[Eugene]

[quote]IMHO, we need to discourage gambling and encourage work. That’s why I would lower the rate on **earned** income, and tax investment income at a much higher rate, with steeply progressive rates.

I would not support a consumption tax, because it’s too regressive. Most poor people spend almost all of their income on basic necessities, while the rich can invest theirs. It would be totally immoral and unethical to tax gamblers at 0-15%, while taxing poor people at the maximum rate (if consumption tax is the highest tax).[/quote]

Agreed. VAT only makes sense if you exempt basic necessities, or compensate with a generous tax refund (say, 10% for every dollar earned up to median household income).

Instead I’d suggest that we eliminate mortgage tax deduction, tax all capital gains as income, raise the estate tax to 50% on every dollar above $500,000, close all loopholes and subsidies in corporate tax code, and lower income tax brackets to make the system revenue-neutral.

[quote]We should encourage saving, so people can make intelligent decisions about investment in the future. [/quote]

I’m not so sure that we should encourage saving. Sometimes too much private saving is a bad thing. (Like right now, for example.) And we certainly shouldn’t do it by lowering taxes on capital gains. All it does is inflate P/E ratios of the stock market, with no tangible benefits for the overall economy.

But we should encourage labor vs. passive investment. It would make sense for the top income tax rate to be equal or lower than the capital gains rate.

[Eugene]

[quote]IMHO, we need to discourage gambling and encourage work. That’s why I would lower the rate on **earned** income, and tax investment income at a much higher rate, with steeply progressive rates.

I would not support a consumption tax, because it’s too regressive. Most poor people spend almost all of their income on basic necessities, while the rich can invest theirs. It would be totally immoral and unethical to tax gamblers at 0-15%, while taxing poor people at the maximum rate (if consumption tax is the highest tax).[/quote]

Agreed. VAT only makes sense if you exempt basic necessities, or compensate with a generous tax refund (say, 10% for every dollar earned up to median household income).

Instead I’d suggest that we eliminate mortgage tax deduction, tax all capital gains as income, raise the estate tax to 50% on every dollar above $500,000, close all loopholes and subsidies in corporate tax code, and lower income tax brackets to make the system revenue-neutral.

[quote]We should encourage saving, so people can make intelligent decisions about investment in the future. [/quote]

I’m not so sure that we should encourage saving. Sometimes too much private saving is a bad thing. (Like right now, for example.) And we certainly shouldn’t do it by lowering taxes on capital gains. All it does is inflate P/E ratios of the stock market, with no tangible benefits for the overall economy.

But we should encourage labor vs. passive investment. It would make sense for the top income tax rate to be equal or lower than the capital gains rate.

[Eugene]

[quote]IMHO, we need to discourage gambling and encourage work. That’s why I would lower the rate on **earned** income, and tax investment income at a much higher rate, with steeply progressive rates.

I would not support a consumption tax, because it’s too regressive. Most poor people spend almost all of their income on basic necessities, while the rich can invest theirs. It would be totally immoral and unethical to tax gamblers at 0-15%, while taxing poor people at the maximum rate (if consumption tax is the highest tax).[/quote]

Agreed. VAT only makes sense if you exempt basic necessities, or compensate with a generous tax refund (say, 10% for every dollar earned up to median household income).

Instead I’d suggest that we eliminate mortgage tax deduction, tax all capital gains as income, raise the estate tax to 50% on every dollar above $500,000, close all loopholes and subsidies in corporate tax code, and lower income tax brackets to make the system revenue-neutral.

[quote]We should encourage saving, so people can make intelligent decisions about investment in the future. [/quote]

I’m not so sure that we should encourage saving. Sometimes too much private saving is a bad thing. (Like right now, for example.) And we certainly shouldn’t do it by lowering taxes on capital gains. All it does is inflate P/E ratios of the stock market, with no tangible benefits for the overall economy.

But we should encourage labor vs. passive investment. It would make sense for the top income tax rate to be equal or lower than the capital gains rate.

[Eugene]

[quote]IMHO, we need to discourage gambling and encourage work. That’s why I would lower the rate on **earned** income, and tax investment income at a much higher rate, with steeply progressive rates.

