Friday, April 22, 2011
I *Heart* Jack Lew
Well-worth watching Charlie Rose's interview with Jack Lew. Consummately measured and balanced, uber-informed, politically astute and sensitive, Lew tackles most major political-economic issues facing the US, from taxes, deficits, inequality, healthcare, ageing & social security. He comes across with a knowledge one sees in one's BEST history teacher, with the demeanor of the best coach/father one saw amongst the other kids - the kind that is thoughtful, but never yells (in public), and is always constructive and positive in his criticism, and champions the values necessary to the success of the team. Such a man (or woman!) is oh-so-needed in this position - less to create consensus from amongst the vicious partisans across the aisle, but rather in order to appeal directly to the American people who will undoubtedly find sense in his patient explanation and no-nonsense communication style.
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3 comments:
Lew is impressive in his ability to mislead and talk slick.
Lew talks about entitlements, but ignores that entitlements are promises older folks made to themselves and now want younger people to pay them. Lew ducks issues of generational equity.
Lew talks about high earning people having benefited for the past 30 years, and then talks about raising income taxes. Lew does a bait and switch because the income taxes hit people that are high earning going forward, even if they did not participate in the prior boom or prior low tax rates.
Lew talks about high earning people benefiting from lots of deductions and credits that reduces their income taxes. Lew does a bait and switch again because most people earning over $200k, much less $100k, earn the bulk of their income as wages with all their deductions and credits phased out except for something for dependents, state and local taxes, and mortgage deductions. And those deductions don't reduce taxes much.
Lew talks about health care costs. But Lew ducks the issue that the issue is people want more health care than they want to pay for, in part because they have the illusion that someone else is paying for it. Lew once again ducked the issue.
The real problem is that the US public is deeply divided over whether and how to reconcile its desire to spend with its ability to pay. And until the public breaks one way or the other one some of the big tax and spending issues, the politicians really can't address these issues. They can just talk slick and play kick the can down the road. So that is what Obama, Ryan, and the rest are doing.
And if Lew wants to really do something about the big elephant in the room. He ought to advocate breaking up the big banks, so that spineless mis-regulators like Geithner and Bernanke can't do another round of bailouts resulting in a massive increase in federal debt due to bailing them out.
If banks had size limits, they wouldn't have the political clout to get bailed out, rather than be financially restructred they way they are in bankruptcy with shareholders eliminated and bondholdrs converted into equityholders.
While some of what you say is true, there is only so much fairness to go around before reality must be dealt with. One thing is certain: high earners will be worse off either way the chips fall. Asset owners universally got hammered during the last stagflationary period and kicked while they were down by the repair job thereafter.
Fairness suggests everyone should pay: the bottom half pays regressively upon consumption and the top decile pays progressively to secure their property rights and prevent the cities and towns from resembling Sao Paulo.
I disagree fundamentally with your phrasing of the problem, however, which I will rephrase as: "The real problem is that Americans are deeply divided over how to pay the modest % of GDP the State expends relative to its Northern European peers." The ability to pay is more than there. And the gap can (and should be) funded both regressively and progressively and it will not cause material negative changes in either investment or national economic well-being. Americans get poor value and effectiveness as well, by comparison, for the State's expenditure. It is this which should make them furious and cause them to crusade for better and more effective expenditure, rather than reducing it. If you want a nice lawn, you don't pour agent orange on it, you pull the weeds, plant new seed and fertilize it.
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