Relevant and even prescient commentary on news, politics and the economy.

Raising Future Taxes Yet Again

Well, it looks like they finally did it. Congressional Republicans agreed yesterday on new ways to raise future taxes. They’ve proven quite expert at cutting today’s taxes and paying for them by issuing more government debt – debt that will have to be repaid in the future through higher taxes, of course – so this […]

Cato Unbound: What Tax Increases Would They Suggest?

Via Mark Thoma comes a debate between David Frum and Bruce Bartlett as to the prospects of achieving fiscal responsibility through cuts in government spending. The short answer is that we cannot. Let’s have Mr. Frum up first: In the 1990s, the newly elected Republican congressional majority enjoyed what we can now see was the […]

GDP and Mortgage Interest

As a supplement to the GDP report, the Bureau of Economic Analysis provides an estimate of aggregate mortgage interest and the effective rate of interest on mortgage debt outstanding. It should come as no surprise that the effective interest rate is increasing. Click on graph for larger image. After twenty years of declining rates, the […]

In Defense of O’Neill

Donald Luskin praises Treas. Sec. Snow with the following: I’ve come to believe that John Snow is doing a terrific job. Since he was nominated by the president in January 2003, he has been at the center of the Bush administration’s best economic initiatives. In his first months in office, he helped push through the […]

More Fiscal Dishonesty from Certain Republicans

Sensible and honest conservative Bruce Bartlett emails me the latest nonsense from Deroy Murdock: Modest legislation to extend President Bush’s tax cuts for two years, rather than make them permanent, is trapped in a House-Senate conference committee. Such inaction might be understandable if tax cuts actually “ballooned the deficit,” as tax hikers always charge. In […]

The 2001 and 2003 Tax Cuts and the Economic Recovery

While I profess to being a Keynesian economist, I have never bought into the notion that fiscal stimulus is the only way to reverse a recession. Max Sawicky – who may be more Keynesian than yours truly – writes: My question in all this, which no conservatives are rushing to answer, is this: What sequence […]

Do We Pay Too Much in Taxes?

Bruce Bartlett has been invited to contribute to the National Review: The question is ambiguous because it is not clear whether people are being asked about the effective rate of taxation (taxes as a share of income) or the marginal rate of taxation (that which applies to the last dollar earned). But either way, taxes […]

Tax Revenues Are Surging and More Economic Spin

Secretary Snow testified before the House Appropriations Subcommittee on Transportation, Treasury, and Housing and Urban Development, the Judiciary on Wednesday: The economic indicators since the President signed the Jobs and Growth Act in May 2003 provide validity to this notion. Since that time, we have seen eleven straight months of positive business investment; nearly five […]

Fixing the Fiscal Nightmare

I’d like to get back to a problem that I was writing about last week: the possibility of using a value-added tax (VAT) to fix the “on-budget” federal budget deficit. That deficit, which excludes the Social Security trust fund (which will run a modest but declining surplus), is likely to be in the neighborhood of […]

Does the Earned Income Tax Credit Create Disincentives?

Mickey Kaus thinks so: Earned Income Tax Credit does send cash to low income earners, but again you need to earn at least some money to get it. And it’s already pretty big. We probably can’t increase it much higher without running into cost and disincentive problems when the credit is phased out in the […]