StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between



The Bruce Bartlett Archives

Posted by Bruce Bartlett
I published this article in yesterday's Financial Times. BB
 
To many the budgetary gridlock in the US may appear as intractable as that in Europe. But the reality is that the American situation is vastly more favourable.
Posted by Bruce Bartlett

According to the latest Medicare trustees report (p. 146), the unfunded liability of Medicare Part D is $16.1 trillion.

 

Google Reader

31 Oct 2011
Posted by Bruce Bartlett

Google has completely destroyed its RSS Reader. Suggestions for alternatives are appreciated. Non-Mac only. 

Posted by Bruce Bartlett
Short answer: It’s because he’s black and a Republican. Let me explain.
 
Republicans have long had a conflicted relationship with African Americans. Their party came into existence for the purpose of ending slavery. The Compromise of 1850 and Kansas-Nebraska Act were widely viewed throughout the North as sell-outs to slave owners and there was revulsion against the Whig Party for failing to mount any meaningful opposition to them. In the election of 1854, the Whigs collapsed and Democrats suffered heavy losses throughout the North.
 
At that point, the Democrats largely became a sectional party based in the South and dedicated to the preservation of slavery. The Republican Party arose from the ashes of the Whig Party and was dedicated to the abolition of slavery. It ran its first presidential candidate in 1856, electing former Whig congressman Abraham Lincoln as president in 1860, after the Democrats split into a pro slavery faction headed by Sen.
Posted by Bruce Bartlett

Press reports say that Congress is about to enact a nominal spending cut of 10 percent in the U.S. Government Accountability Office budget. The mind-boggling stupidity of this action is frankly beyond comprehension. Anyone who knows anything about the budget knows that the GAO is the primary source for detailed analyses of government programs. If Congress really wants to cut the budget without just taking a meat-ax to every program regardless of the consequences it needs the GAO desperately. It is the strongest ally any budget cutter could possibly have. GAO analysts know the ins and outs of government programs better than anyone in Washington. Its database is filled with decades full of reports recommending savings that would have saved trillions of wasted dollars over the years if they had been followed. Instead of slashing GAO's budget, Congress ought to be increasing it.

Updated Tax Polls

19 Sep 2011
Posted by Bruce Bartlett

I have previously posted a table showing that people support raising taxes as part of deficit reduction by a 2-to-1 margin over the Grover Norquist/Club for Growth/Tea Party position that the deficit must be reduced only by spending cuts without a penny of higher taxes. In light of President Obama's new budget plan, which includes higher taxes, I am posting an updated table, including a poll on Friday showing that three-fourths of people support higher taxes and only 21 percent support the doctrinaire right-wing position.

Bachmann/Thatcher

01 Sep 2011
Posted by Bruce Bartlett

Michele Bachmann compared herself to Margaret Thatcher today. This gives me an excuse to reprint my Economix column from a few weeks ago on Thatcher's actual accomplishments in terms of tax and budget policy, which are quite different from the Republican legend about her.

Posted by Bruce Bartlett

New York Times

December 24, 2008

Posted by Bruce Bartlett

On August 15, 1971, Richard Nixon implemented the most radical economic program in American history. And it was all done over a single weekend in secrecy worthy of the atomic bomb project during World War II. While ultimately unsuccessful, the Nixon program showed what a forceful president can do to completely change the nation’s course if he is willing to push the limit of his power.

Posted by Bruce Bartlett

Thirty years ago today, Ronald Reagan signed into law the Economic Recovery Tax Act of 1981. It remains controversial, with Democrats blaming it for undermining the nation’s finances and contributing to the maldistribution of income, while Republicans assert that the Reagan tax cut was so stimulative it actually lost no revenue and that its reprise is just what the economy needs today.

Posted by Bruce Bartlett

 

Posted by Bruce Bartlett

On Thursday, the Financial Times reported that Michael Bradfield, former General Counsel to the Federal Reserve Board and the FDIC, had sent a memorandum to Congress supporting the constitutional option to the debt limit, in which the president would invoke section 4 of the 14th Amendment to override the debt limit and raise the cash necessary to avoid default and the violation of laws requiring spending for various purposes. I have managed to obtain a copy of this memo through a congressional source. Because of its importance to the debate taking place right this moment, I am pasting the memo below. I have not asked Mr. Bradfield's permission because I do not know where to reach him. I hope he doesn't mind.

