Archive for August 1st, 2009

Raise *these* taxes

1 August 2009

So many problems out there — health care costs, climate change, mortgage crisis — and so many complicated solutions being pursued.  Some solutions that economists would tend to favor that do not seem to be part of the current political debate involve eliminating a couple of expensive tax loopholes, for health insurance and mortgage interest, and imposing a carbon tax.

All of these would raise a lot of revenue, and tax increases of any kind are like kryptonite to politicians and of course counterproductive in a recession, but they could be made revenue-neutral by cutting tax rates or increasing the personal exemptions or standard deductions.  Or, when the economy has recovered, tax increases like these could be part of a deficit-reduction package.

One by one:

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Should Bernanke stay or should he go?

1 August 2009

His term ends in early 2010.  Obama’s decision on his fate will probably come much sooner. I tend to think he should be reappointed, not least because the apparent alternative is Larry Summers.  I’d like to see some other macro/policy economists get consideration — Brad DeLong, for example — but I’ve heard basically no other names mentioned besides Bernanke and Summers.

I think many if not most economists would give Bernanke about a D for his handling of the housing bubble and the expansion of 2005-2007 but at least a B for his handling of the financial crisis and macroeconomic fallout.   (It would be an A if not for the mixed signals in bailing out “little” Bear Stearns and not “big” Lehman Brothers.)  It seems like he’s learned that bubbles are not a benign phenomenon and that the Fed can act to stop them.

Last Sunday’s NYT had an excellent point-counterpoint on the question of Bernanke’s reappointment, a true heavyweight matchup between Nouriel (“Dr. Doom”) Roubini, arguing for, and Monetary History of the United States co-author (with Milton Friedman) Anna Jacobson Schwartz arguing against.  Both columns are well worth reading and re-reading over the next few months.

(This time you’ll have to find the Clash video yourself.  Sorry.)

GM/DC

1 August 2009

Just in case you missed cartoonist Ward Sutton’s hilarious rendering of the General Motors bailout in last Sunday’s NYT, “GM/DC: Back in the Black,” here’s the link.

And in case that whets your appetite for the old school video of AC/DC’s original . . .