Monday, November 15, 2010

OK You Fix the Budget

The above link is to an article in today's NYT that lays out many of the issues in fixing the federal budget. The author gives you the choices and asks you to make the decisions. You will discover that many of the choices that can be made involve value judgments. That is, what do you want to do with taxes and what do you want to do with spending. In other words, whose ox is being gored by your choices?

When I think about politics it comes down to answering the above questions. Just follow the money. Government tax policy determines how much revenue that is raised; it also determines the sources of the tax revenue. Government policy also determines how the money will be spent. If everyone understood tax policy and how it is determined, and how spending decisions are made, our system would work pretty well. Unfortunately, these things are poorly understood and our electorate rewards politicians who express concerns over deficits but who are not specific about what they will do to correct them. Heaven for many politicians is to provide government benefits to win votes, while they are also giving voters tax cuts which also wins votes. They do this by paying for benefits with debt instead of with taxes, but they express grave concern about deficits which makes them appear serious about fiscal policy.

1 comment:


    I found this link in that page. Its fun and interesting to see where the big changes come from. Not surprisingly, allowing the Bush tax cuts to expire had a HUGE impact.