« Issue #1 | Main | »

July 30, 2008

Comments

Nato

But Nathan, we *can't* lose in Iraq because we won as soon as we deposed Saddam!

But seriously, though, I'm not sure who's saying anything like "Losing in Iraq is no big deal."

Otherwise, I of course tend to agree with McCain's general stance toward market intervention and taxes, though I find the budgetary gaps in his plans (such as they are) to be worryingly large. Obama's plans are more detailed and would appear to spend less and have a lower overall shortfall, but still include a lot of speculative and really quite dubious "cost savings" amounts that probably means his plan is ~$1 trillion more expensive than advertised. Which would still place it about $4 trillion ahead of McCain's. Then then there's the discrepancy between what the candidates say and what their policy papers say. Obama's speeches would actually imply he'll spend slightly less than one would get from the policy papers, while McCain's tend toward the opposite. This may have something to do with why the Brookings folks calculate so much higher a deficit for McCain: his policy papers are less detailed so they put more weight on his speeches, which would tend to exaggerate the costs of his plans. I don't know.

Nathan Smith

"But Nathan, we *can't* lose in Iraq because we won as soon as we deposed Saddam!"

Yup, that's right. That's why *I* wouldn't talk about "losing in Iraq," because with Saddam dead, no possible outcome of the war from here on out or in the past three years would be correctly characterized as the US losing the war. But McCain doesn't see it that way, so he can talk about "losing the war" as a genuine risk.

Nathan Smith

"... a lot of speculative and really quite dubious "cost savings" amounts that probably means his plan is ~$1 trillion more expensive than advertised. Which would still place it about $4 trillion ahead of McCain's."

What the heck? I assume you're making the usual error of referring to a tax cut as a 'cost,' but even then this estimate sounds completely unrelated to the real political debate. I admit I haven't paid much attention to any formal platform offered by it since Obama himself doesn't seem much interested in it. I have seen the estimates that state the "cost" (i.e., detriment to the budget) of Obama's plans at $3 trillion and those of McCain's at $4 trillion+. Those wouldn't come anywhere close to justifying a claim that *after* you deduct $1 trillion from Obama's plans, they're still $4 trillion ahead of McCain's. Deduct $1 trillion and they'd be about the same. Was this a typo, Nato?

The way the "cost" of tax cuts is estimated is very misleading in any case, because they assume that tax cuts induce no growth in the types of activities being taxed, which is at odds with the basic economic principle-- or just commonsense principle-- that people respond to incentives. Lower corporate tax rates and corporations will report more income, so the tax cut will cost less than if you just crudely assume revenues are cut proportionally to the tax cut. This is both logical and empirically observed, but since it's hard to forecast the extent of the reactions here, it tends to be ignored in forecasts. In any case, McCain's tax-cut talk seems more like a wish list than a real platform since he'll be up against a Democrat Congress and will have to make deals to mitigate the sunsetting of the Bush tax cuts. Also, recently, McCain has (see other post) started hinting at being willing to tolerate tax increases such as a rise in the payroll tax cap, which is consistent with his record of resisting excessive tax-cutting. I think it's pretty likely that McCain will be better than Obama, fiscally speaking.

Nato

I was using the total fiscal plans, not just tax plans. A lot of the dubious "savings" Obama's plan assumes come from his health care plan. I should find you a link, but the one I found when I was throwing together the above post was broken.

Nato

It was, I'm fairly sure, the Brookings analysis that I was mentally referencing, though there are apparently others that are not dissimilar.

Nato

It seems my memory garbled some of it. The ~4$ trillion difference is based on taking into account what the candidates say on the stump, thus saving Obama half a trillion and costing McCain a trillion and a half:

http://www.taxpolicycenter.org/UploadedPDF/411741_updated_candidates.pdf

The comments to this entry are closed.

My Photo

Only use a payday cash advance as a last resort.

Categories

Blog powered by Typepad