On 2010-12-06, at 8:38 AM, Louis Proyect wrote: > On 12/6/10 8:30 AM, Robert Naiman wrote: >> >> I've been wondering how it is that raising taxes during a recession got >> to be a progressive line in the sand. Isn't it a good thing - all else >> equal - > > Taxes should be raised on the rich in order to help finance government > programs like road building, etc. Grover Nyquil came up with the idea of > cutting taxes in order to reduce the size of government and eventually > destroy it, don't you remember?
Right. The issue is political rather than economic. Below, some alternative ways the savings could be (but won't) spent from a very mainstream source in yesterday's New York Times: What Does $60 Billion Buy? By DAVID LEONHARDT Economix blog New York Times December 5 2010 In today’s Week in Review section, I look at how else Congress could spend $60 billion a year — the annual cost of extending the Bush tax cuts on income above $250,000 a year. This post provides details on the calculations. First, a few specifics about the tax cut itself: Less than 2 percent of households will be affected by this extension, according to the Tax Policy Center, a Washington research group. The great majority of these households will be earning $300,000 or more (because of exemptions that reduce taxable income below $250,000). On average, each household in this group will save more than $25,000 a year because of the extension of the high-end cuts. And they will save even more than that from the extension of the Bush tax cuts, because they will also benefit from the extension of the tax cuts that apply to their first $250,000 of taxable income. The Week in Review list notes that $60 billion a year is equal to “as much deficit reduction as the elimination of earmarks, President Obama’s proposed federal pay freeze, a 10 percent cut in the federal work force and a 50 percent cut in foreign aid — combined.” These estimates come from The Times’s recent deficit puzzle (although President Obama’s proposed pay freeze was somewhat smaller than the one listed in the puzzle and thus saved less money). The sources for the puzzle are listed along with it. The National Institutes of Health has an annual budget of about $30 billion, which is why another $60 billion would lead to a tripling of federal funding for medical research. This money would support research on cancer, heart disease and nearly every other medical condition. Sixty billion dollars a year would also pay for universal preschool for 3- and 4-year-olds, with relatively small class sizes. Jane Waldfogel, a Columbia University professor, estimates that such a plan would cost between $46 billion and $56 billion a year, depending on class size. More information on the number of children would be affected is here, and more on preschool costs are here. James Heckman, a Nobel laureate at the University of Chicago, has written extensively about the economic benefits of high-quality early education. The United States has recently been spending about $100 billion a year on military operations in Afghanistan. President Obama’s recently announced surge is estimated to cost $30 billion. A transportation bill proposed by Representative James Oberstar, Democrat of Minnesota, would require about an additional $35 billion a year, on top of existing taxes, to repair and upgrade roads and transit systems. The remaining money — to get to $60 billion — could be spent on water systems and other non-transportation forms of infrastructure. A group headed by Michael Bloomberg (independent mayor of New York), Edward Rendell (Democratic governor of Pennsylvania) and Arnold Schwarzenegger (Republican governor of California) has advocated for a similar program and has details at its Web site. Sixty billion dollars a year would also buy roughly a 15 percent reduction in corporate taxes. Data from the Bureau of Economic Analysis shows that corporate taxes have equalled $250 billion to $300 billion in each of the last two years and equalled between $400 billion and $500 billion a year before the recession began. A bipartisan group, including scholars from the American Enterprise Institute, the Brookings Institution and the Breakthrough Institute, recently called for up to $25 billion a year in spending on clean-energy research and development. Spending $60 billion a year would also make college free for about half of all full-time college students — at both two- and four-year colleges — in the country. About 4.7 million students are enrolled full-time at public four-year colleges, and the average total cost paid by these students — tuition, fees, room and board minus financial aid — is about $10,000; so the cumulative cost is about $47 billion. About 2.1 million are enrolled full-time in private four-year colleges, each paying an average of about $21,000 a year — for a total of about $44 billion. And about 2.5 million are enrolled full-time at two-year colleges, each paying on average of $7,300 — for a total of $18 billion. The combined total, from all three groups, is $109 billion. So $60 billion could cover the full costs of a little more than half of these students. I’m grateful to Sandy Baum, a Skidmore College economist, for help with these numbers. Finally, $60 billion would buy roughly a $500 annual tax cut for every household in the country, because there are roughly 115 million households in the United States. All numbers here are expressed in terms of 2010 dollars, which is to say that dollar sums for future years are adjusted for projections of future inflation. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
