April 18, 2014

Posts on tax policy

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Sunday, August 30, 2009 - 8:53 PM

The first definition of “plausible” on dictionary.com is:

plausible
[plaw-zuh-buhl]

having an appearance of truth or reason; seemingly worthy of approval or acceptance; credible; believable: a plausible excuse; a plausible plot.

Note that it doesn’t say “likely” or “probable”–it connotes the notion of possibility not probability. I bring this up because many folks, especially the media, want to interpret the “Concord Coalition Plausible Baseline” as our best forecast of what the fiscal outlook will turn out to be. No, we’re not saying that’s the most likely outcome; we’re saying that’s a plausible, possible outcome. And it’s a worst-case scenario, because that’s what we do at Concord: we warn about the possible really bad outcomes if we don’t start making more responsible choices–because we don’t want them to happen.

On Saturday's front page of the Washington Post...

Thursday, August 6, 2009 - 7:40 PM

Today’s Washington Post reports that the Senate Finance Committee has come up with a bipartisan plan that contains a new revenue offset (or “pay-for”) that’s more consistent with the goals of health reform (emphasis added):

Senate negotiators are inching toward bipartisan agreement on a health-care plan that seeks middle ground on some of the thorniest issues facing Congress, offering the fragile outlines of a legislative consensus even as the political battle over reform intensifies outside Washington.

The emerging Finance Committee bill would shave about $100 billion off the projected trillion-dollar cost of the legislation over the next decade and eventually provide coverage to 94 percent of Americans, according to participants in the talks. It would expand Medicaid, crack down on insurers, abandon the government insurance option that President Obama is seeking and, for the first time, tax health-care benefits under the most generous plans. Backers say the bill would also offer the only concrete plan before Congress for reining in the skyrocketing cost of federal...

Thursday, July 30, 2009 - 11:18 AM

The Congressional Budget Office once again validates some intuition many of us had about health care reform: when you have health costs rising much faster than the economy is growing, a package that expands coverage but is unwilling to tax health benefits to pay for it is not likely to add up to a deficit-neutral plan over the longer term. The basic problem is that the cost of coverage expansion will continue to increase at the same rate as health care costs, but the tax increase offsets will only grow (at best) at the rate of economic growth. Then you have an additional problem that many of the offsets might be one-time cuts or cuts whose value does not even keep up with economic growth or inflation. 

Quoting from pages 12-13 of the report (a letter to Congressman Dave Camp (R-MI) on the House tri-committee proposal), emphasis added:

Looking ahead to the decade beyond 2019, CBO tries to evaluate the rate at which the budgetary impact of...

Thursday, July 23, 2009 - 9:19 PM

While the President's press conference Wednesday night got a lot of attention and focused substantially on health care, he also did an interview with Washington Post editorial page editor Fred Hiatt earlier in the day. The wide-ranging interview touched on health care reform, but also on a lot of the other subjects Concord Coalition members are interested in -- like deficits, debt, Social Security reform and a BRAC-like fiscal commission. It is worth a read.

Friday, June 5, 2009 - 1:30 PM

I looked at the Treasury Department’s “green book” on the Administration’s revenue proposals only a few days ago, curious to see how the Bush (soon-to-be Obama) tax cuts would be described, considering that they comprise the single most costly policy in President Obama’s proposed budget (about $2 trillion over ten years according to CBO). Seems like a pretty significant “revenue proposal” to describe, right? The Treasury green book is 131 pages long, with each tax proposal described fairly thoroughly, over the course of 1 to a few pages each, in terms of current-law treatment, reason for change, and the specifics on the President’s proposal. Yet the extension of the 2001 and 2003 tax cuts is described in exactly two places–first, as a footnote in the table of contents (note, through the emphasis added, how...

Tuesday, May 26, 2009 - 3:29 PM

In Nobel-prize winning economist and New York Times columnist Paul Krugman's column Monday, he makes an interesting point about California's budget woes that supports much of what The Concord Coalition's message has been for the last three years traveling the country on the Fiscal Wake-Up Tour. The irony is that he often protests much of what we stand for.

In writing about the political barriers to sound fiscal policy and governance in California, he expresses concern that it "foreshadows the future of the nation as a whole." He continues:

"Last week Bill Gross of Pimco, the giant bond fund, warned that the U.S. government may lose its AAA debt rating in a few years, thanks to the trillions it’s spending to rescue the economy and the banks. Is that a real possibility?

Well, in a rational world Mr. Gross’s warning would make no sense. America’s projected deficits may sound large, yet it would take only a modest tax increase to cover the expected rise in interest payments — and right now American taxes are well below those in most other wealthy countries. The fiscal consequences of the...

Wednesday, October 29, 2008 - 12:41 PM

There is a good article in the New York Times today, as part of their "If Elected..." series, that tries valiantly to add up the candidates' taxing and spending promises with an emphasis on their deficit implications. As a budget policy analyst, I know how tough such a task is during an election campaign, and empathize with any reporter who attempts to do so.

What I try to keep remembering to tell members of the media as I go through the numbers with them, is that the numbers are certain to change, and the candidates and their advisors know that, but what really matters is the commitment to fiscal responsibility once in office and what flexibility they have left themselves with, after the campaign ends, to alter their plans. 

Sometimes plans change because campaigns are two-year long processes, and the plans a candidate designed at the beginning, might no longer be what can be written into legislation and enacted once the campaign ends. I think that has clearly happened in the last couple months with the crisis in the financial markets.

Unfortunately, more often than...

Wednesday, October 22, 2008 - 12:45 PM

Today, the Concord Coalition released our second issue brief during the general election. In this one, called “Fiscal Policy Beyond Election Day: Nine Challenges for ’09," we discuss how the reality of the nation’s current economic and fiscal transformation will affect the plans the presidential candidates have developed. Additionally, we propose that recent events, and the unrealsitic nature of the plans even before the financial crisis required massive government intervention, will require whoever becomes president to re-prioritize to fit current circumstances and to improve the well-being of future generations.

Our first issue brief looked more closely at the specifics of the candidate's taxing and spending plans and how by accepting currently policy trends as the baseline by which their plans should be judged, they were setting lower expectations for themselves than they should, and certainly lower expectations than the American public should...