I would not support a consumption tax, because it’s too regressive. Most poor people spend almost all of their income on basic necessities, while the rich can invest theirs. It would be totally immoral and unethical to tax gamblers at 0-15%, while taxing poor people at the maximum rate (if consumption tax is the highest tax).[/quote]

Agreed. VAT only makes sense if you exempt basic necessities, or compensate with a generous tax refund (say, 10% for every dollar earned up to median household income).

Instead I’d suggest that we eliminate mortgage tax deduction, tax all capital gains as income, raise the estate tax to 50% on every dollar above $500,000, close all loopholes and subsidies in corporate tax code, and lower income tax brackets to make the system revenue-neutral.

[quote]We should encourage saving, so people can make intelligent decisions about investment in the future. [/quote]

I’m not so sure that we should encourage saving. Sometimes too much private saving is a bad thing. (Like right now, for example.) And we certainly shouldn’t do it by lowering taxes on capital gains. All it does is inflate P/E ratios of the stock market, with no tangible benefits for the overall economy.

But we should encourage labor vs. passive investment. It would make sense for the top income tax rate to be equal or lower than the capital gains rate.

[Eugene]

[quote]IMHO, we need to discourage gambling and encourage work. That’s why I would lower the rate on **earned** income, and tax investment income at a much higher rate, with steeply progressive rates.

I would not support a consumption tax, because it’s too regressive. Most poor people spend almost all of their income on basic necessities, while the rich can invest theirs. It would be totally immoral and unethical to tax gamblers at 0-15%, while taxing poor people at the maximum rate (if consumption tax is the highest tax).[/quote]

Agreed. VAT only makes sense if you exempt basic necessities, or compensate with a generous tax refund (say, 10% for every dollar earned up to median household income).

Instead I’d suggest that we eliminate mortgage tax deduction, tax all capital gains as income, raise the estate tax to 50% on every dollar above $500,000, close all loopholes and subsidies in corporate tax code, and lower income tax brackets to make the system revenue-neutral.

[quote]We should encourage saving, so people can make intelligent decisions about investment in the future. [/quote]

I’m not so sure that we should encourage saving. Sometimes too much private saving is a bad thing. (Like right now, for example.) And we certainly shouldn’t do it by lowering taxes on capital gains. All it does is inflate P/E ratios of the stock market, with no tangible benefits for the overall economy.

But we should encourage labor vs. passive investment. It would make sense for the top income tax rate to be equal or lower than the capital gains rate.

[Eugene]

The article greatly exaggerates the decline in birth rates. (Or rather, manages to create an impression of such without quoting any relevant figures.) Figures through 2007 are here:

http://www.census.gov/compendia/statab/2011/tables/11s0080.pdf
http://www.census.gov/compendia/statab/2011/tables/11s0083.pdf

Birth rates per 1,000 population are slightly down compared to 1980, because there are more older people around. In 2007, white fertility rates were at the highest level in several decades.

There was some decline because of the recession, but I’m not sure if it constitutes a real demographic shift or just a postponement (just like the baby boom came about because many families postponed having children during the 30’s and the WWII).

At the current trend, we normally need to add 1 million housing units per year to compensate for new household creation, and this trend should hold for at least a couple of decades. But household creation is also systematically postponed these days: just see here

http://www.usatoday.com/news/nation/census/2011-05-04-Census-Households-Demographics_n.htm

In San Diego, the average household size spiked from 2.78 to 2.93 in the last four years. We’ve been steadily gaining population, and we’ve been gaining children, and there has been almost no new construction for a while, but there is no upward pressure on house prices (for now), because people are more likely to live with parents or roommates, compared with 2007. I’d guess that it’s mostly for economic reasons and not because people suddenly started liking living with in-laws. So there we also have accumulating pent-up demand.

[Eugene]

The article greatly exaggerates the decline in birth rates. (Or rather, manages to create an impression of such without quoting any relevant figures.) Figures through 2007 are here:

http://www.census.gov/compendia/statab/2011/tables/11s0080.pdf
http://www.census.gov/compendia/statab/2011/tables/11s0083.pdf

Birth rates per 1,000 population are slightly down compared to 1980, because there are more older people around. In 2007, white fertility rates were at the highest level in several decades.

