Normally, I try to avoid reading Paul Krugman's editorials
because it has been proven to be a leading cause of migraines and seizures. But after Andrew Sullivan
offered mild praise I asked my neighbor to keep the area clear while I read the article. Having recovered from my gyrations I would like to vent...
Mr Krugman is concerned about the economy, its not working well and he has a plan.
First, extend unemployment benefits, which are considerably less generous now than in the last recession; this will do double duty, helping some of the neediest while putting money into the hands of people who are likely to spend it.
Do people need money? Is it all about money? Of course, how obvious lets just give them money. Where is this mysterious money coming from? Is it being generated by efficient, entrepreneurial government employees, who then sprinkle it from ATM machines through-out the nation? The money Mr Krugman wants to distribute is being taken from the very same citizens the gov't is "helping", minus a sizeable cut for all the overhead that needs to keep the government working. What does Mr Krugman mean when he says "helping some of the neediest while putting money into the hands of people who are likely to spend it"? Is it because studies have shown that poor people spend all the money they have on the bare necessities of life, and therefore, stay poor. Or is it because poor people are stupid and spend all the money they get their hands on and therefore stay poor?
Having been poor, known lots of poor people, I would like to tell Mr Krugman to shove it. Poor people know they are poor, don't want to be poor and work hard to get richer. So when Mr Krugman and the gov't suggests lets tax the rich and give to the poor what you end up with is a "progressive tax schedule". A tax schedule where
if you make <$15,000 you pay 0%
if you make $15,000-$25,000 you pay 15%
if you make $25,000-$45,000 you pay 20%
if you make $45,000-$70,000 you pay 40%
if you make > $70,000 you pay 50%
Well all those stupid poor people see this and see that the chances of them getting richer get slimmer as they earn more money. Some of these stupid poor people opt to work for cash. Many are discouraged from investing in education and businesses because of the risk and shrinking reward the tax system offers them. This very same tax system also puts a crimp on gov't collections. Because, guess, what all those stupid poor people and smart rich people try and do find lots of ways to keep the gov't away from the money they have earned themselves. BTW, this is the basis for the Laffer Curve.
If Mr Krugman really wants to help his fellow citizens he might want to, oh I don't know, maybe flatten the tax schedule. This is also known as a "flat tax". Third world nations like Russia have done this and have been able for the first time to increase real tax receipts (quite an accomplishment in a country where the Black economy is estimated to be twice the size of the official economy). New Zealand has also flattened its taxes and the gov't doesn't know what to do with all the extra money, maybe their government will build a monument the entrepreneurial spirit of its citizens.
The next stage in Mr Krugman's strategy is ...
Second, provide aid to the states, which are in increasingly desperate fiscal straits. This will also do double duty, preventing harsh cuts in public services, with medical care for the poor the most likely target, at the same time that it boosts demand.
Yes, the states are in trouble. And like everybody else they have to tighten their belts. There is no way out of it. If they raise taxes they will push people out. Not all states have budget deficits because they have decided to spend their citizen's money on things like official poet laureates. States like NJ, NY, MA have problems and their current governors are not taking any serious actions to cut expenses. Some of the biggest expenses for states being the payrolls of its unionized labor force. Many of the states with the biggest fiscal problems also have huge state governments with powerful organized-labor constituencies. Why should citizens of Arizona, New Mexico subsidize the excesses of NJ and NY?
How is Mr Krugman going to pay for all this? He has it covered.
And how will we pay for all of this? You know the answer to that: Cancel tax cuts scheduled for the future. The economy needs stimulus now; it doesn't need tax cuts for the very affluent five years from now.
Well, I already went over what I thought about taxes above. But on top of flattening the tax schedule, I would like to suggest eliminating the cap-gains tax. You see many of these stupid-poor people have figured out that one of the ways to keep the gov't away from their money is buy starting/investing in businesses. Believe it or not, those silly poor-stupid Hispanics, Koreans, Chinese, who can barely make their way through the NY POST, much less the NY Times, have figured this out. So by eliminating the cap-gains tax all those stupid-poor people will start all sorts of whacky businesses (like selling fruit to vegetarians on street corners - what a wacky idea). And when they do this they will probably hire their kids, brothers, mothers, fathers.
I thought I was going to get through the article and escape unscathed until I got to the end of the article and read the following (you have been warned)...
This isn't rocket science. It's straightforward textbook economics, applied to our actual situation. It's also, I'm well aware, politically out of the question. But I think we're entitled to ask why.
I hope you have not been hurt too much by this sentence. If you and I are lucky this idea will wither like a weed sprayed by RoundUp
. Otherwise, Paul Krugman will cheer as the tax-man will come and further impoverish you and yours as per Mr Krugman's "Economic Plan".