I am scheduled to go on CNBC later today to chat about the idea of a millionaire’s tax bracket. To me, this is a solution in search of a problem. You cannot deal with America’s long-term budget problems by raising taxes on the rich. Even as a short-term fix, it makes for poor policy. As the Tax Policy Center notes:
James Capretta is dead on:
But what’s really important about the last month is not that any reform plan is about to pass. It’s that the terms of the budget, entitlement and health care debates have shifted dramatically, and very likely on a permanent basis. The fundamental elements of the Ryan Roadmap are sweeping tax reform; changes in health care which emphasize a marketplace and consumer choice; and modifications to retirement programs that reflect demographic reality. All of these elements can now be found in budget plans endorsed by prominent Democrats, including Democrats the president himself turned to find solutions to the nation’s budget problems. Consequently, it will be much harder in the future for Democrats to demonize these ideas as they have tried to do in the past.
A member of the Bush White House once told me that the two key influentials when it came to conservatives/Republicans and economics were the Wall Street Journal editorial board and CNBC’s Larry Kudlow. Well, I think you can add a third name to that list: Rep. Paul Ryan. In a newspaper chat, the GOP budget guru gives his two cents on the Fed:
From the White House’s perspective, the ideal replacement for Larry Summers as chief economic brain would be a female chief executive who could reach out to Republicans and the business community without irking liberals. Buzz about the candidacy of Roger Altman, the founder of investment bank Evercore, shows how difficult it may be for President Barack Obama to land that dream candidate.
So is the liberal Democratic position that tax rates don’t really matter? First comes a deficit reduction plan put forward by Rep. Jan Schakowsky would reduce the budget deficit by $427 billion in 2015 by raising taxes by $283 billion, cutting defense by $111 billion and only ever-so-slightly trimming nondefense discretionary spending by $8 billion and Medicare by $17 billion. She doesn’t do a long term analysis because unless you cut entitlements or jack taxes through the roof (and ignore the subsequent economic impact), the numbers won’t work.