Scott Winship and Brian Riley on the China shock that wasn't; Tobias Peter and Major Ethan Frizzell on housing scarcity; Yuval Levin on the Republican Budget; Chris Rufo on Musk's failure
Rufo is just really wrong about Musk and DOGE, and the swamp got drained oceans more than it drained him, and there is more big swamp-busting on the way, stay tuned. I have a lot of respect for Rufo and think he writes with consistent intelligence and integrity, so I'll chalk this one up to his not being enough of an insider to know what's really been going on, and not having any trusted contacts at high levels in the bureaucracy to explain why extremely nerdy and boring matters no one can stand talking about are super important, and so relying on reporting while failing to remember the first law of media coverage of Republican administrations, which is that it's all lies and distortions.
I am not a Musk fanboy, but I am grudgingly compelled by the facts to give him great credit. Grading on the curve of what even the optimistis thought to be actually possible (instead of on one composed of politically impossible fantasies), what he has already brought about has been genuinely astonishing and scandalously undereported. If there was any justice in this world, Isaacson would be working on a second volume of that biography, because what Musk had been accomplishing in just months is just as impressive as any of the many other accomplishments in the book, and genuinely heroic in pace and magnitude.
"However meretricious these attacks were, they worked. "
The Democrat Demonization Strategy was used against Musk, and took off his shine.
Musk was more successful than I expected. Far more -- and I hope to see more swamp-busting in the upcoming weeks & months.
Those who expect, like Levin implies, that Trump will be a big deficit reducer are as delusional as Republicans who think that's what they're doing, and Levin is right to call them out as delusional.
As long as there is LOTS of obvious waste, the politically painful act of cutting entitlements ain't gonna happen.
Entitlements are mostly untouchable until the Democrats agree that there is a real, and urgent, fiscal problem with a 100% debt/gnp. Which is unlikely to happen until after Japan has a huge problem due to their huge debt.
Far better to get tax cuts, which at least Republicans are genuinely in favor of -- tho it would be better to reduce worker taxes. If the top 20% paid 90% of Federally collected taxes, that would not be too much unless the median income is increasing at a higher % than the %growth of the top 1%. Including SS.
When (or If?) the Dems are ready to cut entitlements, there will be a crisis on the horizon so severe that Reps will be willing to increase taxes -- so until then, the Reps should be pushing tax reductions. Whatever resolution to the debt crisis there is, the lower the tax burden at the time of crisis, the better for the solution, and the higher the prior private econ growth & wealth creation had been going on. And an ai productivity gusher that solves the problem is more likely with lower taxes.
The rich are paying for a society where "rich-killer" Luigi type folk are found guilty and punished, so the rich can keep most of their huge wealth without much political support for killing, not just taxing, the rich.
Wealth taxes are coming, and should come, and Rep debt hawks should be working on proposing least harmful wealth taxes, perhaps like progressive cap gains taxes -- but Reps should not support any regressive taxes, like VAT.
(This was supposed to be a quick brief thanks to Handle )
...any chance we could get more detail? The problem, of course, is that outsiders have no visibility into what is wheat and what is chaff and insiders have perverse incentive to report out on which is which. Musk did say something that tracks 100% with my own experiences in a large organization -- something along the lines of 'the ones who scream first and loudest are the ones who need it least.'
Obviously, Democrats never even discuss entitlement reform and are always looking to add new entitlements, so I don't see why you blame Republicans.
Let's face facts. The median voter doesn't want it, so we aren't going to get it.
Trump is making a decent effort to enact large cuts to Medicaid. Are any of the "responsible" GOPe republicans and classical liberals rallying to his side as he makes this difficult political maneuver? No, they are attacking him as they always do.
His tariffs are also likely to raise something like 1.5% of GDP in revenue. Is anyone celebrating his fiscal responsibility? No, more attacks.
I don't know how much going after Ivy League endowments will raise, but fiscal conservatives seem to care more about their alma matters then the government taking needed revenue from a bloated cow that gets special treatment.
Here we've got a guy trying to cut your income taxes by taxing consumption and cutting a wasteful welfare program for our most bloated economic sector and the response is that we all should have voted for Harris.
Yeah, you and $140 Billion worth of other direct and indirect beneficiaries, just this year, 15% of all Medicare spending. Mr. Fake "Entitlements Reform Budget Hawk" himself. If he gets a pass because of "political realism", why not everybody else too? For at least paying zero risk lip service to cuts that everybody knew were never serious because dead on arrival?I Please.
Ryan voted for the 2002 Iraq Resolution, authorizing President George W. Bush to use military force in Iraq. Ryan also voted for the Iraq War troop surge of 2007.
I reject reducing Medicaid in order to create more fiscal space for Reducing tax rates on high income taxpayers. Now if they can find cost savings, expenditures on procedures with little value, applicable to Medicaid, Medicare, and private coverage, tht woud be great. But why should Medicaid patients have more restricted access to health care than Medicare? Let's just tax consumption to pay for it.
