nuancing a little, but that's it.

What is your vision of government?

Steve Benen is doing my work for me.

I've already had this idea in mind for months as the idea of doing this blog got more serious, but he puts it on the table in a beautiful way.  It's kind of unfair that Rick "frothy mixture" Santorum is the mouthpiece for stupid, but stupid would speak it's mind anyway.  Why does America exist?  If your answer is "American Exceptionalism," well sorry, but I wanted an answer, not conservative Mad Libs.

The froth was in response to Obama mentioning our social insurance programs and that our commitment to them is part of what makes us great.  Benen turns rightly to the Preamble and its expressed aspiration of making us all better off through government.  You could disagree with the progressive take of the read, but you're left with the inescapable vision of the Constitution: we join in it because we are better off with it than without.

That is the nature of government.  It is a solution to collective action problems.  The questions are who the "we" is, what "our" problems are, and what acceptable means to solve the problems are.  Generally the third question is argued as a rear-guard action when the first two arguments have been lost.  However, the attack on social insurance is part of a rear-guard action that has lasted 75 years, so this is nothing to get too cocky about.

Osama Bin Laden, Tax Evader

Bin Laden never paid property taxes on his compound.  Not that surprising, really.  Nihilists never like contributing their fair share to society.