Semi-Daily Journal

Note by the way that the Senate bill is so incompetently written that it may not pass at all. The loopholes push the cost way above the $350bn resolution number. And it was Dick Cheney who helped ram the offending part through. So some of the contempt also needs to be directed up Mass Ave.

Realistically, the cut will be made temporary, the sunsetting is just a contrivance to get under $350bn for now.

The Republican Party is dominated by the radical-right. The rule for being smiled on for being a Republican is to support the dictates of the radical-right. Thus, dissent is closed off for those who seek favor know the rule. That is why I rarely bother to attend to any Republican save John McCain or Lincoln Chafee.

Virginia Postrel IS a Republican. Phooey.

Why fight? You're both right. *Both* ends of Pennsylvania Avenue are contemptible. :-)

How disappointing to see Postrel taking such a weaselish stance. Pointing the finger at Congress rather than the President guarantees that her posturing will have zero effect, since 90% or more of them are in safe seats.

And her rationale is completely bogus. Tax reform and the proper size of government are two completely separate issues. Any tax reform that isn't revenue-neutral is a fraud reeking of dishonesty. If you want to cut the size of government, pick programs to cut and find the votes to enact the cuts. If you can't find those votes, then you haven't made the case for smaller government. And helping to engineer a fiscal train wreck to make future choices as painful as possible shows contempt for democracy.

On tax simplicity and effectiveness at encouraging investment - the House bill is better or at least would be if we can find a way to offset the crowding-out from the overal long-term fiscal stimulus. But I'm utterly amazed at how the White House first told the House to go along with the Senate version and now has flip-flopped and told the Senate to go along with the House version. I guess ANY policy change will do as long as Ari Fleischer gets to announce Bush has signed something.

No. No. No. The Democrats have been and are decidedly right on economic policy from 1992 on. The radical-right Republicans are completely wrong on economic policy. The Republican Party is waging class warfare against the middle class. This is the Newt Gingrich destroy Social Security and Medicare Party, and it is having its way.

Dear Dear Dear

The House bill is horrid, the Senate bill is slightly less horrid, the compromise bill will be more horrid than either. This will be a tax cut for the richie rich rich, get it. This will be a deficit expansion tax cut. This is a screw the middle class, especially the middle class baby boomers, tax cut. Duh.

Anne

Why mince words. Tell us how you really feel.

Lise

Actually, there's one way in which the House version appears to be better than the Senate and that is its equalization of capital gains and dividend tax rates. The whole point of the dividend tax debate -- prior to the administration's proposal -- was that the discrepancy between cap gains and dividend tax rates was discouraging dividend payouts and thereby causing a whole host of downstream problems. Well, the Senate-House compromise appears to take care of tha by adopting the House idea and equalizing the two rates. That is a big step forward for common sense and economic efficiency.

I'm drawing these conclusions from an AP story so any corrections are welcome.

Did you see the Warren Buffett OpEd yesterdat? He explains how the dividend tax cut would reduce his tax rate to 3%. At least some of the wealthy can look past the greed factor and look at the big picture.

http://www.washingtonpost.com/wp-dyn/articles/A13113-2003May19.html

JT JT JT

The addition of the capital gains tax reduction skews the tax cut bill decidely more to the richie richies. Capital gains even more than dividends go to the richest of the rich. Where oh where is the journalist who thinks?

"Did you see the Warren Buffett OpEd yesterdat? ... At least some of the wealthy can look past the greed factor and look at the big picture."

Let's hear him say that he shouldn't be collecting Social Security and Medicare benefits paid for out of the paychecks of his Dairy Queen employees. Means testing the rich out of entitlements would have a vastly larger and better impact on the nation's finances than keeping the dividend tax or estate tax. It's the progressive thing to do too...

I totally agree with Jim Glass on the means testing. I live in a retirement mecca, and there are a *lot* of really weathy retirees moving here and building 4000sf houses. Class *and* generational warfare, what's not to like?