It looks like Trump is settling in on 10% world, 30% China for tariffs.
The US has $4.1T in imports. $440B was from China.
So $366B in revenue from not China and $132B from China. So $498, let's just say $500B.
Now maybe a 10% tariff causes a few less imports, but people aren't going to abandon profitable business over a 10% tax. My town has an 11% meals tax and we still have restaurants.
So whatever way you slice it, I still expect the tariffs to raise hundreds of billions in revenue a year.
The cost of extending the TCJA income tax rates over the next ten years is scored at $3.4T. Being crude and dividing by 10, that is $340B a year. So totally in the ballpark with expected tariff revenue even if I take a haircut.
Why does Trump say he wants to raise import prices enough to discourage imports and encourage inefficient domestic production?
Why does Trump say parents will just have to buy fewer dolls because they cost more?
Those two facts alone run counter to your argument that price increases will be too low to matter. If 10% is too low to discourage imports, then it is too low to be doing its job.
I don’t know about you, but it seems pretty damned hypocritical to brag about one tax cut while raising other taxes.
Nearly every tax bill in history has raised some taxes and lowered others. Trumps last tax bill lowered marginal rates but got rid of the SALT deduction. His current one raises the CTC but taxes university endowments. This is nothing new.
Mild taxes cause mild changes in behavior, modest taxes modest, and high taxes high.
That Trump says his policies will do all sorts of amazing at times contradictory things….have you seen POLITICIANS before.
My point is that all your calculations are meaningless and his tariffs cannot do what he claims.
* If he raises tariffs high enough to do what he claims he wants, they will reduce imports so much that the revenue will be insignificant.
* If he leaves his tariffs low enough to not block imports, they won't do what he wants.
And even aside from that hypocrisy, trying to argue based on what tariffs are today is a waste of time. You may as well take today's weather as indicative of what weather will be like next year.
Entitlement spending dismantlement will occur when some devious actuary calculates the confluence of the downward curve of boomers dying off with the upward curve of folks that will keep our sleazy legislators voted into office. I think I just said it'll happen when enough boomers croak that office holders are no longer threatened when they talk of butchering social security.
Kinda like cannabis. 40 years ago I predicted it would never be legalized until my parents generation had all croaked. About the time the last of them were going on to their reward, weed was legalized almost overnight in the places you'd expect would legalize it.
Essentially, the Max Planck-ism of change happening one funeral at a time.
Yes, the increase in Social Security full retirement age to 67 for everyone born after 1960 is good indicator that nobody in the Boom generation would or will ever accept a reduction in their benefits to protect the system.
Talk about “entitlement programs” tends to just focus on Social Security (36% of mandatory spending), and Medicare (22%) but these are just the two largest of a long list of mandatory spending programs. Social Security has its own dedicated payroll tax funding and does not receive general tax revenues except to replace trust funds already spend, so it is not really part of the budget deficit problem unless Levin is proposing to divert Social Security Tax revenues to the African Development Corporation. When Social Security benefit outlays exceed the trust funds ability to pay, then Congress will have decisions to make. But if you want to offset discretionary spending with Social Security benefit cuts, please do come out and say so. Where Congress gets an “F” grade is when it opens up benefits to state government retirees who didn’t pay into it, which is pretty much what it did last year.
Medicare is a bit different because although it has dedicated payroll tax funding, it is also funded from general revenues. GAO estimated $100 billion worth of Medicare improper payments in 2023 and the Social Security Administration asks “Did you know that Medicare fraud costs Americans an estimated $60 billion per year?” Programs are in place to attempt to address these problems (https://www.kff.org/medicare/issue-brief/medicare-program-integrity-and-efforts-to-root-out-improper-payments-fraud-waste-and-abuse/ ) DOGE apparently attempted to follow up on these claims in a novel manner, if I understand correctly, by attempting to use payment data to ferret out patterns of upcoding (https://www.americanprogress.org/article/ending-overpayment-in-medicare-advantage/?utm_source=chatgpt.com ) but has not yet produced results, so I guess Levin is entitled to sneer, I mean Musk has been in DC since December and we still had a budget deficit in March (although the annual April budget surplus rose to $258 billion, an increase from the $210 billion surplus in April 2024) so boy howdy is that Musk a loser or what. And Trump has issued an executive order that might rein in Medicare prescription drug costs. Personally I would give Congress a provisional “C” on Medicare because it managed to move the lobbyists into hyperbole territory: https://www.ama-assn.org/press-center/ama-press-releases/congress-abandons-medicare-patients-and-their-physicians And some members have apparently been thinking in specifics and have apparently advanced site-neutral payment proposals, where payments for certain services would be the same regardless of the setting (hospital, outpatient facility, etc.). Not huge, but something. We will wait and see.