There was some decline because of the recession, but I’m not sure if it constitutes a real demographic shift or just a postponement (just like the baby boom came about because many families postponed having children during the 30’s and the WWII).

At the current trend, we normally need to add 1 million housing units per year to compensate for new household creation, and this trend should hold for at least a couple of decades. But household creation is also systematically postponed these days: just see here

http://www.usatoday.com/news/nation/census/2011-05-04-Census-Households-Demographics_n.htm

In San Diego, the average household size spiked from 2.78 to 2.93 in the last four years. We’ve been steadily gaining population, and we’ve been gaining children, and there has been almost no new construction for a while, but there is no upward pressure on house prices (for now), because people are more likely to live with parents or roommates, compared with 2007. I’d guess that it’s mostly for economic reasons and not because people suddenly started liking living with in-laws. So there we also have accumulating pent-up demand.

[Eugene]

The article greatly exaggerates the decline in birth rates. (Or rather, manages to create an impression of such without quoting any relevant figures.) Figures through 2007 are here:

http://www.census.gov/compendia/statab/2011/tables/11s0080.pdf
http://www.census.gov/compendia/statab/2011/tables/11s0083.pdf

Birth rates per 1,000 population are slightly down compared to 1980, because there are more older people around. In 2007, white fertility rates were at the highest level in several decades.

There was some decline because of the recession, but I’m not sure if it constitutes a real demographic shift or just a postponement (just like the baby boom came about because many families postponed having children during the 30’s and the WWII).

At the current trend, we normally need to add 1 million housing units per year to compensate for new household creation, and this trend should hold for at least a couple of decades. But household creation is also systematically postponed these days: just see here

http://www.usatoday.com/news/nation/census/2011-05-04-Census-Households-Demographics_n.htm

In San Diego, the average household size spiked from 2.78 to 2.93 in the last four years. We’ve been steadily gaining population, and we’ve been gaining children, and there has been almost no new construction for a while, but there is no upward pressure on house prices (for now), because people are more likely to live with parents or roommates, compared with 2007. I’d guess that it’s mostly for economic reasons and not because people suddenly started liking living with in-laws. So there we also have accumulating pent-up demand.

[Eugene]

The article greatly exaggerates the decline in birth rates. (Or rather, manages to create an impression of such without quoting any relevant figures.) Figures through 2007 are here:

http://www.census.gov/compendia/statab/2011/tables/11s0080.pdf
http://www.census.gov/compendia/statab/2011/tables/11s0083.pdf

Birth rates per 1,000 population are slightly down compared to 1980, because there are more older people around. In 2007, white fertility rates were at the highest level in several decades.

There was some decline because of the recession, but I’m not sure if it constitutes a real demographic shift or just a postponement (just like the baby boom came about because many families postponed having children during the 30’s and the WWII).

At the current trend, we normally need to add 1 million housing units per year to compensate for new household creation, and this trend should hold for at least a couple of decades. But household creation is also systematically postponed these days: just see here

http://www.usatoday.com/news/nation/census/2011-05-04-Census-Households-Demographics_n.htm

In San Diego, the average household size spiked from 2.78 to 2.93 in the last four years. We’ve been steadily gaining population, and we’ve been gaining children, and there has been almost no new construction for a while, but there is no upward pressure on house prices (for now), because people are more likely to live with parents or roommates, compared with 2007. I’d guess that it’s mostly for economic reasons and not because people suddenly started liking living with in-laws. So there we also have accumulating pent-up demand.

[Eugene]

The article greatly exaggerates the decline in birth rates. (Or rather, manages to create an impression of such without quoting any relevant figures.) Figures through 2007 are here:

http://www.census.gov/compendia/statab/2011/tables/11s0080.pdf
http://www.census.gov/compendia/statab/2011/tables/11s0083.pdf

Birth rates per 1,000 population are slightly down compared to 1980, because there are more older people around. In 2007, white fertility rates were at the highest level in several decades.

