Today, the WonkBlog staff went full tilt against the crazies on the right. First, our favorite nerd Ezra Klein took on crazies in Congress who claim that “tax reform” will solve all our problems. It’s sad that we even have to talk about this—that Klein even has to write an article. Their claim is that by lowering margin tax rates but eliminating deductions the free market will not be distorted and so will spontaneously jump into high gear and employ all the long-term unemployed. Really, that’s what they’re saying.
Klein talks about this with a few economists. Larry Summers seems to be fairly keen on tax reform for other reasons, but doesn’t think it will stimulate the economy. Bruce Bartlett, an apostate Republican, is more to the point, “I am not familiar with any tax reform that raised growth, here or anywhere else.” On the other hand, Alan Auerbach suggests that a different kind of tax reform—a regressive value-added tax, which no is suggesting—could stimulate the economy.
This last idea really bugs me. For the last three decades, we’ve seen big increases in GDP. And yet the middle class has seen almost no improvement in their living standard. Why do we continue to think that increased GDP alone is a good thing. The truth is that our GDP could go down but if it went along with more equality, it would improve the live of the middle class.
Regardless of this, all the Republican crowing about reforming the tax code is just that: crowing. It isn’t going to get us anywhere.
Social Security Tax Reform
The biggest problem with Social Security is that the crazies on the right want to destroy it for no good reason. And they won’t even talk about sensible changes to improve the program. Shockingly, Dylan Matthews wrote an article today about my favorite topic: the Social Security tax cap, How to Sort Out Social Security’s Finances While Making it More Generous. It seems that Senator Mark Begich of Alaska is proposing that we get rid of the cap, increase benefits for the wealthy (a great trade off), and fix the cost of living adjustments.
I don’t have much to say about this other than: more!