Now on to the other 42% mandatory spending:
- Medicaid: big news here with battling back and forth over attempts to shift costs back to the states which have gone hog wild in recent years due to the federal government bailing them out during covid.
- SSDI: if I understand correctly DOGE took a whack at the abysmal and expensive claims processing and appeals programs which were union controlled to maximize employment and minimize productivity. Apparently changes to federal union control over the process has shaken things up and some savings might be possible. Not sure what Congress is doing here.
- Unemployment Insurance – Department of Labor overhead is funded in part through the Employment Trust Fund so DOGE recommendations like eliminating deadweight overhead like the Department’s Bureau of International Labor Affairs might conceivably help reduce mandatory outlays should appropriators follow through.
- SNAP and TANF - apparently Congress is considering adding work requirements for eligibility, upsetting lots of people.
- Federal retirement trust fund - Congress has been discussing eliminating the ludicrous FERS Supplement program that pays federal employees who retire before they are 62 a payment comparable to what they would receive from Social Security if they were eligible. I’d still give Congress a “D” in this area as defined benefit retirement programs are an anachronism and the federal programs should have been closed decades ago.
- Military retirement - Give Hegseth credit for pushing to reallocate funding for the ridiculous number of generals and admirals to the ranks that actually work for a living. Military retirement is overwhelmingly a benefit for officers, since enlisted get chewed up and spit out before they can make it to 20. Fewer officers, fewer mandatory military retirement outlays.
And we could go on, but I want to disagree with Levin’s “my way (‘catfood for Grandma’) or the highway” framing of the budget. The tax base can be expanded.
Social Security costs a lot less than the federal government loses on tax expenditures. Tax expenditures are revenue losses attributable to provisions of Federal tax laws which allow a special exclusion, exemption, or deduction from gross income or which provide a special credit, a preferential rate of tax, or a deferral of tax liability. Stuff like section 501(c) of the Tax Code. It’s estimated that in 2019, tax expenditures in totaled $1.6 trillion, which was 7.8% of GDP and the federal tax revenues would increase by 44% with the elimination of tax expenditures. I’d give Congress a D and not an F in this area because they apparently are going after mega-university endowment funds in some small way which is better than nothing. But in an ideal world, they would be offsetting tax rate changes with much larger eliminations of tax expenditures including eliminating 501(c) exemptions and the charitable donation deduction.
No cuts to Entitlement spending until Democrats call for them.
Republicans lose elections, and thus possibility to cut, if they call for cuts.
90% of the responsibility for irresponsible, excess entitlement spending is Democrats.
Goldberg was right about the importance of labels - no Liberal nor Conservative was elected, no Leftist nor Right wing, no Progressive. OK, 1 Bernie as a reliable Dem fake "Independent". Policy is made by Dems & Reps.
Those calling for Reps to cut entitlement spending are calling for Reps to lose elections. Trump won, and is doing Far Far better than Biden actually did, and better than Harris would have -- but that's not good enough for Trump haters.
Maybe a lot more talk about cutting Fed worker entitlements first, and too much spent on retired Feds. Vast majority of them vote Dem anyway, so Reps won't lose elections by such cuts.
Being against revenue raising tariffs (up from $8 billion to $16 billion in April) while complaining about govt spending leading to deficits is ... hypocritical? counterproductive? stupid? (D all of the above).
The places that actually have a VAT are not enjoying faster econ growth, nor more efficient govt. It's a new tax, so many voters think it would not replace, but merely add to the current taxes. I think so, and therefore oppose it.
Insofar as tariffs are fairly close to a partial consumption tax (on the ~35% finished goods), those wanting consumption taxed more should also favor such tariffs, but frequently don't. There are already higher rates on finished goods over intermediate.
As a matter of fact a VAT that replaced the wage tax and fully funded Social Security and health insurance (at whatever level Congress choses) would be and increase in taxes. That I precisely the point: to reduce that part of the deficit.
And why should one “be happy” with a “consumption” tax that taxes imports more than other goods, favoring activities competing with imports while disfavoring those that do not, especially exports
"should also favor" is what I actually wrote, tho "be happy" is what you wrongly read & quoted. Trump critics often quoted Trump, falsely, in claiming he said things that, "As a matter of fact", he didn't actually say.
Similar meanings are not equal.
A huge part of the support for progressive Income Taxes, as well as unhappiness against Musk or Trump, is the egalitarian impulse to punish the successful. As long as that's the case in society, as it clearly still is, the idea of getting rid of income taxes seems so politically unlikely as to be laughable.
Tho a VAT to replace wage taxes & health insurance seems far more likely, and is what you're proposing here, I don't read anything about elected Republicans talking about this. I'd be happy to read links to see what's being said by whom.
An automatically increasing VAT due to increasing the US debt would likely be good for society, but suicide for the political party that enacts it without full support by the other party.
