Lifted from Robert Waldmann’s more private thoughts:
I love this video.
I agree that it is very odd for Romney to brag about balancing a budget with a 1.5 billion dollar federal bailout. But what exactly does it mean for a manager of a firm to balance a budget ? I’d say the very minimum is to keep the firms you control out of bankruptcy. By this standard Romney is not a budget balancer at all. At Bain he made huge amounts of money relying on limited liability. Several Bain controlled firms went bankrupt. Those were budgets under Romney’s control (sole shareholder CEO and all that) which were as un balanced as budgets can be.
I know I am mixing up budgets and balance sheets. I am doing that to bend over backwards to try to meet Romney half way. Really a corporations budget isn’t balanced if it issues debt. Unbalanced budgets are the key to private equity. Romney’s whole career as a businessman is based on understanding that an obsession with avoiding debt is costly.
On this he is consistent in practice as well as being consistently dishonest, since as you note, he proposes a huge increase in the US budget deficit. The approach of loading an entity up with debt and not worrying about what happens if it can’t pay has worked very well for him so far, so why shouldn’t he stick with it_
I’m very sorry I wrote an outraged comment on your post critiquing #rateloweringbasebroadening (RLBB)for not critiquing it completely enough. In this video you make the key point that extremely high income people will gain money they sure don’t need from RLBB as they just don’t have deductions on the order of their income (importantly this refers to Romney style RL and maybe a bit of BB (but no details) and things are different if the BB includes raising taxes on capital income and capital gains).
On Gas prices, I note that US consumption is a large fraction of world consumption. A US gas tax probably would cause lower petroleum prices in the medium run (not immediately only after people trade in their SUVs for cars). It makes no sense for a country to pretend it is tiny when it is large. Laissez faire is optimal only when price taking is optimal. In the world petroleum market, the US acts as a monopsony which has no interest in maximizing profits. It’s as if Saudi Arabia ignored the effect of their exports on prices. Of course you know this (you praised Mankiw on the gas tax). Fleet economy standards may be a silly way to do it based on the US obsession with low gas prices, but I suspect that Obama’s policies are causing lower petroleum prices and will eventually cause significantly lower petroleum prices. “There is nothing [more] a US President can do” is true given and only given political limits.
(OK so enough being responsible. Now a dumb joke about a smart guy — a smart Pollack joke
Love the denunciation of rate cutting and base broadening. You are the most effective populist since President Jackson, Pollack.)