Morning Reads: October 18
Thursday, October 18 2012
A timely article given next week’s last and final debate on foreign policy. Granted, Ahmadinejad makes outrageous and radical statements all the time, but forget the messenger for a minute and read the message, “”How long can a government with a $16 trillion foreign debt remain a world power?” he asked at a press conference with Kuwaiti media personnel.”” First off, his statement was factually inaccurate. While the U.S. does have a roughly $16 trillion debt, its foreign held public debt is roughly $5 trillion. But aside from that inaccuracy, the message should be taken seriously. Many in our own country have expressed the same sentiment regarding the impact our fiscal situation can have on our national security. This includes former Chairman of the Joint Chief of Staff Admiral Mike Mullen, who said the single biggest threat to our national security is our debt.
Everyone has been waiting for some specifics on Governor Romney’s tax plan, and over the past two weeks he has hinted at the idea that he’d pay for his tax rate cuts by capping itemized deductions. In Tuesday night’s debate, he said maybe cap them at $25,000. So would this proposal pay for the cost of reducing tax rates by 20%? Not likely, according to the non-partisan tax policy center. According to their analysis, capping itemized deductions at $25,000, while also cutting tax rates and eliminating the AMT, would yield about $1.3 trillion in additional revenue over 10 years. Since the cost of a 20 percent rate cut would be roughly $5 trillion, it would not come close to offsetting the cost of the rate cuts.
NPR has an interesting series of articles where they ask economists from across the political spectrum to imagine their dream candidate and what policies they would advocate for. This article has to do with tax policy, and the economists are in agreement that the mortgage interest deduction and the exclusion for employer provided health insurance, two of the largest tax expenditures, make no economic sense. Both of them distort the market while providing huge tax benefits to the wealthy. ““It just makes no sense that if we have Bill Gates or some very wealthy person, we’re subsidizing them to get a very expensive home”, said Dean Baker, of the Center for Economic and Policy Research.”