I can’t speak for others but my objection to the progressive's income tix is that it taxes saving and not just consumption progressively. It is also true that I favor a tax and expenditure system that a) reduces the deficit to no more than the amount of productive public investment and b) transfers more consumption down the consumption scale.
I think it is quite presumptuous to attribute the desire to redistribute consumption to an “impulse to punish the successful.” [In my case your are just wrong.] All that is required is the belief that the marginal dollar of consumption will do Bezos or Soros less good than it will a poorer person.
I give my opinions straight without thought for how politicians might put them in practice. In my political ideal everyone would agree about efficiency issues and disagree only about how much to redistribute consumption.
"The optimistic case (and I am not an optimist) is that the Republicans will do the right thing after they have tried everything else. That is, after they have cut domestic discretionary spending as much as they care to, they will realize—next year, or the year after—that entitlements have to be reformed."
I wish I could be optimistic. I strongly suspect that a lot of Republicans know that the present structure of entitlements is unsustainable. But they also know that one reason Trump was the first Republican to win the popular vote in ages was that he promised not to touch Social Security and Medicare.
They also know that it is very unlikely Democrats will say, "As champions of sustainability, we agree something has to be done." They will instead attack any cut as betrayal, a terrible, horrible, very bad thing.
And they also know that the media, which will sometimes call out the lies of Trump and bad people like him, or will try to educate people on things like climate change, will allow such attacks to simply pass as reasonable politics or actually good things.
Those Reps who try to cut entitlements when the Dems don't think there is an urgent crisis will deservedly lose their next election and cuts will be somewhat restored, if they even occured.
Until the crisis is near enough to be almost certain, or maybe more likely, after a crisis hits and it's too late to avoid lots of pain, then the party which has the hot recession potato loses the next election, and some reform is attempted which is very unpopular.
The right time to reform entitlements is right after an enemy sinks an aircraft carrier and not a minute earlier. I think the right way to conceive of entitlements is a means of maintaining a state's capacity for regular taxation while also keeping a population accustomed to high regular taxes. To the extent that we have a world divided up by powerful, centralized states created by the requirements of mass mobilization for wars of annihilation, the entitlement state is a necessary set of institutions for maintaining that potential. The entitlement state as an expression of national filial piety is a false story.
And so Yuval's argument must fail because of the core misunderstanding of US entitlement policy, taking the patent purpose of the policies as the true purpose rather than appreciating the occult purpose. At face value, Yuval's proposal and those of his colleagues is sensible and prudent. When applied to the true but concealed purpose of the policies, it makes no sense whatsoever: if the purpose is to just maintain the tax facility for wartime exigency and to spend the money on nonsense in the interim, how efficiently the money is wasted is irrelevant.
The essential question, however, is if the ability to turn the mass entitlement state into a mass warfare state still exists. This is a long running problem from Vietnam onwards. If we imagine a world in which Army Chief of Staff Eric Shinseki was not sacked but rewarded for his forecast that Iraq would need to be garrisoned by several hundred thousand or millions of solders for years, that would be one in which the US had a lot of capacity to reassign welfare spending to military spending. That's not what has typically happened: when the US tries to turn butter into bullets, leaders tend to do an about-face and tell the military to make do.
"Los Angeles has built just 19,000 new single-family houses since 2014—many of them luxury “McMansions.” This is a drop in the bucket for a county with 3.7 million housing units."
I immediately thought it odd that they switched from LA to the county. Why?
I then looked and the city is barely 10% of the county land area. What is gained by focusing on a densely populated part of the county?
And I totally missed that 19,000 HOUSES were built in the city. I'm more familiar with Chicago suburbs where most mcmansions are built in new developments but quite a few are in old neighborhoods by tearing down one or more existing homes. I'd expect far more of the latter in the second most populated city in the US. Why would we expect anything else there?
Isn't the better question how many multi-family units are added in a city like that?
And even if they did come to the realization that entitlement spending must be curbed, they’ll need the political cover to get the job done. That is where the Budget BRAC—originally the Base Realignment and Closure Commission that could serve as a model for the Budget Realignment and Correction commission—comes in. It’s an example of Congress doing something economically necessary but politically difficult.
Rufo is just really wrong about Musk and DOGE, and the swamp got drained oceans more than it drained him, and there is more big swamp-busting on the way, stay tuned. I have a lot of respect for Rufo and think he writes with consistent intelligence and integrity, so I'll chalk this one up to his not being enough of an insider to know what's really been going on, and not having any trusted contacts at high levels in the bureaucracy to explain why extremely nerdy and boring matters no one can stand talking about are super important, and so relying on reporting while failing to remember the first law of media coverage of Republican administrations, which is that it's all lies and distortions.
