The New Republic

I wish them luck but who needs a commission? 1) Means test social security and Medicare. 2) Another slight raise in the income tax, progressively (may affect Obama's pledge not to tax the under-250,000, i.e., directly tax them). 3) Raise the gas tax with a rebate for people living in rural areas. 4) Just to be original: Patent tax: any product sold under a claim of patent protection (or made by a patented process) pays a tiny tax on the revenue. Can I get some of the committee's expense money now?

- Lymon1

February 19, 2010 at 10:13am

Lymon, Why a rebate for people in rural areas? They already enjoy a significantly lower cost of living, and for most of them (who live in small towns) their daily transportation needs are shorter than for suburbanites.

- IowaBeauty

February 19, 2010 at 10:59am

Mr. Chait, this is more than a little ironic seeing as your lack of encouragement is not exactly an argument. You are wrong about Rivlin's post, firstly by adding in superfluous text- the argument in its entirety is actually only:

The Speaker and the Senate Majority Leader have promised to bring their recommendations to a vote. If the Commission works diligently to produce a viable compromise and public anxiety about the impact of rising debt on the economic future manifests itself in the election campaign, the Commission may well be the vehicle through which common sense prevails.

And secondly by its summation. In fact, his argument can hardly be described as unsubstantiated assertion. It is rather three eminently reasonable premises and an entirely appropriate logical inference: Premise 1) "If the Commission works diligently to produce a viable compromise" This refers to the Commissions ability to make a fair sounding compromise. Some groups on the left and the right are bound to hate this come what may. But if the plan contains things both hate in some degree of even proportion, has a good degree of populism to it, (i.e. is relatively progressive hammers bankers and CEOs), and is not overly draconian in scope or speed of the austerity, they might just look reasonable to the electorate at large. That means good poll numbers and bad news for the pols not wanting to touch it with a barge pole. Premise 2) "The Speaker and the Senate Majority Leader have promised to bring their recommendations to a vote." This means that Senators will have to stand up and be counted vis a vis the reasonable compromise, which greatly increases chances of passage. Especially when you consider... Premise 3) "and public anxiety about the impact of rising debt on the economic future manifests itself in the election campaign" And this refers to the contingency of the political climate. Obama's ushering this thing into existence and pushing on it has presented a real conundrum for Republicans. They have succeeded famously in making the deficit a huge issue in the public's mind. They're in real deep do do if they wear the failure for this. Likewise, Dems in a tough year against a resurgent Republican Party are going to feel that Republican meme like an anchor around their necks. All of which means that, though very very few politicians are going to want to vote for such a measure, there's a decent chance that fewer still are going to want to be seen not voting for it. And, as per 2, there's no chance they won't be seen. Logical inference) As the man says, "the Commission may well be the vehicle through which common sense prevails." The stars have aligned to a great degree, so it could happen. With all the special interest money bound to deluge Washington on this, that certainly doesn't mean even odds, but it's unquestionably a fair argument for "may well be", which I would translate as non-trivial liklihood.

- I Majorajam

February 19, 2010 at 11:03am

Lymon, you're overcomplicating things. The answer is this: Increase revenue, decrease spending. In the last generation, Democrats in Congress have been willing to do both. Republicans in Congress have been willing to do neither. The problem isn't knowing what to do; the problem is the existence of a political party that makes opposition to the measures necessary to solve the problem a first principle. We don't need a commission to tell us what to do; we need a wholesale reform of the Republican Party. Until the GOP is ready to embrace fiscal responsibility, the debt problem cannot and will not be solved. Given the current political dynamic, it's probably a bad thing for Democrats to take any action at all to control the federal debt. The current level of debt will severely constrain future Republican governments from enacting very much of their lower-revenue, higher-spending agenda. Any serious steps to tackle the debt problem now will simply increase the damage Republicans will do to the national credit when they next regain power. Any deficit reductions now will simply give Republicans more rope with which to hang the republic.

- rhubarbs

February 19, 2010 at 11:46am

Rhubs -- absolutely -- I realize that's the whole point of kicking things to a committee and hoping it can provide political cover, I was just having fun showing how easy it is to do this commission's work for them, at least on revenues. Iowa -- it struck me that a gas tax is already a regressive tax and that rural folks might have longer drives because of the nature of their jobs, lack of public transportation, etc. and some folks would be bearing an unfair burden. Definitely open to suggestions, the main point is to get both the revenue and social/geopoliticcal good that a gas tax might bring.

- Lymon1

February 19, 2010 at 11:59am

Lymon, didn't mean to sound like I was arguing against anything you said - I sort of meant to expand on your suggestions. With regard to the gas tax, Iowa is right. But it would probably be useful to build in some offsets for independent contractors in the transportation business, as you suggest. Higher gas prices come straight out of the pockets of most commercial truckers, for example, not out of the bottom lines of the companies whose goods they're transporting. Also, might be worth seeing if some kind of trade could be made whereby production-based farm subsidies are reduced but input-based tax credits (such as for gas) are increased.

- rhubarbs

February 19, 2010 at 12:45pm

Minor point, but costs that are industry-wide do not come out of the pockets of firms except in the shortterm. They must end up in the price sooner or later. The transition can be painful if too fast, but, ultimately, there is no other possibility. If the industry cannot pass on the cost, it contracts until the more limited supply raises the price to cover the cost. This is clear from Smith, to Ricardo, to Marx, to Sraffa. No way around it. Quantity adjusts until price covers costs. Imposing the tax and then rebating it is self-defeating.

- roidubouloi

February 20, 2010 at 12:47am