There was some decline because of the recession, but I’m not sure if it constitutes a real demographic shift or just a postponement (just like the baby boom came about because many families postponed having children during the 30’s and the WWII).

At the current trend, we normally need to add 1 million housing units per year to compensate for new household creation, and this trend should hold for at least a couple of decades. But household creation is also systematically postponed these days: just see here

http://www.usatoday.com/news/nation/census/2011-05-04-Census-Households-Demographics_n.htm

In San Diego, the average household size spiked from 2.78 to 2.93 in the last four years. We’ve been steadily gaining population, and we’ve been gaining children, and there has been almost no new construction for a while, but there is no upward pressure on house prices (for now), because people are more likely to live with parents or roommates, compared with 2007. I’d guess that it’s mostly for economic reasons and not because people suddenly started liking living with in-laws. So there we also have accumulating pent-up demand.

[Eugene]

[quote=CA renter]Right, paramount.

Are we growing, or are prices simply getting higher (our purchasing power is deteriorating)? One is good, the other is very, very bad. Which one do you think it is?[/quote]

Yes, we are growing, for now. GDP is still growing in real terms (in other words, after adjusting for price changes). Things could be worse. UK GDP actually shrunk for a quarter last fall. Greece and possibly Spain (not sure) are, technically, still in recession.

That may not last long, though: Republicans are out in full power once again, demanding immediate austerity (including abolishing Medicare and cutting Medicaid) and blocking the debt ceiling increase unless they get what they want, perfectly willing to burn the house even if it falls on their own heads. In the mean time, Obama administration has been a total failure, completely conceding to Republican pseudoscience and failing to exert any effort to resolve this horrible situation.

Krugman calls it 1937 all over again. Given his excellent track record, I see no reason to disagree with him. I’ll give it two weeks. Unless the White House comes up with some kind of radical program to jump-start the economy in the next two weeks, or a sensible deal is reached with the GOP that does not involve any significant spending cuts right now (as opposed to any deferred spending cuts delayed till unemployment goes below 6% – which is the right way to go), on June 16, 2011, I’m going all-cash again. (And, just for the record, I’ve been mostly all-stock since January 2009.)

The general problem is that Republicans are almost sure to oppose almost any government move that might prevent the double-dip recession. For example, a rerun of 2009 stimulus would be extremely effective, and today, when the economy isn’t losing jobs at the fastest rate since 1930’s, it could result in immediate and obvious results (lower unemployment, higher consumer spending). But is there any chance of getting another $1 trillion (6% of GDP) of short-term deficit spending through the Congress, for a chance to end the Great Recession here and now? None at all.

Sensible, intelligent left-wing economists have been trying to catalogue things that could be done now, in spite of Republican stonewalling in the House

http://delong.typepad.com/sdj/2011/06/department-of-stuff-that-could-really-help-the-economy-and-doesnt-require-republican-cooperation.html

http://delong.typepad.com/sdj/2011/05/shoulda-coulda-woulda-but-we-didnt-watch-macroeconomic-policy-in-recession-department.html

But I wouldn’t be holding my fingers crossed for any of that to be actually implemented by the Obama administration.

[Eugene]

[quote=CA renter]Right, paramount.

Are we growing, or are prices simply getting higher (our purchasing power is deteriorating)? One is good, the other is very, very bad. Which one do you think it is?[/quote]

Yes, we are growing, for now. GDP is still growing in real terms (in other words, after adjusting for price changes). Things could be worse. UK GDP actually shrunk for a quarter last fall. Greece and possibly Spain (not sure) are, technically, still in recession.

That may not last long, though: Republicans are out in full power once again, demanding immediate austerity (including abolishing Medicare and cutting Medicaid) and blocking the debt ceiling increase unless they get what they want, perfectly willing to burn the house even if it falls on their own heads. In the mean time, Obama administration has been a total failure, completely conceding to Republican pseudoscience and failing to exert any effort to resolve this horrible situation.