I am not a Musk fanboy, but I am grudgingly compelled by the facts to give him great credit. Grading on the curve of what even the optimistis thought to be actually possible (instead of on one composed of politically impossible fantasies), what he has already brought about has been genuinely astonishing and scandalously undereported. If there was any justice in this world, Isaacson would be working on a second volume of that biography, because what Musk had been accomplishing in just months is just as impressive as any of the many other accomplishments in the book, and genuinely heroic in pace and magnitude.
"However meretricious these attacks were, they worked. "
The Democrat Demonization Strategy was used against Musk, and took off his shine.
Musk was more successful than I expected. Far more -- and I hope to see more swamp-busting in the upcoming weeks & months.
Those who expect, like Levin implies, that Trump will be a big deficit reducer are as delusional as Republicans who think that's what they're doing, and Levin is right to call them out as delusional.
As long as there is LOTS of obvious waste, the politically painful act of cutting entitlements ain't gonna happen.
Entitlements are mostly untouchable until the Democrats agree that there is a real, and urgent, fiscal problem with a 100% debt/gnp. Which is unlikely to happen until after Japan has a huge problem due to their huge debt.
Far better to get tax cuts, which at least Republicans are genuinely in favor of -- tho it would be better to reduce worker taxes. If the top 20% paid 90% of Federally collected taxes, that would not be too much unless the median income is increasing at a higher % than the %growth of the top 1%. Including SS.
When (or If?) the Dems are ready to cut entitlements, there will be a crisis on the horizon so severe that Reps will be willing to increase taxes -- so until then, the Reps should be pushing tax reductions. Whatever resolution to the debt crisis there is, the lower the tax burden at the time of crisis, the better for the solution, and the higher the prior private econ growth & wealth creation had been going on. And an ai productivity gusher that solves the problem is more likely with lower taxes.
The rich are paying for a society where "rich-killer" Luigi type folk are found guilty and punished, so the rich can keep most of their huge wealth without much political support for killing, not just taxing, the rich.
Wealth taxes are coming, and should come, and Rep debt hawks should be working on proposing least harmful wealth taxes, perhaps like progressive cap gains taxes -- but Reps should not support any regressive taxes, like VAT.
(This was supposed to be a quick brief thanks to Handle )
...any chance we could get more detail? The problem, of course, is that outsiders have no visibility into what is wheat and what is chaff and insiders have perverse incentive to report out on which is which. Musk did say something that tracks 100% with my own experiences in a large organization -- something along the lines of 'the ones who scream first and loudest are the ones who need it least.'
I second this request.
Obviously, Democrats never even discuss entitlement reform and are always looking to add new entitlements, so I don't see why you blame Republicans.
Let's face facts. The median voter doesn't want it, so we aren't going to get it.
Trump is making a decent effort to enact large cuts to Medicaid. Are any of the "responsible" GOPe republicans and classical liberals rallying to his side as he makes this difficult political maneuver? No, they are attacking him as they always do.
His tariffs are also likely to raise something like 1.5% of GDP in revenue. Is anyone celebrating his fiscal responsibility? No, more attacks.
I don't know how much going after Ivy League endowments will raise, but fiscal conservatives seem to care more about their alma matters then the government taking needed revenue from a bloated cow that gets special treatment.
Here we've got a guy trying to cut your income taxes by taxing consumption and cutting a wasteful welfare program for our most bloated economic sector and the response is that we all should have voted for Harris.
"HR-1 - Medicare and Prescription Drug Act" ("Part D" Expansion) - Roll Call, 27-Jun-2003, 2:33 AM, Paul Ryan (R-WI) - "Aye". Passed 216-215.
I never knew that Paul Ryan was responsible for my cushy career.
Yeah, you and $140 Billion worth of other direct and indirect beneficiaries, just this year, 15% of all Medicare spending. Mr. Fake "Entitlements Reform Budget Hawk" himself. If he gets a pass because of "political realism", why not everybody else too? For at least paying zero risk lip service to cuts that everybody knew were never serious because dead on arrival?I Please.
Ryan voted for the 2002 Iraq Resolution, authorizing President George W. Bush to use military force in Iraq. Ryan also voted for the Iraq War troop surge of 2007.
Yes, like all politicians Trump has promised his policies will solve all problems at once even in contradiction.
I’m telling you what his tariffs are actually likely to do on the revenue front. Do you dispute it?
I reject reducing Medicaid in order to create more fiscal space for Reducing tax rates on high income taxpayers. Now if they can find cost savings, expenditures on procedures with little value, applicable to Medicaid, Medicare, and private coverage, tht woud be great. But why should Medicaid patients have more restricted access to health care than Medicare? Let's just tax consumption to pay for it.
I don’t reject it. I hate the poor and welfare. I’m glad they are getting less so I can get more.
I admire an honest man.
Please quote the exact words that show "the response is that we all should have voted for Harris."
Please explain how raising tariff rates, which reduces imports and hence tariff revenue, can raise enough revenue to balance the income tax cuts.
