Over at New Deal 2.0 just before Christmas, Jeff Madrick, author of the
Age of Greed, presented the
The 10 Worst Economic Ideas of 2011. Given that it's only 10, it's obviously an abbreviated list. But these 10 worsts are compressed into some succinct talking points for the coming year, whether you're canvassing for votes or into it again with Uncle Vince. At the top of the list were the Herman Cain and Newt Gingrich proposals.
1. Taxes should be more regressive.
At the top of the list for sheer scandalous insensitivity are Herman Cain’s and New Gingrich’s tax plans for America. Cain and Gingrich are both flat tax advocates. Cain proposes “9-9-9″ — a 9 percent sales tax, 9 percent income tax, and 9 percent corporate tax. He would also eliminate most deductions. Would this raise more or less money? The romantic conservatives claim the lower income tax rate would mean more growth. Never mind that the evidence to support that claim has been found profoundly lacking time and again.
What is eyebrow-raising is how regressive the Cain tax would be. According to the Tax Policy Center, those who make more than $1 million would get a tax cut of about $455,000 on average. Those who make between $40,000 and $50,000 would get a tax increase of about $4,400. The tax rate would be 23.8 percent for this group, compared to 17.9 percent for those who make $1 million or more.
Cain’s plan might take in as much money as is now taken in by the federal government. But Gingrich’s plan wins the gold medal: his plan is both regressive and a gigantic revenue loser. His flat tax is 15 percent on incomes, with plenty of deductions like the one for mortgage interest still intact. He would eliminate taxes on capital gains and dividends. Those who earn more than $1 million would make out like bandits, saving an average of more than $600,000 a year, while those earning $50,000 a year would save about $1,000. Meanwhile, the government would forego about $1 trillion in annual revenues by 2015.
[In addition, Madrick had some things to say about all of these]:
2. Austerity works.
3. Export growth models are sustainable.
Germany is especially proud that it has exported its way to becoming the strong man of Europe. It has suppressed wage growth, used subsidies to make its products more competitive, and taken advantage of the fixed euro, set at too low a rate to maintain trade balances. It is determined to remain oblivious to the fact that such a model requires countries that buy its products to run deficits and therefore borrow lots of money. This is why export models are known as beggar-thy-neighbor models, and it is why Germany has a moral obligation to help bail out nations like Greece, Italy, and Spain. Export models are really debt models on a global scale.
4. Fannie and Freddie did it.
5. Cutting Social Security benefits is a priority.
6. Inflation is just around the corner.
7. The Medicare eligibility age should be raised.
8. Competition between Medicare and private health insurance will reform the health care system and reduce costs.
9. Federal spending should be capped at 21 percent of GDP.
The whopper is the House Republican plan to adopt a budget balancing amendment to the Constitution. It would reduce federal expenditures to 18 percent of the previous year’s GDP, meaning more like a 16.5 percent cap. This would change America as we know it, testing the nation’s political stability with harsh cuts in social spending and precluding any serious public investment in the nation’s economic foundations.
10. Balancing the budget should involve equal parts tax hikes and government spending cuts.
This is not economics; it is politics. But economists argue for it all the time as if it is good economics, not admitting their conservative bias that high taxes are bad for growth and government social and investment spending never helps.
Blast from the Past. At Daily Kos on this date in 2009:
Arguably the biggest political story of holiday week, outside of the Senate passage of health care reform, was the decision by freshman Democratic Congressman Parker Griffith to jump to the Republican Party.
There are several reasons why a candidate would cross the aisle, as has been evidenced by the recent history of party switches, both in the Congress and at the state level.
The problem for Griffith is that there are several characteristics of his decision to jump sides that don't fit well with past precedents, and there are unique dynamics to this particular election cycle that might make his decision an ultimately unsuccessful one.
Let's go through some of the reasons for party switches, weigh them against the facts of the Griffith defection, and see how this nouveau Republican stacks up.
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