The popular perception is that our do-nothing Congress is going to drive our country into a financial ditch.
Tyler Cowen (one of my favorite economists, even though he's a Bitcoin skeptic) points out that's not actually true.
If Congress does nothing, then a bunch of things will happen which should balance the budget in ten or so years:
The Bush tax cuts will expire. Income tax rates go up for everybody (rich, poor and middle class) and the Federal Government will get a lot more revenue. If you're a Democrat who thought the Bush tax cuts were a really bad idea in the first place then that shouldn't bother you.
The SuperCommittee SuperFailure budget cuts will happen. Military and Domestic spending will be cut. I'd be pretty happy with that, I think we're spending way too much money on our military and don't think we get our money's worth from most Federal government spending.
Medicare spending will be cut, because there will be no "doc fix" to override a law that was passed several years ago that was supposed to limit doctor reimbursement of Medicare expenses. If that happens (I don't think it will), then it'll suddenly become very difficult to find a doctor willing to accept people on Medicare. It would, however, save a ton of money. It would also be a fascinating natural experiment in health-care economics-- given that there's a surprisingly weak correlation between health care spending and longevity or other measures of health maybe we'd all be better off if we collectively spent less money on doctors.
From my perspective, do-nothing looks like a pretty good second-best solution. I'd rather we cut military spending more, kept the tax cuts for people making under $50,000 per year, and implemented Megan McArdle's plan for national catastrophic health insurance. But Congress has shown that it is really good at doing nothing, and I don't expect that to change.
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3 comments:
Do you really think that your second best solution is going to come to pass? You can't be serious.
No, in this context, "do nothing" means "do nothing to the status quo".
I understand your contrarian instincts get wound up with your optimism and then you think that you've stumbled on insight, but you're merely dreaming again.
Wake up.
Do I really think Congress will do ABSOLUTELY nothing?
No, sadly I think you're right. I think they'll re-implement the "Doc Fix" and will extend some of the Bush tax cuts and will probably even find a way of sidestepping... oh, lets say 40% of the military cuts.
We have lost a great contrarian.
RIP Christopher Hitchens.
The contrarian spirit, in a somewhat less abrasive form, lives on on this blog.
That's a compliment, by the way.
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