Krugman calls it 1937 all over again. Given his excellent track record, I see no reason to disagree with him. I’ll give it two weeks. Unless the White House comes up with some kind of radical program to jump-start the economy in the next two weeks, or a sensible deal is reached with the GOP that does not involve any significant spending cuts right now (as opposed to any deferred spending cuts delayed till unemployment goes below 6% – which is the right way to go), on June 16, 2011, I’m going all-cash again. (And, just for the record, I’ve been mostly all-stock since January 2009.)

The general problem is that Republicans are almost sure to oppose almost any government move that might prevent the double-dip recession. For example, a rerun of 2009 stimulus would be extremely effective, and today, when the economy isn’t losing jobs at the fastest rate since 1930’s, it could result in immediate and obvious results (lower unemployment, higher consumer spending). But is there any chance of getting another $1 trillion (6% of GDP) of short-term deficit spending through the Congress, for a chance to end the Great Recession here and now? None at all.

Sensible, intelligent left-wing economists have been trying to catalogue things that could be done now, in spite of Republican stonewalling in the House

http://delong.typepad.com/sdj/2011/06/department-of-stuff-that-could-really-help-the-economy-and-doesnt-require-republican-cooperation.html

http://delong.typepad.com/sdj/2011/05/shoulda-coulda-woulda-but-we-didnt-watch-macroeconomic-policy-in-recession-department.html

But I wouldn’t be holding my fingers crossed for any of that to be actually implemented by the Obama administration.

[Eugene]

[quote=CA renter]Right, paramount.

Are we growing, or are prices simply getting higher (our purchasing power is deteriorating)? One is good, the other is very, very bad. Which one do you think it is?[/quote]

Yes, we are growing, for now. GDP is still growing in real terms (in other words, after adjusting for price changes). Things could be worse. UK GDP actually shrunk for a quarter last fall. Greece and possibly Spain (not sure) are, technically, still in recession.

That may not last long, though: Republicans are out in full power once again, demanding immediate austerity (including abolishing Medicare and cutting Medicaid) and blocking the debt ceiling increase unless they get what they want, perfectly willing to burn the house even if it falls on their own heads. In the mean time, Obama administration has been a total failure, completely conceding to Republican pseudoscience and failing to exert any effort to resolve this horrible situation.

Krugman calls it 1937 all over again. Given his excellent track record, I see no reason to disagree with him. I’ll give it two weeks. Unless the White House comes up with some kind of radical program to jump-start the economy in the next two weeks, or a sensible deal is reached with the GOP that does not involve any significant spending cuts right now (as opposed to any deferred spending cuts delayed till unemployment goes below 6% – which is the right way to go), on June 16, 2011, I’m going all-cash again. (And, just for the record, I’ve been mostly all-stock since January 2009.)

The general problem is that Republicans are almost sure to oppose almost any government move that might prevent the double-dip recession. For example, a rerun of 2009 stimulus would be extremely effective, and today, when the economy isn’t losing jobs at the fastest rate since 1930’s, it could result in immediate and obvious results (lower unemployment, higher consumer spending). But is there any chance of getting another $1 trillion (6% of GDP) of short-term deficit spending through the Congress, for a chance to end the Great Recession here and now? None at all.

Sensible, intelligent left-wing economists have been trying to catalogue things that could be done now, in spite of Republican stonewalling in the House

http://delong.typepad.com/sdj/2011/06/department-of-stuff-that-could-really-help-the-economy-and-doesnt-require-republican-cooperation.html

http://delong.typepad.com/sdj/2011/05/shoulda-coulda-woulda-but-we-didnt-watch-macroeconomic-policy-in-recession-department.html

But I wouldn’t be holding my fingers crossed for any of that to be actually implemented by the Obama administration.

[Eugene]

[quote=CA renter]Right, paramount.

Are we growing, or are prices simply getting higher (our purchasing power is deteriorating)? One is good, the other is very, very bad. Which one do you think it is?[/quote]

Yes, we are growing, for now. GDP is still growing in real terms (in other words, after adjusting for price changes). Things could be worse. UK GDP actually shrunk for a quarter last fall. Greece and possibly Spain (not sure) are, technically, still in recession.

