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Monday, April 25, 2011

Paul Krugman: Let’s Take a Hike

There is a plausible plan to a balanced budget that preserves the social safety net, but we aren't hearing much about it:

Let’s Take a Hike, by Paul Krugman, Commentary, NY Times: When I listen to current discussions of the federal budget, the message I hear sounds like this: We’re in crisis! We must take drastic action immediately! ...
You have to wonder: If things are that serious, shouldn’t we be raising taxes, not cutting them? ... Consider the Ryan budget proposal, which ... begins by warning that “a major debt crisis is inevitable” unless we confront the deficit. It then calls ... for tax cuts, with taxes on the wealthy falling to their lowest level since 1931.
And because of those large tax cuts, the only way the Ryan proposal can even claim to reduce the deficit is through savage cuts in spending, mainly falling on the poor and vulnerable. (A realistic assessment suggests that the proposal would actually increase the deficit.)
President Obama’s proposal is a lot better. At least it calls for raising taxes on high incomes back to Clinton-era levels. But it preserves the rest of the Bush tax cuts... And, as a result, it still relies heavily on spending cuts, even as it falls short of actually balancing the budget. ...
The ... only major budget proposal out there offering a plausible path to balancing the budget ... includes significant tax increases: the “People’s Budget” from the Congressional Progressive Caucus ... is projected to yield a balanced budget by 2021 ... without dismantling ... Social Security,... Medicare and Medicaid.
But if the progressive proposal has all these virtues, why isn’t it getting anywhere near as much attention as the much less serious Ryan proposal? ...
The answer, I’m sorry to say, is the insincerity of many if not most self-proclaimed deficit hawks. To the extent that they care about the deficit..., it takes second place to their desire to do precisely what the People’s Budget avoids doing, namely, tear up our current social contract, turning the clock back 80 years under the guise of necessity. They don’t want to be told that such a radical turn to the right is not, in fact, necessary.
But, it isn’t, as the progressive budget proposal shows. We do need to bring the deficit down, although we aren’t facing an immediate crisis. How we go about stemming the tide of red ink is, however, a choice — and by making tax increases part of the solution, we can avoid savaging the poor and undermining the security of the middle class.

    Posted by on Monday, April 25, 2011 at 12:42 AM in Budget Deficit, Economics, Politics, Social Insurance, Taxes | Permalink  Comments (51)


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