It looks like Trump is settling in on 10% world, 30% China for tariffs.
The US has $4.1T in imports. $440B was from China.
So $366B in revenue from not China and $132B from China. So $498, let's just say $500B.
Now maybe a 10% tariff causes a few less imports, but people aren't going to abandon profitable business over a 10% tax. My town has an 11% meals tax and we still have restaurants.
So whatever way you slice it, I still expect the tariffs to raise hundreds of billions in revenue a year.
The cost of extending the TCJA income tax rates over the next ten years is scored at $3.4T. Being crude and dividing by 10, that is $340B a year. So totally in the ballpark with expected tariff revenue even if I take a haircut.
Why does Trump say he wants to raise import prices enough to discourage imports and encourage inefficient domestic production?
Why does Trump say parents will just have to buy fewer dolls because they cost more?
Those two facts alone run counter to your argument that price increases will be too low to matter. If 10% is too low to discourage imports, then it is too low to be doing its job.
I don’t know about you, but it seems pretty damned hypocritical to brag about one tax cut while raising other taxes.
Nearly every tax bill in history has raised some taxes and lowered others. Trumps last tax bill lowered marginal rates but got rid of the SALT deduction. His current one raises the CTC but taxes university endowments. This is nothing new.
Mild taxes cause mild changes in behavior, modest taxes modest, and high taxes high.
That Trump says his policies will do all sorts of amazing at times contradictory things….have you seen POLITICIANS before.
My point is that all your calculations are meaningless and his tariffs cannot do what he claims.
* If he raises tariffs high enough to do what he claims he wants, they will reduce imports so much that the revenue will be insignificant.
* If he leaves his tariffs low enough to not block imports, they won't do what he wants.
And even aside from that hypocrisy, trying to argue based on what tariffs are today is a waste of time. You may as well take today's weather as indicative of what weather will be like next year.
Or option 3:
The tariffs are high enough to raise a modest amount of revenue, and low enough not to collapse trade.
Like PLENTY OF OTHER TAXES. Europeans pay a VAT on most goods greater then these tariffs and they are still buying goods.
As I said, my town has an 11% meals tax, it raises revenue and all the restaurants haven't closed. So how is a 10% tariff much different.
My marginal tax rate is higher then the new tariffs on China, and yet I haven't stopped working.
The money has to be raised somehow. Tariffs are just another tax. I suspect 0% was to the left of the laffer curve for this kind of tax.
Entitlement spending dismantlement will occur when some devious actuary calculates the confluence of the downward curve of boomers dying off with the upward curve of folks that will keep our sleazy legislators voted into office. I think I just said it'll happen when enough boomers croak that office holders are no longer threatened when they talk of butchering social security.
Kinda like cannabis. 40 years ago I predicted it would never be legalized until my parents generation had all croaked. About the time the last of them were going on to their reward, weed was legalized almost overnight in the places you'd expect would legalize it.
Essentially, the Max Planck-ism of change happening one funeral at a time.
Yes, the increase in Social Security full retirement age to 67 for everyone born after 1960 is good indicator that nobody in the Boom generation would or will ever accept a reduction in their benefits to protect the system.
Talk about “entitlement programs” tends to just focus on Social Security (36% of mandatory spending), and Medicare (22%) but these are just the two largest of a long list of mandatory spending programs. Social Security has its own dedicated payroll tax funding and does not receive general tax revenues except to replace trust funds already spend, so it is not really part of the budget deficit problem unless Levin is proposing to divert Social Security Tax revenues to the African Development Corporation. When Social Security benefit outlays exceed the trust funds ability to pay, then Congress will have decisions to make. But if you want to offset discretionary spending with Social Security benefit cuts, please do come out and say so. Where Congress gets an “F” grade is when it opens up benefits to state government retirees who didn’t pay into it, which is pretty much what it did last year.
Medicare is a bit different because although it has dedicated payroll tax funding, it is also funded from general revenues. GAO estimated $100 billion worth of Medicare improper payments in 2023 and the Social Security Administration asks “Did you know that Medicare fraud costs Americans an estimated $60 billion per year?” Programs are in place to attempt to address these problems (https://www.kff.org/medicare/issue-brief/medicare-program-integrity-and-efforts-to-root-out-improper-payments-fraud-waste-and-abuse/ ) DOGE apparently attempted to follow up on these claims in a novel manner, if I understand correctly, by attempting to use payment data to ferret out patterns of upcoding (https://www.americanprogress.org/article/ending-overpayment-in-medicare-advantage/?utm_source=chatgpt.com ) but has not yet produced results, so I guess Levin is entitled to sneer, I mean Musk has been in DC since December and we still had a budget deficit in March (although the annual April budget surplus rose to $258 billion, an increase from the $210 billion surplus in April 2024) so boy howdy is that Musk a loser or what. And Trump has issued an executive order that might rein in Medicare prescription drug costs. Personally I would give Congress a provisional “C” on Medicare because it managed to move the lobbyists into hyperbole territory: https://www.ama-assn.org/press-center/ama-press-releases/congress-abandons-medicare-patients-and-their-physicians And some members have apparently been thinking in specifics and have apparently advanced site-neutral payment proposals, where payments for certain services would be the same regardless of the setting (hospital, outpatient facility, etc.). Not huge, but something. We will wait and see.