That may not last long, though: Republicans are out in full power once again, demanding immediate austerity (including abolishing Medicare and cutting Medicaid) and blocking the debt ceiling increase unless they get what they want, perfectly willing to burn the house even if it falls on their own heads. In the mean time, Obama administration has been a total failure, completely conceding to Republican pseudoscience and failing to exert any effort to resolve this horrible situation.

Krugman calls it 1937 all over again. Given his excellent track record, I see no reason to disagree with him. I’ll give it two weeks. Unless the White House comes up with some kind of radical program to jump-start the economy in the next two weeks, or a sensible deal is reached with the GOP that does not involve any significant spending cuts right now (as opposed to any deferred spending cuts delayed till unemployment goes below 6% – which is the right way to go), on June 16, 2011, I’m going all-cash again. (And, just for the record, I’ve been mostly all-stock since January 2009.)

The general problem is that Republicans are almost sure to oppose almost any government move that might prevent the double-dip recession. For example, a rerun of 2009 stimulus would be extremely effective, and today, when the economy isn’t losing jobs at the fastest rate since 1930’s, it could result in immediate and obvious results (lower unemployment, higher consumer spending). But is there any chance of getting another $1 trillion (6% of GDP) of short-term deficit spending through the Congress, for a chance to end the Great Recession here and now? None at all.

Sensible, intelligent left-wing economists have been trying to catalogue things that could be done now, in spite of Republican stonewalling in the House

http://delong.typepad.com/sdj/2011/06/department-of-stuff-that-could-really-help-the-economy-and-doesnt-require-republican-cooperation.html

http://delong.typepad.com/sdj/2011/05/shoulda-coulda-woulda-but-we-didnt-watch-macroeconomic-policy-in-recession-department.html

But I wouldn’t be holding my fingers crossed for any of that to be actually implemented by the Obama administration.

[Eugene]

[quote=CA renter]Right, paramount.

Are we growing, or are prices simply getting higher (our purchasing power is deteriorating)? One is good, the other is very, very bad. Which one do you think it is?[/quote]

Yes, we are growing, for now. GDP is still growing in real terms (in other words, after adjusting for price changes). Things could be worse. UK GDP actually shrunk for a quarter last fall. Greece and possibly Spain (not sure) are, technically, still in recession.

That may not last long, though: Republicans are out in full power once again, demanding immediate austerity (including abolishing Medicare and cutting Medicaid) and blocking the debt ceiling increase unless they get what they want, perfectly willing to burn the house even if it falls on their own heads. In the mean time, Obama administration has been a total failure, completely conceding to Republican pseudoscience and failing to exert any effort to resolve this horrible situation.

Krugman calls it 1937 all over again. Given his excellent track record, I see no reason to disagree with him. I’ll give it two weeks. Unless the White House comes up with some kind of radical program to jump-start the economy in the next two weeks, or a sensible deal is reached with the GOP that does not involve any significant spending cuts right now (as opposed to any deferred spending cuts delayed till unemployment goes below 6% – which is the right way to go), on June 16, 2011, I’m going all-cash again. (And, just for the record, I’ve been mostly all-stock since January 2009.)

The general problem is that Republicans are almost sure to oppose almost any government move that might prevent the double-dip recession. For example, a rerun of 2009 stimulus would be extremely effective, and today, when the economy isn’t losing jobs at the fastest rate since 1930’s, it could result in immediate and obvious results (lower unemployment, higher consumer spending). But is there any chance of getting another $1 trillion (6% of GDP) of short-term deficit spending through the Congress, for a chance to end the Great Recession here and now? None at all.

Sensible, intelligent left-wing economists have been trying to catalogue things that could be done now, in spite of Republican stonewalling in the House

http://delong.typepad.com/sdj/2011/06/department-of-stuff-that-could-really-help-the-economy-and-doesnt-require-republican-cooperation.html

http://delong.typepad.com/sdj/2011/05/shoulda-coulda-woulda-but-we-didnt-watch-macroeconomic-policy-in-recession-department.html

But I wouldn’t be holding my fingers crossed for any of that to be actually implemented by the Obama administration.

[Author]

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