Public finance

The Truth About Sin Taxes.

Though I ultimately disagree with her conservative takeaway, I actually found myself agreeing with much of Katrina Trinko's argument that sin taxes -- taxes on everything from cigarettes to soda -- are politically cowardly and cheap:

That's because during this recession, politicians are increasingly resorting to sin taxes to help close budget gaps. Aware that Americans, facing high unemployment and underemployment, won't rush to support (or re-elect) those who raise income taxes, politicians are devising less obvious ways to boost revenue. Raising fees on government services is one such way; increasing or instituting sin taxes is another.

For Taxes, the Deficit Argument Isn't Enough.

There was no small amount of pleasure among Democrats when a scathing news article ran in yesterday's Washington Post highlighting Republican hypocrisy on deficits:

Even as they hammer Democrats for running up record budget deficits, Senate Republicans are rolling out a plan to permanently extend an array of expiring tax breaks that would deprive the Treasury of more than $4 trillion over the next decade, nearly doubling projected deficits over that period unless dramatic spending cuts are made. 

Your Morning Economic Pessimism.

With his usual clarity, Paul Krugman explains why the current economic situation is looking a lot like 1938. It's not a pretty picture, and what's so bracing about Krugman's analysis is that despite the note of hope on which he ends, it's hard to avoid the conclusion that our current political situation makes doing what's necessary all but impossible:

Bloggers, Taxes, and City Budgets.

You may have heard about this crazy story from Philadelphia, in which the city is sending letters to bloggers, demanding that they pay a $300 "business privilege tax" because of their income from blogging. This rang a chord with me, because a few years ago, long after I had moved to D.C., I got a letter from the city of Philadelphia informing me that I owed them money from my unpaid business privilege tax. This happened because I reported some modest royalty income from a book I had written while living in Philadelphia, and the city decided that by writing a book I was operating a business within the city, and therefore needed to pay a tax for the privilege.

Who's Doing Paul Ryan's Taxes?

The latest fuss over Rep. Paul Ryan's budget plan -- a perennial topic, apparently, because it's the only Republican public policy proposal with even vague specifics -- has prompted another controversy: Megan McArdle sniping at Paul Krugman over which congressional organ does which tax estimate. More on that fascinating issue down the road, but let's get down to brass tacks: Where did Ryan's revenue estimate come from?

Boehner Reads the Tea Leaves in Romer's Resignation.

So John Boehner thinks the announced resignation of Christina Romer, in combination with the latest jobs report, is evidence the Obama administration needs to seriously retool its economic policy:

You Know How Jesus Prized Wealth.

The mainstays of conservative Christian activism -- the Family Research Council and the Christian Coalition -- are launching a new campaign to protect the wealthy from tax increases, according to subscription-only Roll Call. The tax hikes, they say, are a "family values issue."

Feldstein: Stop Spending With Taxes.

Conservative tax orthodoxy as outlined by Grover Norquist and the Americans for Tax Reform -- and accepted by most Republicans -- requires not only opposition to tax increases but also opposition to closing tax loopholes: Any act that might raise revenue is forbidden. Unfortunately, this perpetuates a slew of subsidies and give-aways in the current tax code, often targeted at corporate interests, that distort its effects and are the equivalent of real spending.

Marco Rubio's Debt-Ridden Plan.

Like most Republicans, Florida Senate hopeful Marco Rubio has taken to attacking President Obama on debt and deficits.

The Right's Dangerous Game.

Barry Eichengreen writes on fiscal consolidation -- budget cuts to reassure the bond markets -- observing that while austerity is necessary for Southern Euorpe's debt-burdened countries,* the U.S., Germany, and even the United Kingdom don't need such policies. While he's writing below about Britain's Liberal-Conservative government, the analysis could apply just as well to deficit hawks in the United States.

Pop Quiz: When Is the Deficit Important?

Answer: It's critically important if you don't want to fund unemployment benefits or other short-term, jobs-creating stimulus. On the other hand, If you want to shift the U.S. energy sector into the 21st century, the deficit doesn't matter that much. Viz:

Senate backers of a long-shot bid to pass legislation with greenhouse gas caps got some fresh help Wednesday when the Congressional Budget Office reported that one high-profile proposal would help curb the federal deficit by about $19 billion over the next decade ... But Kerry conceded last week that his bill as a whole has been abandoned as the main vehicle for moving an energy or climate package.

Sugar Tax and Anti-Taxes.

Last week, New York Gov. David Paterson dropped his proposal to tax sugary drinks by a penny per ounce, and The New York Times has an analysis on how the money behind the soda industry and the power of anti-tax advocates did it in. Pepsi Co., which has a headquarters in Westchester County, and Coca-Cola, which has a bottle-distributing plant on Staten Island, surely played a role, but it probably doesn't help that progressives weren't fully behind it either.

The Little Picture: Chancellor Angela Merkel.

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Federal Chancellor of Germany Angela Merkel this week proposed 80 billion euros in spending cuts and new fees in order to reduce her country's budget deficit. It's just one instance of a growing trend of fiscal tightening amongst countries around the world:

Growth and Consequences.

Matt Yglesias calls attention to Joe Gagnon's proposal for a relatively unorthodox monetary-policy intervention -- having central banks purchase massive amounts of debt in order to bring interest rates even lower than their current zero-bound to stimulate growth. Given Congress' inability to adopt more aggressive fiscal policies and the Fed's exhaustion of conventional monetary-policy approaches, this may be the right tool for the job -- and for jobs growth.

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