Now on to the other 42% mandatory spending:
- Medicaid: big news here with battling back and forth over attempts to shift costs back to the states which have gone hog wild in recent years due to the federal government bailing them out during covid.
- SSDI: if I understand correctly DOGE took a whack at the abysmal and expensive claims processing and appeals programs which were union controlled to maximize employment and minimize productivity. Apparently changes to federal union control over the process has shaken things up and some savings might be possible. Not sure what Congress is doing here.
- Unemployment Insurance – Department of Labor overhead is funded in part through the Employment Trust Fund so DOGE recommendations like eliminating deadweight overhead like the Department’s Bureau of International Labor Affairs might conceivably help reduce mandatory outlays should appropriators follow through.
- SNAP and TANF - apparently Congress is considering adding work requirements for eligibility, upsetting lots of people.
- Federal retirement trust fund - Congress has been discussing eliminating the ludicrous FERS Supplement program that pays federal employees who retire before they are 62 a payment comparable to what they would receive from Social Security if they were eligible. I’d still give Congress a “D” in this area as defined benefit retirement programs are an anachronism and the federal programs should have been closed decades ago.
- Military retirement - Give Hegseth credit for pushing to reallocate funding for the ridiculous number of generals and admirals to the ranks that actually work for a living. Military retirement is overwhelmingly a benefit for officers, since enlisted get chewed up and spit out before they can make it to 20. Fewer officers, fewer mandatory military retirement outlays.
And we could go on, but I want to disagree with Levin’s “my way (‘catfood for Grandma’) or the highway” framing of the budget. The tax base can be expanded.
Social Security costs a lot less than the federal government loses on tax expenditures. Tax expenditures are revenue losses attributable to provisions of Federal tax laws which allow a special exclusion, exemption, or deduction from gross income or which provide a special credit, a preferential rate of tax, or a deferral of tax liability. Stuff like section 501(c) of the Tax Code. It’s estimated that in 2019, tax expenditures in totaled $1.6 trillion, which was 7.8% of GDP and the federal tax revenues would increase by 44% with the elimination of tax expenditures. I’d give Congress a D and not an F in this area because they apparently are going after mega-university endowment funds in some small way which is better than nothing. But in an ideal world, they would be offsetting tax rate changes with much larger eliminations of tax expenditures including eliminating 501(c) exemptions and the charitable donation deduction.
No cuts to Entitlement spending until Democrats call for them.
Republicans lose elections, and thus possibility to cut, if they call for cuts.
90% of the responsibility for irresponsible, excess entitlement spending is Democrats.
Goldberg was right about the importance of labels - no Liberal nor Conservative was elected, no Leftist nor Right wing, no Progressive. OK, 1 Bernie as a reliable Dem fake "Independent". Policy is made by Dems & Reps.
Those calling for Reps to cut entitlement spending are calling for Reps to lose elections. Trump won, and is doing Far Far better than Biden actually did, and better than Harris would have -- but that's not good enough for Trump haters.
Maybe a lot more talk about cutting Fed worker entitlements first, and too much spent on retired Feds. Vast majority of them vote Dem anyway, so Reps won't lose elections by such cuts.
Being against revenue raising tariffs (up from $8 billion to $16 billion in April) while complaining about govt spending leading to deficits is ... hypocritical? counterproductive? stupid? (D all of the above).
"that entitlements have to be reformed."
For example by substituting a VAT for the wage tax and setting the rate at a level that pays for whatever level of benefits they wish to fund.
The places that actually have a VAT are not enjoying faster econ growth, nor more efficient govt. It's a new tax, so many voters think it would not replace, but merely add to the current taxes. I think so, and therefore oppose it.
Insofar as tariffs are fairly close to a partial consumption tax (on the ~35% finished goods), those wanting consumption taxed more should also favor such tariffs, but frequently don't. There are already higher rates on finished goods over intermediate.
As a matter of fact a VAT that replaced the wage tax and fully funded Social Security and health insurance (at whatever level Congress choses) would be and increase in taxes. That I precisely the point: to reduce that part of the deficit.
And why should one “be happy” with a “consumption” tax that taxes imports more than other goods, favoring activities competing with imports while disfavoring those that do not, especially exports
"should also favor" is what I actually wrote, tho "be happy" is what you wrongly read & quoted. Trump critics often quoted Trump, falsely, in claiming he said things that, "As a matter of fact", he didn't actually say.
Similar meanings are not equal.
