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Viewing by month: December 2010

Dec 10 2010

The Obama-Republican Tax Deal

Though I’m a bit disappointed, I’m not at all surprised over the tax deal that’s been brokered between the Obama Administration and Congressional Republicans.  Granted, maybe something more palatable could have emerged had Obama engaged the issue much earlier.  Personally, I would have liked to see the tax cuts expire for high income households and the revenue generated transferred to shore up hemorrhaging state and local government budgets.  In that way, a budget deficit source would have been closed off while a spending source with one of the largest multiplier effects would have opened up.  Alas, that is water under the bridge.  The liberal left of the Democratic Party and progressive economists like Paul Krugman need to get over it.

In exchange for extending the high income tax cuts, the tax cuts for low and middle income Americans will continue and this should help in at least maintaining the slow rise in consumer spending that the economy seems to be experiencing.  Additionally, the extension of jobless benefits and the one year reduction in payroll taxes will put a bit more money mostly in the hands of those who will likely spend it rather than save it.  It’s like a second “mini” stimulus that should modestly expand aggregate demand and provide a little more oomph to our ongoing but fragile recovery.  What I really don’t like about the deal is Obama rolling over on the estate tax cut.  Its extension was an unnecessary gift to very high income households and to the Republican side of the aisle. 

2 comments - Posted by Ernest Zampelli at 2:35 PM - Categories: Economy | Government & Civil Society

Dec 6 2010

The Obesity Wars, Laissez-Faire, and the Government: An Economist’s Perspective

This morning in the New York Times I read the article regarding the recently passed child nutrition bill.  Georgia Congressman Paul Broun, Republican and physician, said this about that bill:

“This bill is not about child nutrition. It’s not about healthy kids. It’s about an expansion of the federal government, more and more control from Washington, borrowing more money and putting our children in greater debt. The federal government has no business setting nutritional standards and telling families what they should and should not eat.”

This follows closely on the heels of Sarah Palin’s (very mature) tweet after her appearance at a Pennsylvania elementary school:

“I'll intro kids 2 beauty of laissez-faire via serving them cookies amidst school cookie ban debate; Nanny state run amok!"

Obviously, this is shaping up to be another battle between proponents of free-market, laissez-faire capitalism (of which I am one) and those who support government policies directed at curbing the rise in obesity (of which I am one).  Now how can I be a supporter of both?  Very simply.  I believe strongly in the power of markets, the free interaction of buyers and sellers, to allocate resources to their most valuable uses.  But I also know that there exist situations in which markets fail in their resource allocation role and when such failures are serious enough, there is justifiable cause for appropriate government intervention.


0 comments - Posted by Ernest Zampelli at 10:12 AM - Categories: Economy | Government & Civil Society