13 April 2010

The Federal Budget: One Chart and One Table

From Villainous Company, via JamulBlog.

From Ezra Klein, via Megan McArdle.  Here's what Klein says:
Another way of putting this: I've heard Tyler Cowen say that he asks conservatives when they'll support a VAT. It's easy (at least in theory) to support deep spending cuts in year one and year two and year three and year four, but straight cuts through to year 40? And beyond? Eventually, you need revenue. And I'd say the same goes for liberals: You can raise taxes on the rich in year one and year two and year three, but in year 40?
Eventually, we're just going to have to get the growth of health-care costs down. There's simply no other way.
Hold your horses. That should read "Eventually, we're just going to have to get the growth of government spending on health-care down. There's simply no other way." The problem with the budget is that the government writes blank checks for health care AND that people want to consume lots of resources in the form of health care.  The fact that costs are high are not themselves a problem.  The problem is that they are high and the government has made lots of open-ended promises to but health care for people.

PS With regards to the table above, see Greg Mankiw discussing Parade Magazine's celebrity-laden "Annual Salary Survey."
By my count, about 14 percent of the people in Parade's sample earn more than $1 million a year. In the real world, the actual percentage is about 0.2 percent. [...]

Does this matter? I think it might. There is a common perception in some circles that we can solve all our fiscal problems if only we were willing to tax the rich some more. Yet, in reality, there are not enough rich for this to work. By presenting such a skewed cross-section of incomes, Parade inadvertently feeds an all-too-common misperception.

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