Posted by Bruce Bartlett

Some time in the next week or so, President Obama will be forced to break the law. Either he must break the law by refusing to pay bondholders the interest or principal they are legally entitled to, or he must refuse to pay government contractors, government employees, Social Security recipients and millions upon millions of other people and businesses that are also legally entitled to payments from the Treasury. Republicans say he can just pay the bondholders and screw everyone else. But the president is just as legally obligated to make other payments required by appropriations and other laws as he is to make interest payments. Indeed, there is a law, the Congressional Budget and Impoundment Control Act of 1974, which says that it is illegal for the president to fail to spend money that Congress has appropriated. Furthermore, the Supreme Court ruled in the case of Clinton v. New York that the president may not impound funds even if Congress says he can.

Posted by Bruce Bartlett

I posted an earlier version of this table a week ago, but there have been several new polls confirming the conclusion, so I have brought it up to date.

 

Posted by Bruce Bartlett
From the Fiscal Times July 15, 2011
Next week, House Republicans plan to debate a balanced budget amendment to the Constitution.
Posted by Bruce Bartlett
It appears that Republicans have walked away from a historic opportunity to reduce the deficit because of their obsessive insistance that not one penny come from higher revenues. Recent polls, however, suggest that the American people are not so obstinate and are more than willing to accept some increase in taxes to reduce the deficit.

Debt Limit Options

04 Jul 2011
Posted by Bruce Bartlett
For more than I year, I have been warning about the danger of a debt default resulting from Congress’s failure to raise the debt limit in a timely manner. Now, we are getting close to the 11th hour and it is clear that there are many Republicans willing to risk a default to achieve their ideological goal of slashing government. Although they say they are motivated by a concern for the nation’s finances, their total unwillingness to consider so much as $1 of tax increase proves that such claims are hollow.
 
As a consequence, I continue to believe that a debt crisis is imminent. I have serious doubt that Congress will raise the debt limit in time to prevent the Treasury from running out of cash to pay its bills, including interest and repayments on the debt.
Posted by Bruce Bartlett
Contrary to Republican dogma, polls show that the American people strongly support higher taxes to reduce the deficit and improve income inequality. Following are 19 different polls since the first of the year that say so.
 
A June 9 Washington Post/ABC News poll found that 61 percent of people believe higher taxes will be necessary to reduce the deficit.
 
A June 7 Pew poll found strong support for tax increases to reduce the deficit; 67 percent of people favor raising the wage cap for Social Security taxes, 66 percent raising income tax rates on those making more than $250,000, and 62 percent favor limiting tax deductions for large corporations.
Posted by Bruce Bartlett
The main sticking point in negotiations between Republicans and Democrats on deficit reduction measures to accompany a rise in the debt limit is whether higher revenues should make any contribution. A key Republican concern is that any tax increase would depress the economy.
 
Given the slow patch that the economy is going through, any realistic threat to growth is one that has to be taken seriously. But the Republican position that spending cuts are expansionary while tax increases are depressing is not logically consistent. Both spending cuts and tax increases affect the economy in roughly the same way in the short run – by reducing aggregate demand. Fiscal contraction, whether on the tax side or the spending side, will have a negative effect under current economic conditions.
 
Of course, it goes without saying that there will be different economic effects depending on how spending is cut or taxes are raised. But the first-order effect in either case will be to reduce national income and depress growth.
Posted by Bruce Bartlett
Republicans claim to be deeply concerned about the budget deficit and the national debt, yet repeatedly demand additional large tax cuts. For example, former Minnesota Gov. Tim Pawlenty, a candidate for the Republican presidential nomination, supports a balanced budget amendment to the Constitution but also wants an $8 trillion tax cut. He rationalizes this contradiction by asserting that his tax cut will not actually lose any revenue. As Pawlenty told Slate reporter Dave Weigel on June 13:
 
“When Ronald Reagan cut taxes in a significant way, revenues actually increased by almost 100 percent during his eight years as president.


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