Liberal bloggers have taken to ganging up on the Blue Dogs—conservative Democrats who tend to go their own way on fiscal and foreign policy issues. Smelling victory in November, some on the left would like to find a way to take out these lawmakers, who mostly represent southern and midwestern swing districts.    more »

For a brief 48 hours, it looked as if John McCain was courageous enough to say something sensible about tax policy—and as a result was immediately attacked by both the right and the left. Today’s Wall Street Journal reported disapprovingly that McCain would consider payroll taxes as a way to bolster Social Security’s finances.“Mr. Stephanopoulos [on ABC’s This Week] pressed, ‘So that means payroll tax increases are on the table, as well?’ Here came the words that have caused the McCain campaign well deserved grief: ‘There is nothing that's off the table. I have my positions, and I'll articulate them. But nothing's off the table.’”    more »

To paraphrase the oily Captain Renault of Casablanca fame, we in Washington are shocked, shocked to find that deficits are going on here. To listen to the cries of outrage and dismay, one might think the Bush Administration’s latest projection of nearly $400 billion in red ink for the fiscal year ending on Sept. 30, and almost $500 billion for next year was unexpected.    more »

A questioner at our forum on the candidates’ tax plans asked about the portion of Senator Obama’s tax proposals that would go to households with no tax liability. I did not have the answer then, but Jeff Rohaly has since crunched the numbers. He estimates that the refundable portion of tax credits (other than for healthcare) would increase by $648 billion over ten years in the Obama plan. The new credits would also increase the percentage of households that do not owe income tax in 2009 from 38 percent under current law to 48 percent in the proposal, although that percentage will decline over time as real incomes grow.    more »

Barack Obama’s fiscal policy can be summarized pretty simply: Cut taxes for low- and middle-class Americans, boost spending for education, health care, and alternative energy, and pay for much of it raising taxes on the rich. That’s not the only way he’d finance his ambitious plans, of course—he’d also have to borrow $3 trillion and get some money from ending the war in Iraq—but he hopes to generate nearly $300 billion over the next decade just from rolling back the Bush tax rate cuts on high-bracket taxpayers.    more »

TPC sponsored a fascinating debate today between John McCain’s top policy adviser, Doug Holtz-Eakin, and Barack Obama’s senior economic adviser, Austan Goolsbee. More than anything, I was struck by how much time each spent criticizing the other guy’s fiscal plan rather than promoting their own.    more »

In response to my blog the other day about economists endorsing John McCain’s proposal to create an alternative individual income tax, Winghunter asked a perfectly reasonable question: What would such a scheme do for the economy?    more »

It wasn’t exactly So You Think You Can Dance, but watching Congress and President Bush boogie their way through the final song of the recent Medicare prom was still a hoot. In the end, Hill Democrats stomped Bush and, despite his veto, easily passed a Medicare bill that delayed, yet again, mandated cuts in physician payments. The Dems did so while insisting they were for both true competition and fiscal responsibility. Bush, trying to claim those same virtues for himself, had unsuccessfully tried to block the bill, insisting it would hurt beneficiaries by curbing their access to managed care plans.    more »

I turned in my PhD dissertation just in time. I can’t believe I’m going to be a doctor of public finance. My paper: An Alternative Tax System in the McCain Administration. It is a detailed description and macroeconomic analysis of John McCain’s plan to give taxpayers a choice of paying under the current system or through a much simpler and more efficient option.    more »

John Endean raised an intriguing idea the other day in response to my blog on whether business executives would be willing to give up targeted tax breaks in return for a lower corporate rate, as John McCain has suggested.    more »

My blog on “How the Budget Baseline Favors Spending” stimulated numerous thoughtful comments. Some implied that my proposal would reward those who wish to make the Bush tax cuts permanent and ignore the fact that dubious accounting was used to get them passed in the first place. Those arguing this point did not pay sufficient attention to my last paragraph which implied that baseline reform would have to await the disposition of the Bush cuts. Further, I alluded to the possibility that whatever portions of the Bush policy are extended, the extension will again be temporary, thus making it difficult to finally settle the point.   more »

Unlike many bloggers, I am not going to bash John McCain’s renewed interest in balancing the budget. It is nice to see his on-and-off love affair with fiscal responsibility heating up again. There is just one problem with his vow to balance the budget by 2013. He can’t do it. Or, to be more precise, he can’t do it while extending the Bush tax cuts, cutting other taxes of his own, and maintaining a costly military presence in Iraq.    more »

The Wall Street Journal editorial page ran one of its favorite tables the other day, purporting to show how uncompetitive the U.S. corporate tax regime is with the rest of the developed world. The chart shows that, at nearly 40%, combined state and federal statutory rates here are far higher than the average of the countries in the OECD.    more »

The Congressional Budget Office’s expenditure and revenue baseline is supposed to illustrate the budget implications of extending current policy. Few may care how the baseline is actually constructed, but since all policy changes are measured “from the baseline,” the arcane definitions that describe current policy can have a profound effect on Congressional decisions.    more »

Lots of buzz lately about sovereign wealth funds—those huge investment pools run by foreign governments that are becoming an increasingly important source of capital for U.S. companies. The Wall Street Journal’s Michael Phillips reports that foreign investors bought nearly $1 trillion in U.S. securities in 2007. And a small but growing share was acquired by sovereign wealth funds operated by dozens of countries, including China and the oil-soaked nations of the Middle East.    more »