Monday, July 18, 2011

Grand Bargains Galore

Seems like everybody is getting into the grand bargain game--trying to come up with a tax-spend solution that will get us out of the ditch.  Here's Turcopilier:
A solution to the deficit problem is clearly available:

1- Return income tax rates to what they were when that paragon of presidential virtue, Bill C. was in office. (irony alert) I hear people "going on" about the stultifying effect of income tax rate increases on small businesses. I don't get it. The US economy was booming under those tax rates. "People are afraid because the S Corporations will be hurt by higher taxes." "S corporations," "mumble, mumble," "double taxation," "mumble, mumble," "class warfare," "mumble, mumble." I used to be one of the owners of an S Corporation. The principal benefit of such a corporation is that distributions (not salary) to the owners IS NOT taxed as corporate income. The same thing is true of partnerships. So, basically, the truth is that well off people just don't want their taxes raised. They succeeded in having their Republican friends lower their taxes in the Bush years and they are fighting to keep them low using their ability to "bribe" members of Congress with campaign fund money.

2- Get rid of the Part D medicare pharmacy benefit. It is welfare for big pharma and it is not funded in any realistic way. You want a pharmacy benefit? Go around the world and ask people who have such benefits how they do it. Start by asking the French.

3 - Abandon the "Wars of Revolution" philosophy that now dominates our foreign policy. Let there be no more large commitments of ground and air assets to campaigns intended to change the civilizations of others. Think sneaky, not oafishly big. COIN is a bad joke. It always was... Michael Brenner wrote to tell me a new version of the light bulb joke. "How many COINistas does it take to change a light bulb? The answer is five, one to hold the bulb and the other four to rotate the table the first is standing on." Think small, THINK!
 And here's the Steve Parente (restated by Don Taylor ):
End the tax preference of employer paid insurance.

Transition Medicare to defined contribution program for those under age 54.

Block grant Medicaid.

Adjust several aspects of the ACA (lessen subsidy triggers, end taxes imposed on device makers, etc.).
I'm with Turc on getting rid of Part D--rather, replacing it with a more coherent drug plan designed to serve somebody other than the drug companies. I'm with him on Wars of Revolution and I like the lightbulb joke. Re corporate taxation I hear him on Subchapter S, but I'd go further: do away with the corporate income tax altogether and tax dividends at the ordinary income rate.  While we're at it, let's skip down to Steve's list and get rid of the tax preference for employer sponsored health plans--and while we're at that, let's go ahead and get rid of the home mortgage interest deduction (we'll tend to the charitable deduction next year).   And while we're there, let's take a swipe at the carried interest deduction that leaves the hedge fund manager's secretary paying tax at a higher rate than her financial overlord.  And you want to talk about means--testing social security?  I'm listening.   Probably a few other, ahem, simplifications I'll think of later.

As to the rest of the health care list, I'm on the fence which probably means I don't understand health care well enough to have a coherent opinion.  I do believe, as I guess  I have said before, that we have two rather different health care problems.  One is "who pays."  The other is the ingrained perception that health care just costs too damn much.    As to "who pays"--I'll certainly sign on to the view that society (=us, including me) owes a duty to assist its least fortunate.  As to "too damn  much"--well, I already mentioned Part D.   I've wondered aloud before how the world could change if I could use my Medicare overseas.    Meanwhile, I think I've watched my own internist's income go down over the 20-odd years I've known her, even as the specialists and the insurance companies seem to rake in the big bucks. There must be something wrong with this picture.

1 comment:

Ebenezer Scrooge said...

There's only one problem with getting rid of corporate tax completely and taxing dividends at the ordinary rate.

Many (most?) equity-holders are tax-exempt entities: endowments, pension funds, etc. This change would be an enormous windfall to them. Maybe pension funds can use all the windfalls they can get, but Harvard really does not need any more of Uncle Sam's largesse.