Sometimes, in the words of the great Branch Rickey, you get "addition by subtraction." [footnote below] In the case of Peter Orszag, the aphorism fits. Peter Orszag was the Director of the Office of Management and Budget, appointed by the President in January 2009. After preparing two budgets, he left the government this summer and was replaced by President Obama.
In his first column since being hired by the the New York Times, he suggests a two year extension of the tax cuts for everybody, including the rich, and then ending them for everyone. There's always a reason to extend tax cuts for the rich. Sun shines, extend tax cuts for the rich. It rains, extend tax cuts for the rich. But ending them never seems to come.
I am glad this guy is out of the White House and I think it may be because the President did not agree. [See Updates: Obama admin rejects Orszag compromise today]
Mr. Orszag also proposes a "modest" (his word) value added tax of 5% to 6%. A value added tax is "a tax on the estimated market value added to a product or material at each stage of its manufacture or distribution, ultimately passed on to the consumer. It differs from a sales tax, which is levied only at the point of purchase." (Wikipedia: Value added tax.) In other words, poor and middle class people get fleeced on EVERY purchase. I oppose VATs.
Orszag from his column.
In the face of the dueling deficits, the best approach is a compromise: extend the tax cuts for two years and then end them altogether. Ideally only the middle-class tax cuts would be continued for now. Getting a deal in Congress, though, may require keeping the high-income tax cuts, too. And that would still be worth it.
snip
One possibility would be to establish a new source of revenue, perhaps through revenue-increasing tax reform, and possibly including a modest value-added tax (that is, a V.A.T. of 5 percent to 6 percent). This approach has many potential benefits, including the opportunity to improve our tax code by cutting back on loopholes and shifting toward a consumption-based tax system. It is also politically impossible, at least in the era of the 60-vote Senate. Those who fear a V.A.T. have little reason to worry — the votes aren’t there.
The beauty of extending the tax cuts for only two years is that canceling them doesn’t require an affirmative vote. It happens by default, so Congressional deadlock works in its favor. And it would essentially solve our medium-term deficit problem, reducing the deficit by $200 billion to $350 billion a year from 2015 to 2020.
NY Times, PETER ORSZAG, September 6, 2010, One Nation, Two Deficits
And in two years, there will be lots of reasons to extend the tax cuts on the rich even more. There always are. President Obama agrees that there should be NO extension of the tax cuts for the wealthy:
Temporarily extending tax cuts for the rich opens the door to permanent tax cuts and that is something the United States cannot afford, an economic advisor to President Barack Obama said on Tuesday.
Jason Furman, deputy assistant to the president for economic policy, said a proposed short-term extension for the rich that some economists have advocated would put the country on a slippery slope it would be tough to pull back from.
"There is a concern that (if) you extend those tax cuts for even a year, and that is a way to get a foot in the door ... and make them permanent," he told an event in Washington on the impact of tax policy on families.
Obama adviser warns against tax cuts for wealthy
[Footnote re Branch Rickey. "Addition by Subtraction."
It was long time Dodgers General Manager Branch Rickey who is credited with coining that term. It means sometimes a team can get better not by adding an important player but by removing one. The theory was that you can often have a player who is an obstacle to a team’s goals.
Addition by Subtraction
Wesley Branch Rickey (December 20, 1881 – December 9, 1965) was an innovative Major League Baseball executive elected to the Baseball Hall of Fame in 1967. He was known for breaking Major League Baseball's color barrier by signing African American player Jackie Robinson, for drafting the first Hispanic/Black Hispanic superstar, Roberto Clemente, for creating the framework for the modern minor league farm system, and for introducing the batting helmet.
wikepedia, Branch Rickey
[End footnote]
Mr. Orszag's decision to leave the Obama adminstration clearly is a case of addition by subtraction.
Update I: from citizenx in the comments.
Sam Stein agrees w/ on departure (1+ / 0-)
Recommended by:TomP
But within the White House, many believe that to make even a small compromise on the Bush tax cuts (whether on political or economic grounds) is to give the store away. Last month, for instance, the Vice President's chief economic adviser Jared Bernstein sat down with the Huffington Post for an off-the-record discussion on a host of economic matters. The one thing that he and his office allowed to be printed was a relatively uncompromising take on why a temporary extension of the Bush tax cuts for the wealthy simply won't work.
Orszag's Column Points To Odd-Man-Out Status At White House
I'll look at my navel after the midterms.
by citizenx on Tue Sep 07, 2010 at 09:47:21 AM PDT
by citizenx
Update II: White House pushback on Orszag column (from Sam Stein at HuffPo):
It was also fairly noteworthy that just hours after Orszag's New York Times column went live, the White House formally pushed back on the compromise suggestion.
"The president has been clear about his support for extending tax cuts for the middle class and about ending the tax cuts for the wealthiest 2 percent of Americans, which would cost 700 billion over ten years to extend at a time when we are dealing with a fiscal crisis and the independent CBO has listed as the least effective form of growing the economy," said spokesperson Jen Psaki.
White House aides have been relatively mum about whether Orszag privately argued for a temporary extension of Bush tax cuts for the wealthy while still in the administration. But the fact that, immediately upon leaving, he made this argument suggests as much.
Increasingly, there have been whispers within the White House and among the cadre of economic advisers that deal closely with the administration that Orszag was a voice at odds with his colleagues.
snip
"He [Orszag] was the main antagonist of Summers' and Romer's in advocating a stop to measures supporting discretionary spending," the adviser said, requesting anonymity. "Summers and Romer were actually closely aligned on macro-economic policy."
HuffPo, Sam Stein, Orszag's Column Points To Odd-Man-Out Status At White House
Update III: From blackwaterdog in the comments, Gibbs says no to Orszag!
Gibbs, NOW: (11+ / 0-)
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White House press secretary Robert Gibbs restates, again, President Obama's view that "we cannot afford to extend the tax cuts for those making more than $250,000 a year."
"We should and must pass legislation that extends the tax cuts for middle-class families," he says. "I'm simply stating what our position is."
Did anyone in the White House know that Peter Orszag was going to write about the Bush tax cuts before the column appeared in The New York Times? "We certainly didn't see Peter's column before it appeared today," he says.
Gibbs says Obama disagrees with the argument, made by Orszag, that the Bush tax cuts should be extended for two years.
http://www.politico.com/...
"Barack Obama volunteered to be the captain of the Titanic AFTER it hit the iceberg" (Van Jones)
by blackwaterdog on Tue Sep 07, 2010 at 10:07:28 AM PDT
blackwaterdog