One question—what is the ultimate goal? Is it to reduce debt as fast as possible to 0%? To bring deficits to $0? Achieve a 50%/30%/etc debt to GDP ratio within a certain timeframe?
I think the timing is a very important question because it can completely alter some of your positions. It still took Switzerland about 20 yrs to go from 50% to 16% but then Greece has slashed its debt by something like 50% in 5-7 years, which was extremely painful.
That's a good point. I think the goal should be to stabilize the debt-to-GDP ratio in the short run and incrementally reduce it in the long run. But I think the longer we wait to do that, the more extreme and painful measures will be needed to get our fiscal house in order.
This is mostly fine. In your individual reform are you wiping out all the tax expenditures but just not talking about it? That’s a bigger swing than corporate welfare and so you should be. Tax preferenced spending is the original sin of health care, spiking home mortgage deduction would push housing prices down helping young over old adjusted for inheritance
Why no mention of cutting defense spending or military entitlements?
Another question one must ask is.
What product or service has the military provided? Are they fighting for a better America or a corporate takeover of the people? As long as a country has a military, there will never be peace. That’s something they’ve been selling us for decades.
No politician will do what’s best for the country as it would call previous administrations out and the people would revolt if they overstood that the government has been lying to them for years and their school textbooks were a scam.
But cutting waste and cutting defense are different animals, because the military is the collateral behind the dollar: we get to run trillion-dollar deficits at rates nobody else could dream of only because the world parks its savings in Treasuries, and it does that partly because our Navy keeps the sea lanes open and the security umbrella makes holding dollars the rational default for every ally.
If we were to cut deep and allies hedge, dollar demand softens, yields drift up. And since we already spend more on interest than on defense, that rate move swallows the saving and feeds the rates-above-growth trap that ends at the printing press, while hollowing out the base that was the actual way out.
I expected to like this to be something I’d support. I can’t decide if I really want to spend the time to reply in detail, but I think you have a fine as a politician. You readily wave things away or suggest changes without enlightening your audience as to what you mean or what the implications. Many people will hear this as common sense, almost painless changes but you should climb back into your hope and keep digging. 1) [180B] in corporate subsidies. You give nothing info on the components or why it would be difficult in democracy but sensible fixes in your 24 hours as Thomas Friedman. Are we really subsidizing Colgate and Catepiller? Or is it more complex. I suspect most are ag subsidies. What’s the impact of cutting it off next Monday? Is some of it R&D? I don’t know. Corporate subsidies sound like AOC. 2) Retiree welfare- you intend to take my dad’s retiree benefits and retroactively cut them now that he’s old and “wealthy”. You give no elaboration on what that means but let’s say at 70 he had $1m in savings and $1m house. He planned for retirement. Has a 25 year life expectancy (both parents lived that long). So Biden inflation means his payments are cut while people who didn’t prepare get increases? He was a farmer. He definitely has a pitchfork.
That’s from the front end. Sorry to be rude but it’s not particularly insightful into what needs to happen, particularly the impact of the changes you suggest.
Thanks for taking the time to write your response, let me see if I can respond with a bit more detail.
1) You're right that the federal government isn't writing checks directly to companies like Colgate. The largest components are agricultural subsidies, Small Business Administration loans, energy and transportation subsidies, and export financing for arms manufacturers. It also includes applied research that private firms can commercialize, but not basic research, which is a genuine public good. I think these business subsidies should be eliminated—not necessarily overnight, but on a relatively short timeline—because private firms should bear these costs themselves rather than shifting them to taxpayers.
2) I think you can gradually phase out benefits as income rises and introduce more means testing for people who are still many years away from retirement to reduce the political backlash. But for Social Security to be sustainable, some people will have to receive smaller benefits, and I think those reductions should be concentrated on higher-income retirees.
If I was DfD I would go for the Land Value Tax instead of the X-Tax. Attempts to “simplify” the income tax … well, as a for instance, who decides if the F-350 I buy for my business is a legit “investment” or really personal consumption?
That's a fair point. I think the X Tax simplifies the tax code by eliminating many of the more complicated features of the current income tax—like depreciation schedules, asset classification, and capital cost recovery—and replacing them with immediate expensing. You'd still have to distinguish between business and personal consumption in some cases, but that's already an issue under the current system.
I like the idea of a land value tax, but I think it would be difficult to implement at the national level. Local governments already assess land values, but creating a consistent federal system for valuing land across the entire country would be a major administrative and political undertaking.
One question—what is the ultimate goal? Is it to reduce debt as fast as possible to 0%? To bring deficits to $0? Achieve a 50%/30%/etc debt to GDP ratio within a certain timeframe?
