The Holland Principle

Who first said that the US government is "an insurance company with an army"?  Paul Krugman often gets the credit, but he says it is  not original with him: "this isn't original" he wrote, invoking the principle on April 27, 2011.   Ezra Klein also gets credit; he  presented it alongside a lovely pie chart  on Feb. 14, 2011, but I find a (second-hand) reference back in 2007 crediting Krugman, so Krugman at least trumps Klein.   A polisci textbook (Jan. 1, 2010) credits it to "a Bush administration staff member."  

And   here's a ref dated April 5, 2004 crediting it to "OSTP's Mike Holland" as from Science in for 4/11/2003.   I haven't taken the time to track it all the way to JSTOR.   OSTP=Office of Science and Technology Policy?   "Mike Holland" would appear to be this guy,  whose Linkedin profile shows that he was at OSTP at the relevant point in time.

Recognizing that no quote is original, and that we can probably count on finding an earlier avatar on a clay pot in Sumer, I'd say that for a moment we ought to call it "The Holland Principle."  Yo Mike, okay with you?

Update:  Hoo ha, that didn't take long.   On the evidence, I would say we are so far back to Frederick von Schrötter, so I assume Hammurabi is in the crosshairs.  A more specific version of the Fisher quote (although unsourced) is here; although I'd have to say that "a gigantic insurance company with a sideline business in defense and homeland security"--is not nearly so euphonious as the revised form. But following the Stigler's Law, I still think we should call it "the Holland Principle."

Tedious Afterthought:  The comment thread at Thoma  includes some interesting backchatter on whether the Holland Principle, even if true, is A Good Thing or not.

Have You Ever Seen...

...a better short summary of what the government does with your money?

The Budget and the Debt: Two Good Books

Sometimes good things really do come in pairs.  Last spring I read, back to back, two super introductions to the tax system.  This week, here's another pairing, this on the conjoined problems of budget/debt.

That would be: Red Ink by David Wessell, and White House Burning by Simon Johnson and James Kwak.  They're not identical, neither in content nor in style.  Wessell mostly limits himself to the mechanics of the budgetary process.  Johnson/Kwak cover everything from from the War of 1812 (actually, from 1789) to the beginning of the next ice age.  Wessell, though he has a narrative, still reads a bit like one who makes his paycheck meeting a daily deadline.   Johnson/Kwak remind you that their ideas may have started in the classroom.  But at the end of the day, they're both telling the same story.   That is: we've got a debt problem--maybe not critical today and perhaps not even tomorrow, but bound to come home to roost within the lifetime of a large part of the voting public.  And we can't solve it by icing Big Bird.

You knew that.  You know the litany of conventional responses: we raises taxes, or we cut taxes and solve the problem on the backs and necks of the poor.  Neither book really challenges that framework, although Johnson/Kwak do throw out a couple of points that don't seem (to me) to have gotten the attention they deserve.

One: cutting "government spending" does not necessarily cut spending.  You'd think the voters--particularly in a place like California, where we started capping taxes in 1979--would have figured this out before.  There's  no end of instances out here were voters who rejected the notion of paying taxes for something or other have waked up to discover they have to pay, ahem user fees for the same damn thing. Stuff is not free; if you don't pay for it one way, you may wind up paying for it another. Like I say,  not rocket science.  Surprising we would even need Kwak/Johnson to remind us.

The other is perhaps one step more subtle.   This one addresses the supposed peril of increases taxes--i.e., the peril that as tax increase will destroy jobs.  Grant it: given the right particulars; still the point is that if true, then we have not a tax problem but an employment problem.

At the end of the day, there's probably nothing much in either book not already well known by the conscientious wonk.  But never so well presented.  If I had to read just one, I'd go for Kwak/Johnson, but go ahead and read them both; well worth the effort.

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.

In Case You've Forgotten...

Updating his superb booklength fisking of the Bush tax-and-spend policies, Bruce Bartlett crisply summarizes the Republican strategy of reducing government by not paying for things.

What Samwick Said...

Political martyrology.

The Budget Game

Hey, this is cute--the Committee for a Responsible Federal Budget had ginned up a clever little do-it-yourself budget cutter app (that's old news) and the Dallas Morning News has repackaged it as an interactive toy for its readers (not quite so old, but still new to me). 

I think it's cool.  I know the left tends to demonize CRFB as an avatar of Pete Peterson, whom they see as death on all entitlement programs.  Maybe, but I think you can oppose his tastes while recognizing that his numbers are pretty good, some of the best.  In a world where no one running office can so much as dare think about specifics re government budgeting, I suspect that only a billionaire can get away with talking like this.

Real-time Budget Hawkery

The budget hawks at Concord Coalition are starting a weekly (while Congress is in session) budget report that you can get by email. It's actually a rebranding of a report already being written and edited by Charles Konigsberg, longtime Washington budget wonk, lately hired by CC as its chief budget counsel.

CC sent out an introductory email to its list this morning. They don't seem to be showcasing it at the main website yet, but I assume you can get it for the asking.