Department of "Huh?"
Greg Mankiw today:
Greg Mankiw's Blog: Hubbard on the Fiscal Future: Economist Glenn Hubbard (who preceded me as CEA chair and is now back at Columbia) has an op-ed in today's Wall Street Journal. He reminds us that unless we see significant entitlement reform, taxes are heading higher:
Imagine the nightmare of a tax burden 50% higher -- not so farfetched as it sounds.... The Congressional Budget Office regularly quantifies these shadows of the Ghost of Tax Day Future. Their forecasts are not sanguine. A generation from now, absent any changes, increases in Social Security and Medicare spending alone are projected to consume 10 more percentage points of national GDP than they do today.
There is nothing very new here, but it is good to have Glenn saying it anyway. As George Orwell once said, "We have now sunk to a depth where the restatement of the obvious is the first duty of intelligent men"...
Greg Mankiw's and Glenn Hubbard's ex-Boss today:
WSJ.com - Bush Urges Congress To Extend Tax Cuts: Associated Press April 15, 2006 12:45 p.m.: "Monday is Tax Day, and that means many of you are busy finishing up your tax returns," Mr. Bush said in his weekly radio address. "The good news is that this year Americans will once again keep more of their hard-earned dollars because of the tax cuts we passed in 2001 and 2003."...
Mr. Bush said his administration has helped families by lowering tax rates and doubling the child credit, reducing the marriage penalty and cutting taxes on small businesses. "Tax relief has done exactly what it was designed to do: It has created jobs and growth for the American people," he said. "Yet some here in Washington are now proposing that we raise taxes, either by repealing the tax cuts or letting them expire."...
The tax cuts that reduced the top rate for capital gains and dividends to 15% are a centerpiece of Mr. Bush's tax policy. They are set to expire at the end of 2008. The bill being discussed would keep them in place through 2010. If they expire, the top tax rate for capital gains would increase to 20% and dividends would be taxed at marginal tax rates as high as 39.6%. "An important debate is taking place in Washington over whether to keep these tax cuts in place or to raise your taxes," he said. "For the sake of American workers and their families, and for our entrepreneurs, I believe Congress needs to make the tax relief permanent."
Perhaps the first duty of a CEA chair should be to state the obvious--that tax cuts that create permanent deficits are a bad idea--to the president in such a way that it sinks in?