I think the timing is a very important question because it can completely alter some of your positions. It still took Switzerland about 20 yrs to go from 50% to 16% but then Greece has slashed its debt by something like 50% in 5-7 years, which was extremely painful.
That's a good point. I think the goal should be to stabilize the debt-to-GDP ratio in the short run and incrementally reduce it in the long run. But I think the longer we wait to do that, the more extreme and painful measures will be needed to get our fiscal house in order.
This is mostly fine. In your individual reform are you wiping out all the tax expenditures but just not talking about it? That’s a bigger swing than corporate welfare and so you should be. Tax preferenced spending is the original sin of health care, spiking home mortgage deduction would push housing prices down helping young over old adjusted for inheritance
Good point. I should have specified this, but the x tax would get rid of that stuff.
Why no mention of cutting defense spending or military entitlements?
Another question one must ask is.
What product or service has the military provided? Are they fighting for a better America or a corporate takeover of the people? As long as a country has a military, there will never be peace. That’s something they’ve been selling us for decades.
No politician will do what’s best for the country as it would call previous administrations out and the people would revolt if they overstood that the government has been lying to them for years and their school textbooks were a scam.
You're half right, there's real rot in Defense, and we went after it in this post:
https://boydinstitute.org/p/the-pentagons-blank-check
But cutting waste and cutting defense are different animals, because the military is the collateral behind the dollar: we get to run trillion-dollar deficits at rates nobody else could dream of only because the world parks its savings in Treasuries, and it does that partly because our Navy keeps the sea lanes open and the security umbrella makes holding dollars the rational default for every ally.
If we were to cut deep and allies hedge, dollar demand softens, yields drift up. And since we already spend more on interest than on defense, that rate move swallows the saving and feeds the rates-above-growth trap that ends at the printing press, while hollowing out the base that was the actual way out.
I expected to like this to be something I’d support. I can’t decide if I really want to spend the time to reply in detail, but I think you have a fine as a politician. You readily wave things away or suggest changes without enlightening your audience as to what you mean or what the implications. Many people will hear this as common sense, almost painless changes but you should climb back into your hope and keep digging. 1) [180B] in corporate subsidies. You give nothing info on the components or why it would be difficult in democracy but sensible fixes in your 24 hours as Thomas Friedman. Are we really subsidizing Colgate and Catepiller? Or is it more complex. I suspect most are ag subsidies. What’s the impact of cutting it off next Monday? Is some of it R&D? I don’t know. Corporate subsidies sound like AOC. 2) Retiree welfare- you intend to take my dad’s retiree benefits and retroactively cut them now that he’s old and “wealthy”. You give no elaboration on what that means but let’s say at 70 he had $1m in savings and $1m house. He planned for retirement. Has a 25 year life expectancy (both parents lived that long). So Biden inflation means his payments are cut while people who didn’t prepare get increases? He was a farmer. He definitely has a pitchfork.
That’s from the front end. Sorry to be rude but it’s not particularly insightful into what needs to happen, particularly the impact of the changes you suggest.
Thanks for taking the time to write your response, let me see if I can respond with a bit more detail.
1) You're right that the federal government isn't writing checks directly to companies like Colgate. The largest components are agricultural subsidies, Small Business Administration loans, energy and transportation subsidies, and export financing for arms manufacturers. It also includes applied research that private firms can commercialize, but not basic research, which is a genuine public good. I think these business subsidies should be eliminated—not necessarily overnight, but on a relatively short timeline—because private firms should bear these costs themselves rather than shifting them to taxpayers.
2) I think you can gradually phase out benefits as income rises and introduce more means testing for people who are still many years away from retirement to reduce the political backlash. But for Social Security to be sustainable, some people will have to receive smaller benefits, and I think those reductions should be concentrated on higher-income retirees.
If I was DfD I would go for the Land Value Tax instead of the X-Tax. Attempts to “simplify” the income tax … well, as a for instance, who decides if the F-350 I buy for my business is a legit “investment” or really personal consumption?
A “major administrative and political undertaking”. That’s what dictators are for! :)
That's a fair point. I think the X Tax simplifies the tax code by eliminating many of the more complicated features of the current income tax—like depreciation schedules, asset classification, and capital cost recovery—and replacing them with immediate expensing. You'd still have to distinguish between business and personal consumption in some cases, but that's already an issue under the current system.
I like the idea of a land value tax, but I think it would be difficult to implement at the national level. Local governments already assess land values, but creating a consistent federal system for valuing land across the entire country would be a major administrative and political undertaking.