Also notable is the Floyd Norris column in Friday NYT ... a child's treasury of unintended consequences, mostly re status uncertainties and secondary gaming to convey tax effects to tax-motivated investors in an information-deficient environment.

I can't describe how ugly it gets ... go find it, go read it.

http://www.nytimes.com/2003/01/17/business/17NORR.html

Floyd Norries column.... Other than ALL of the above, the dividend tax cut is splendid idea. I too can't describe how ugly it gets. Good grief!

But how can the combined wisdom of every economist in the land possibly equal the brilliance of Chuck Schwab?

"Felix Rohatyn wryly suggests that, if you want to push the Dow up a few percentage points, it would be better to take the $360 billion in tax breaks and use it to just buy stocks directly."

Mureen Dowd - NYTimes

Billmon,

"Combined wisdome of every economiy in the land"? Boy, now I'm confused. Didn't Friedman just tell the entire editorial reading world that the plan is getting good grades from economists? How could such a difference of view exist on what is an empirical question? Leaves me mumbling to myself.

Imagine -

President Bush's new tax plan is an answer in search of a question. It would provide little short-term stimulus. It seems unlikely to provide much of a long-term boost to growth or jobs. It is an incomplete way to reform corporate taxes.

It would not boost investor confidence. It would provide windfall gains for previous actions, rather than encouraging new activity. It would make taxes more complex. It does not fix the alternative minimum tax. It does not resolve uncertainty regarding the repeal of EGTRRA at the end of 2010. It is fiscally irresponsible and unduly weighted toward high-income households.

Other than this, the Bush tax plan is terrific.

There is no tilt to the rich, though if there were the rich would deserve the tilt. There is no deficit and will be no deficit. There will be no harm to Social Security and Medicare from a long term deficit, because there can be no deficit and besides we will all be made rich rich rich as dividends pour down on us. Happy are the economists.

>>Didn't Friedman just tell the entire editorial reading world that the plan is getting good grades from economists?<<

Reforming the taxation of income from capital to diminish firms' incentive to overleverage themselves generally gets good grades from economists. Increasing the deficit generally gets bad grades from economists. Failing to provide a meaningful stimulus generally gets bad grades from economists. Tilting the distribution of income further toward the rich gets good grades from economists who think our tax system redistributes too much from rich to poor already, and bad grades from economists who think our tax system needs to be more redistributive.

Friedman's WSJ piece goes directly to Prof. DeLong's argument for increasing the role of the federal govt. to 30% of GDP. Here's an article that validates Friedman's argument:

http://www.usatoday.com/usatonline/20030115/4779933s.htm

<<----------quote-----------
State and local governments are spending more money and hiring more people
than last year, even as governors and mayors warn of draconian cuts in
public services because of the economic slump.

The National Governors Association says states face the ''most dire fiscal
situation since World War II.'' But a USA TODAY analysis shows that most of
the budget cuts being studied are not declines in spending from last year.
Instead, they are reductions in spending increases that were approved when
the U.S. economy was booming.

For example, Minnesota legislators approved spending based on an expected
13.4% jump in tax revenue over the next two years. But tax collections are
expected to rise 6.6%. The result: $4.6 billion must be cut. But those cuts
would be from planned spending; actual spending is still expected to rise
from present levels.

[snip]

Spending by state and local governments has grown nationwide without
interruption for decades, in good times and bad times alike. It has not
fallen since 1944, and it has grown faster than the rate of inflation every
year since 1982. The rate of spending growth is down slightly from the late
1990s, but governments remain one of the healthiest parts of the economy.
---------endquote------->>

I appreciate Professor DeLong's taxonomy of what economists like and dislike about the Bush plan, which gets Friedman off the hook, sort of. However, it seems like a good idea to measure the plan against what the administration says it is meant to do, as well as against a set of goals that economists would recommend. I understand that the administration's claims for the tax plan have been something of a moving target, with less talk short-term stimulus now than when the plan was first discussed, but there is still that early claim that the package is stimulative. The Roach article elsewhere on this site makes the case that the tax plan is just backwards, doing too little stimulating in the near term, too much dissaving in the long term. Lovers of the permanent income hypothesis would likely disagree with Roach, but again, this tax plan started out being advertised pretty heavily as a stimulus and reform plan, now mostly as a reform plan. I think it would be a good thing to get someone, probably Snow when the time comes, to state very clearly what the plan is meant to achieve. Then, it should have to clear a couple of hurdles. Are the goals of the plan something we want and is the plan likely to accomplish those goals? Absent that sort of clarity, it is too easy to keep selling the plan to various groups as serving various purposes.

Billmon may have been a bit more hyperbolic in his assertion than Friedman, but Friedman works for us (voters/taxpayers), and should be held to a pretty high standard when he speaks for economists as a group.

>> Friedman works for us (voters/taxpayers), and should be held to a pretty high standard when he speaks for economists as a group. <<

Huh???

Friedman is a private citizen working for a private organization (Stanford-Hoover). And when did he say he "speaks for economists as a group"?