Somebody asked my thoughts on it. I really don't have detailed thoughts, but I suppose it's worth highlighting a few things.
- One of the reasons why I have a hard time having any firm thoughts on it is that I haven't seen much in the way of a timeline for rolling this out. Perhaps it's because I haven't been paying close enough attention - if anyone knows of simply a chart showing revenue, outlays, and deficits and how each would change over the next decade with each plan I'd probably have a lot more to say.
- The reason is, right now I think it's absurd that anyone is talking about (1.) raising taxes, (2.) cutting spending, or (3.) cutting the deficit. Five years from now I think it would be absurd not to talk about those three things. To the extent that these debt deals are addressing entitlement spending and Iraq and Afghanistan, the cuts are likely to come on a medium to long term horizon. That's fine with me. If it's happening a ways out I'd even go in for a relatively big deal, because these opportunities don't come around all that often.
- In last night's debt talks apparently Boehner wanted to throw in adjustments to health reform. The one the Washington Post specifically mentions is ending the individual mandate. That would be great, in my opinion. While they're ending a variety of tax credits (this corporate jet thing and apparently maybe the mortgage interest deduction too) they might consider ending tax credit for employer sponsored plans (they partially ended it during health reform). That's a McCain campaign proposal, and a good one, but I'm guessing all this health reform stuff isn't going to make it in.
- This is beginning to be exclusively a debt negotiation and the debt limit itself is starting to fall out of the discussion. That's not good, because the debt limit is far more important and urgent than the debt. The debt limit needs to increase. Better yet, we just shouldn't have a debt limit. Congress passes appropriations bills and Congress passes revenue bills. If they want to tell the president what to spend and what to tax they don't get to reinvent algebra - they don't get to tell him what to borrow. That's determined by simple arithmetic, not by Congressional fiat.
- A balanced budget amendment would be a horrible idea. Recently I said we could run deficits from now until the sun burns out, so long as we run deficits at a rate such that we keep the debt level stable as a share of GDP. Upon further reflection, though, I realized that it's likely we'll be an inter-stellar species long before the Sun burns out, so that isn't really a constraint. So let me revise that - we can keep running deficits until the heat death of the universe.
Friday Night Music
2 hours ago