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December 29, 2004

Why Oh Why Are We Ruled by These Idiots? (Administration Priorities Department)

Another swift about face by the Bush administration:

Political Wire: Bush Will Delay Tax Overhaul: "Wholesale changes to the tax code that just weeks ago were identified as a Bush administration goal by the end of 2005 are being pushed back for at least another year," the Washington Post reports. White House officials "have determined that they have their hands full with Bush's pledge to overhaul Social Security and a budget plan that will demand politically painful cuts to non-defense spending."

So is tax reform now stacked behind the Mars mission as far as administration priorities are concerned? Bear in mind that neither the "painful cuts" nor the Social Security "plan" are far enough along even for serious trial balloons to have been floated...

Posted by DeLong at December 29, 2004 01:56 PM

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Tracked on December 31, 2004 08:53 AM


Excellent post, Brad.

Couple of points to add.

A good case can be made that we won the war when the allies broke the German and Japanese codes and that from that point on the war was a matter of mopping up. And the codebreakers were not professional soldiers, by any means.

Another case can be made that we won the war in Europe when we controlled the skies over Germany, which we were able to do when some non-soliders back home designed and built the P-38, the first long range fighter planes.

And I know it's a movie, and a not particularly good movie, but best scene in A Bridge Too Far is when the Elliott Gould character oversees the deployment of the Bailey Bridges. I'm sure the scene represents a reality, though, that the engineers fought and helped win the war without firing a shot. Most of them were not professional soldiers.

All of this is just to say that wars are won in ways that don't just minimize casualties but don't necessarily take place on the front line.

Finally, this is a point I remember vividly from William Manchester's excellent biography, American Caesar. Douglas MacArthur was highly critical of the American commanders in Europe and of the Navy commanders in the Pacific because he felt they were careless with their troops' lives.


Posted by: Dave Reilly at December 29, 2004 02:33 PM

While it's nice to think of getting the budget in order and not digging us a deeper hole, I fear two things out of this group. The first is actually making significant cuts or increasing taxes, but the second is not really an option. The second is, what are they going to cut? We have to make tough choices, but the middle and lower classes always seem to get the short end of the stick in these things.

As for tax reform, some of the things in The Washington Post article don't make sense. Since when has this group acted like they want to make the system more progressive? There are plenty of signs that they want to make it more regressive. They say they don't want to go to a flat tax or a national sales tax, but while I would like to believe them, what reason do we have to believe them? In fact, if I can take a slightly accusatory, conspiracy theory-like tone, the fact that they are putting it off could tell us something. They could know that the economy is about to go into the toilet and think that by waiting a few years, an uninformed public would go along with whatever the president says (e.g. "We need to get this economy back on track with a flat tax," etc).

Posted by: Brian at December 29, 2004 02:36 PM

I'm sorry, Brad. Somehow I posted my comment on the wrong one of your posts. I copied it to the right one. You can delete the duplicate and this apology if you want.

Posted by: Dave Reilly at December 29, 2004 02:40 PM

Isn't it a good thing if the Bush administration has problems getting moving on its major initiatives (given the average quality of Bush initiatives)?

Complaining they can't get moving is like the old comment about the restaurant: "The food there is terrible. Yes, and the portions are so small."

(I am assuming that the failure to get out initiatives as quickly as the administration initially proposed reflects disorganization, division, Constitutional checks and balances, etc. that reduce the chances of ultimate success; as opposed to Machiavellian disinformation strategies that increase the likelihood of ultimate success.)

Posted by: Martin at December 29, 2004 02:42 PM

Agree there haven't been serious trial balloons on the cuts, but there have been on social security. A couple of weeks ago, both Snow and someone from the White House staff were asked about paying for the transition by lifting or eliminating the cap on payroll taxes. Both said firmly that Bush had committed to not raising payroll tax *rates*. The roof did not fall in. There have been repeated stories about diverting 4% of payroll to personal accounts up to a maximum of $1,000/yr. They've attracted minor criticism related to transaction costs/investment fees. So the social security train is moving. The "plan" is under wraps because, although it's not August, this still isn't the right time to launch the product.


Posted by: jam at December 29, 2004 03:14 PM

Josh Marshall has been highlighting the fact that the administration is pursuing SS privatization the same way it pursued justifying the Iraq War....in other words, create a sense of crisis first, then do whatever the hell you want to deal with the crisis.

My guess is that the administration knows it can only create one such "crisis" at a time, and have decided that the "Social Security crisis" is the one to create first----2006 is a midterm election year, and thus politically it makes far more sense to not have Social Security privatization be an issue during the election campaign----and to have "tax cuts and tax reform" be an issue in the 2006 campaign.

