by Charles Blahous
e21: Economic Policies for the 21st Century
December 05, 2012
This article makes eight major points regarding fiscal discussions. Point #1: There is no point in complaining about others pushing for their policy views. Point #2: While the fiscal cliff is largely about taxes, the long-term deficit problem is about spending. Point #3: Advertised ratios of proposed spending cuts to tax increases are meaningless and should be ignored. Point #4: Stabilizing spending is the best way to clinch any deal that includes revenue increases. Point #5: Federal deficits are reduced by tax revenues, not by tax rates. Point #6: For a given amount of tax revenue collections, high marginal tax rates with many loopholes are bad economic policy relative to lower rates with few loopholes. Point #7: The logical way to hit the “rich” is to cut federal spending on them. Point #8: Any credible deficit-reduction deal must split the Democratic caucus and will likely need to be negotiated largely by President Obama and Republicans.