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Tuesday, August 2, 2011

Good Stuff from Yglesias and the Center for American Progress

Matt Yglesias has a good post up on how the debt ceiling debate has obscured the fact that the big driver of increased federal expenditures into the future is due to the growth of health care costs.This pairs well with my last post, which shows the same thing in a comparative perspective.

He writes, “The thinking here, which drove administration policy during its first 30 months in office, is based on the reality that high projected government spending is driven almost entirely by the rising cost of health care.” He then goes on to describe some of the health care aspects of the deficit reduction plan developed by his colleagues at the Center for American Progress.

For now, though, I'd like to pivot to some other aspects of the plan. CAP's plan aims to balance the budget by 2030, and it has several important tax provisions that would help the middle class. It institutes a flat 15% tax rate on income up to $100,000 for joint returns, raises the top bracket back to the 39.6% it was under the Clinton Administration, and it adds a 5% surtax on millionaires until the budget is balanced.

In addition, it incorporates a financial transactions tax (often called a “Tobin Tax,” after its early proponent, Nobel Prize-winning economist James Tobin). Beyond Tobin's idea of a tax on foreign currency transactions, the CAP proposal would apply as well to stock, bond, and derivatives sales. This proposal would simultaneously raise revenue and reduce the financial speculation that contributed to the 2008 crisis.

These are definitely reforms worth pursuing, and the CAP link above gives you multiple options for how deeply you want to follow up on them.

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