Posted by: paul_lukasiak at December 29, 2004 03:45 PM

Yes, but bear in mind that someday-one day, the faecoliths lodged in the bowels of Congress must move, and pass; and may their pantaloons split up their fat crotches

Posted by: Lee A. Arnold at December 29, 2004 04:35 PM

There is still a big problem with the Alternative Minimum Tax that threatens to engulf folks in the $100K - $200K range, particularly in high tax states. The problem has been patched over one year at a time -- most recently, by a temporary increase in the AMT exemption, which has a budget cost of @ $22 billion/ year and expires at the end of 2005. It will be interesting to see how the Bushies deal with this tax time bomb. They got thru the election by promising to appoint a commission to study the problem, but this is just a "paper tiger" solution.

Tick ... tick... tick. Anyone know any good AMT jokes? We may need them.

Posted by: Robert at December 29, 2004 06:07 PM

"Anyone know any good AMT jokes?"

A priest, a rabbi, and Warren Buffett walk into a bar. They start up a discussion about taxes and it is discovered that the rabbi's earned income uses up his AMT exemption and additionally he has $30,000 of long term capital gains......

Ok, I'm going to have to work on this some. What should the rabbi say when he discovers he pays a higher capital gains rate than Warren Buffett? And what witty comment should the priest make to the rabbi?

Posted by: snsterling at December 29, 2004 07:40 PM

"There is still a big problem with the Alternative Minimum Tax that threatens to engulf folks in the $100K - $200K range, particularly in high tax states."

Do you think they are worried about people in high tax states? Those are the people who tried to kick them out of office, and they would not agree that states should be rewarded for high taxation.

From the Washington Post article:
"Finally, the plan eliminates the itemized deduction for state and local tax payments."

Posted by: snsterling at December 29, 2004 08:05 PM

If they are so worried about the AMT and are really so interested in protecting the middle class, why didn't they deal with that first and forgo some or all of the tax breaks for the wealthy?

One solution to the upcoming problem is simply alter the rates at which it kicks in, I believe. That way, it will continue to serve its original purpose of making sure the rich don't avoid too much and the middle class won't get stuck with an unfair burden. But then, I expect monkeys to fly out of my ass before I see this crowd raise taxes.

Posted by: Brian at December 29, 2004 09:03 PM

Identifying when wars are(were) won can be an interesting exercise. Croesus lost his war against Persia when the crossed the Halys River; arguably, our Iraq adventure was lost when our troops guarding the oil ministry allowed the library and museum to be looted.

Posted by: Brian Boru at December 29, 2004 09:53 PM

Steuerle sure called that one, didn't he?

Posted by: RonK, Seattle at December 29, 2004 10:22 PM

After thinking about it some more, I think I know why Bush is delaying his "tax reform" package.

The "crisis" in Social Security is based on one set of assumptions regarding the nature of the economy, long term economic growth, etc. (i.e. they are using the "worst case scenario" to predict the bankruptcy of the Trust Fund in under 40 years, etc.)

The rationale for Bushco's "tax reform" will be based on a whole different, more optimistic set of economic assumptions----

and the nature of BOTH scams would be made obvious if the administration were simultaneously using two different sets of economic projections to accomplish its goals.

I'd be willing to wager that, when his "tax reform" proposals are finally released, the economic assumptions used to justify them would be so optimistic they would virtually eliminate any argument that there is/was a crisis in Social Security to begin with.

Thus, Social Security has to be destroyed FIRST, because if his "tax reform" proposals were passed, Bushco would not be able to argue that there was any crisis in Social Security.

(Speaking of which, maybe some of you experts out there can analyze the economic assumptions/projections used to justify Bush's tax cuts, and see if they are consistent with the assumptions/projections being used to claim there is a "Social Security crisis." I'd be willing to bet that they are quite different, despite the fact that they were using the same data sets that were around at the beginning of the first Bush administration....)

Posted by: paul_lukasiak at December 30, 2004 03:26 AM

Paul Lukasiak -- you are right on target and the people opposed to bush should be making a big deal of the point that his budget documents project 4% to 5% real GDP growth while his SS documents projects 1.8% real GDP growth.

Moreover, two recent studies by widely recognized experts on productivity show them to be raising their estimates of long term economic growth that make the SS projection look even more out of line.

Posted by: spencer at December 30, 2004 05:55 AM

Re the Mars mission, I am told that the entire group at NASA Ames that studies aeronautical safety issues has been told to expect about a 70% cut in January. NASA is shifting its budget to support the Mars mission.

Posted by: anon at December 30, 2004 01:03 PM

A proposal for a reformed tax system: start with a blank piece of paper.

Add $1,000 to the current personal exemption; add $1,000 to the standard exemption. This will be tax simplifcation for the mass of the middle class since many will not need to itemize. No other exemptions, exceptions, credits, rebates.

Any tax rate scheme you want, progressive or flat. And every dollar taxed the same as any other dollar.

Posted by: pragmatic_realist at December 30, 2004 05:35 PM