Jim,

In the scenario he sketched out in his op-ed, Buffett described how he would be able to set up a $310 million for himself save about $100 million in taxes in a single year. Do you really think that public-spirited rich folk would be able to offset that kind of drain on the treasury by refusing to cash their Social Security checks or file Medicare claims? And when you start denying entitlements to people just because they don't need the money, doesn't this amount to [gasp] redistribution?

I find the "means testing" argument morally repugnent and usually based on an at best unenlightened understanding of the role of the state in national "insurance" programs.

First, for anyone to argue that "value added" to our society is best measured by income is simply ludicrous. The good, competent teacher (and there are many more good competent teachers than there are good, competent corporate CEO's) adds enormous value. He or she simply lacks a simplistic measure like stock prices or earnings per share(which are largely more attributable to luck than competence) to measure their contribution.

Second, there is a strong rationalle for the funding of broad social "insurance" benefits on a pay as you go basis using the estimated present value of future tax dollars as a way to achieve actuarial balance. Certainly it would be possible to create and use surpluses and invest in the present value of corporate earnings through stock ownership, but I believe this method is called communism and we have seen how that doesn't work.

Why shouldn't Warren Buffet as a citizen collect Social Security and participate in Medicare?

Why should a productive citizen (and most of our citizens are productive) have to prove "need" to collect on programs designed to smooth out the inequities that result from the capitalistic and market economies that create so much wealth even as they also create enormous disparities in reward for value added?

Advocating means testing or playing the knee jerk "benefits paid by our children" card is fine for social darwinists but a waste of intellectual time for those who would like to help find ways to create societies that last.

"Why shouldn't Warren Buffet as a citizen collect Social Security and participate in Medicare?"

Because his payout is from a finite pool of money which is insufficient to satisfy demand?(1) Whatever Buffet receives from SS and medicare is immaterial to his own health and financial well-being; is this not obvious? And no I am not mad at him for having lost a little bit of money on my brkb, I should have trusted the dude.

(I am beginning to understand, even without the skill of course, the pleasures that DD obtains from being contrarian.)

(1) I have no idea whether the money gained by means-testing would cover the cost of the test.

Anne: instead of the condescending response, how about reading my post and responding to its contents? Why do you assume I share your overriding concern for "progressivity"? Actually, I don't; equalizing the cap gains and dividend tax rates is far more important than soaking the rich for a few more dollars. Please think about why I'd believe that before responding again.

Sam: While I don't find the idea of "means testing" contradictory -- I like it when coupled with some other reforms of SS -- I'm puzzled by the potential ideological contradiction it represents. Means-testing begins the process of transforming SS into what it should be -- a "welfare" system for the poor(er) senior citizens -- but I don't think the proponents of means-testing generally believe SS should be a "welfare" system.

To anticipate one possible objection, I don't believe a "welfare" system for the elderly would arouse the same distaste the now-reformed "welfare" system for the poor provoked.

"And when you start denying entitlements to people just because they don't need the money, doesn't this amount to [gasp] redistribution? "

When you make transfer payments to rich people who don't need the money *that's* redistribution, from the poor to the rich.

"I find the "means testing" argument morally repugnent ..."

Generally? Also regarding progressive income taxes, education benefits, assorted gov't loan guarantees, welfare benefits, and other government benefits and programs? Or just regarding these two programs?

"... there is a strong rationalle for the funding of broad social "insurance" benefits..."

I note that the word "insurance" there is placed in scare quotes -- as well it should be! What are the insurable risks that SS and Medicare "insure" Warren Buffett against? Poverty and the inability to pay his medical bills? ;-)

"Why shouldn't Warren Buffet as a citizen collect Social Security and participate in Medicare?"

So the poor don't have to pay higher taxes to benefit of the rich. It's the progressive point of view.

And also to avert the "pending national insolvency" that we hear so much about, at this site especially. E.g, Social Security is 20% underfunded in the out years. Now guess the percentage of Social Security benefits that is projected to be paid out to retirees with millionaire wealth in the out years, as our nation grows richer and richer over time, seniors remain richer than everyone else, and the richest quintile of seniors grows richest of all.

See -- we can progressively save the poor from having to pay taxes to benefit the rich, and avert national insolvency at the same time. A twofer! ;-)

Social Security doesn't have to be means tested if they end the cap.