For our first-day thought experiment

From “How to Really Save the Economy,” by Robert J. Barro, New York Times, September 10, 2011

I believe that a long-term fiscal plan for the country requires six big steps.

Three of them were identified by the Bowles-Simpson deficit reduction commission: [1] reforming Social Security and Medicare by increasing ages of eligibility and shifting to an appropriate formula for indexing benefits to inflation; [2] phasing out “tax expenditures” like the deductions for mortgage interest, state and local taxes and employer-provided health care; [3] and lowering the marginal income-tax rates for individuals.

I would add three more: [4] reversing the vast and unwise increase in spending that occurred under Presidents Bush and Obama; [5] introducing a tax on consumer spending, like the value-added tax (or VAT) common in other rich countries; and [6] abolishing federal corporate taxes and estate taxes. All three measures would be enormously difficult — many say impossible — but crises are opportune times for these important, basic reforms.


From “White House Outlines $467 Billion In Savings To Pay For Jobs Act,” by Sam Stein, Huffington Post, September 12, 2011

The Obama administration announced on Monday a series of tax policy changes that officials say will pay for the costs of the president’s job creation plan.

The provisions, announced by Office of Management and Budget Chair Jack Lew, would raise a projected $467 billion over the course of 10 years. The American Jobs Act, as outlined by the president last week, will cost an estimated $447 billion.

The primary piece would be to limit itemized deductions for individuals making over $200,000-a-year and families making over $250,000 -- which Lew said would raise $400 billion over 10 years. Another pay-for would be to treat carried interest as ordinary income rather than capital gains, which Lew said would raise $18 billion. The White House is also calling for the end of tax subsidies for certain oil and gas companies, which the administration believes would raise $40 billion, and the axing of a tax break for corporate jet owners, which it believes could save $3 billion.

From In the Shadow of No Towers, by Art Spiegelman

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