A huge part of the support for progressive Income Taxes, as well as unhappiness against Musk or Trump, is the egalitarian impulse to punish the successful. As long as that's the case in society, as it clearly still is, the idea of getting rid of income taxes seems so politically unlikely as to be laughable.
Tho a VAT to replace wage taxes & health insurance seems far more likely, and is what you're proposing here, I don't read anything about elected Republicans talking about this. I'd be happy to read links to see what's being said by whom.
An automatically increasing VAT due to increasing the US debt would likely be good for society, but suicide for the political party that enacts it without full support by the other party.
I can’t speak for others but my objection to the progressive's income tix is that it taxes saving and not just consumption progressively. It is also true that I favor a tax and expenditure system that a) reduces the deficit to no more than the amount of productive public investment and b) transfers more consumption down the consumption scale.
I think it is quite presumptuous to attribute the desire to redistribute consumption to an “impulse to punish the successful.” [In my case your are just wrong.] All that is required is the belief that the marginal dollar of consumption will do Bezos or Soros less good than it will a poorer person.
I give my opinions straight without thought for how politicians might put them in practice. In my political ideal everyone would agree about efficiency issues and disagree only about how much to redistribute consumption.
Very John Stuart Millian.
"The optimistic case (and I am not an optimist) is that the Republicans will do the right thing after they have tried everything else. That is, after they have cut domestic discretionary spending as much as they care to, they will realize—next year, or the year after—that entitlements have to be reformed."
I wish I could be optimistic. I strongly suspect that a lot of Republicans know that the present structure of entitlements is unsustainable. But they also know that one reason Trump was the first Republican to win the popular vote in ages was that he promised not to touch Social Security and Medicare.
They also know that it is very unlikely Democrats will say, "As champions of sustainability, we agree something has to be done." They will instead attack any cut as betrayal, a terrible, horrible, very bad thing.
And they also know that the media, which will sometimes call out the lies of Trump and bad people like him, or will try to educate people on things like climate change, will allow such attacks to simply pass as reasonable politics or actually good things.
Those Reps who try to cut entitlements when the Dems don't think there is an urgent crisis will deservedly lose their next election and cuts will be somewhat restored, if they even occured.
Until the crisis is near enough to be almost certain, or maybe more likely, after a crisis hits and it's too late to avoid lots of pain, then the party which has the hot recession potato loses the next election, and some reform is attempted which is very unpopular.
The right time to reform entitlements is right after an enemy sinks an aircraft carrier and not a minute earlier. I think the right way to conceive of entitlements is a means of maintaining a state's capacity for regular taxation while also keeping a population accustomed to high regular taxes. To the extent that we have a world divided up by powerful, centralized states created by the requirements of mass mobilization for wars of annihilation, the entitlement state is a necessary set of institutions for maintaining that potential. The entitlement state as an expression of national filial piety is a false story.
And so Yuval's argument must fail because of the core misunderstanding of US entitlement policy, taking the patent purpose of the policies as the true purpose rather than appreciating the occult purpose. At face value, Yuval's proposal and those of his colleagues is sensible and prudent. When applied to the true but concealed purpose of the policies, it makes no sense whatsoever: if the purpose is to just maintain the tax facility for wartime exigency and to spend the money on nonsense in the interim, how efficiently the money is wasted is irrelevant.
The essential question, however, is if the ability to turn the mass entitlement state into a mass warfare state still exists. This is a long running problem from Vietnam onwards. If we imagine a world in which Army Chief of Staff Eric Shinseki was not sacked but rewarded for his forecast that Iraq would need to be garrisoned by several hundred thousand or millions of solders for years, that would be one in which the US had a lot of capacity to reassign welfare spending to military spending. That's not what has typically happened: when the US tries to turn butter into bullets, leaders tend to do an about-face and tell the military to make do.
"Los Angeles has built just 19,000 new single-family houses since 2014—many of them luxury “McMansions.” This is a drop in the bucket for a county with 3.7 million housing units."
I immediately thought it odd that they switched from LA to the county. Why?
I then looked and the city is barely 10% of the county land area. What is gained by focusing on a densely populated part of the county?
And I totally missed that 19,000 HOUSES were built in the city. I'm more familiar with Chicago suburbs where most mcmansions are built in new developments but quite a few are in old neighborhoods by tearing down one or more existing homes. I'd expect far more of the latter in the second most populated city in the US. Why would we expect anything else there?
Isn't the better question how many multi-family units are added in a city like that?
And even if they did come to the realization that entitlement spending must be curbed, they’ll need the political cover to get the job done. That is where the Budget BRAC—originally the Base Realignment and Closure Commission that could serve as a model for the Budget Realignment and Correction commission—comes in. It’s an example of Congress doing something economically necessary but politically difficult.
https://open.substack.com/pub/debtdispatch/p/george-will-overcoming-constitutional