from SLATE:
David Brooks vs. the House Progressives
By Matthew Yglesias
Posted Tuesday, March 19, 2013, at 9:37 AM
The biggest problem the liberal faction of the Democratic Party
generally has is getting heard at all [big surprise!!], so I'm really
glad that David Brooks dedicated a column to explaining his problems
with the Congressional Progressive Caucus budget that was released
last Thursday. In a way, I think Brooks' complaints make the case for
the CPC budget more strongly than any of the praise I've read.
For starters, even though newspaper columnists are sharply
space-constrained, Brooks dedicates relatively little space to
criticizing the content of the CPC budget. Instead you get a lot of
rhetoric about the CPC budget being written "by people hermetically
sealed in the house of government" who "have had little contact with
private-sector job creators"* who "believe that government is the
horse, the source of growth, job creation and prosperity."
In policy terms, the critique is fairly limited. The CPC wants a top
marginal income tax rate of 49 percent, which, combined with state
income taxes, would push marginal tax rates nearly as high as they
were in the Eisenhower years. Over to Brooks:
>> Higher taxes will produce long-term changes in social norms, behavior and
>> growth. Edward Prescott, a winner of the Nobel Memorial Prize in economics,
>> found that, in the 1950s when their taxes were low, Europeans worked more
>> hours per capita than Americans. Then their taxes went up, reducing the
>> incentives to work and increasing the incentives to relax. Over the next
>> decades, Europe saw a nearly 30 percent decline in work hours.<<
My view is that this particular Prescott line of research overstates
the impact of tax rates on labor supply decisions. Most European
countries have regulatory policies that are explicitly designed to
reduce the number of hours that people work. France famously requires
six weeks of paid vacation time per year. Most German jurisdictions
place limits on retailers' ability to be open on Sundays. You may like
more generous vacation and family leave mandates, or you may hate
them, but obviously the impact of these laws is going to be that
people work less. The more generous European welfare state also
creates undeniable disemployment effects on the spending side.
European higher education is much cheaper for the student than
American higher education, for example, and this encourages students
to spend more time studying and partying and less time working for
money. So I'd view Prescott as pointing to something like an upper
bound on the possible tax impact on labor supply. Brooks also neglects
to mention that the CPC budget, via the Making Work Pay tax credit,
would tend to increase work incentives for low-wage workers, while
Ryan-style tax reform would increase the tax burden on many
middle-class families.
Long story short, I would say the CPC budget has the following main
advantages over the Ryan budget:
** More food and medical care for poor children.
** Less air pollution and a meaningful chance to avert the worst
consequences of climate change.
** Lower taxes on middle-class and working-poor families.
** Medicare reform focused on reducing the unit price of health
care services rather than increasing it.
** More funding for transportation infrastructure and basic research.
Brooks says the Ryan budget has the following main advantages over the
CPC budget:
** High-income individuals will be less inclined to take vacations
or retire and more inclined to work long hours.
In a world where trade-offs are, to an extent, unavoidable, I don't
see that as an enormously difficult choice.
-------
* It is true that most CPC members, like most members of Congress,
have a professional background as politicians and attorneys, though
both Jared Polis and Alan Grayson, at a minimum, have been
entrepreneurs.
--
Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your
own way and let people talk.) -- Karl, paraphrasing Dante.
_______________________________________________
pen-l mailing list
[email protected]
https://lists.csuchico.edu/mailman/listinfo/pen-l
