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Cornucopia of Inflation Stories

Today must be inflation day in the blogosphere.

The WSJ has a bizarre article about monetizing the national debt through inflating the money supply.

Another WSJ article talks about how inflation is affecting real wages.

Finally, Carpe Diem has a whole series of posts on inflation.

From the Obvious News Department: Social Security Sucks for Younger Workers

CBO yesterday came out with their updated analysis of the Social Security system's demise (cash flow deficit 2019, system blows up in 2049).  Of course, the fact that younger workers get an annual real rate of return of 1% or less on their FICA taxes is the much bigger deal.

In a related vein, Glenn Hubbard makes the obvious point that raising taxes to "pay for" these entitlement programs will wreck the economy:

Simple arithmetic suggests that with this much more of GDP eaten up by the two programs, all federal taxes on average would have to be raised by more than 50% to make up the shortfall. Research by economists Eric Engen of the Federal Reserve Board and Jonathan Skinner of Dartmouth suggests that such a tax increase would reduce long-term GDP growth by about a full percentage point. This is no small matter: Think of it as reversing all of the gains in our long-term growth rate from the productivity boom of the past 15 years.

News Roundup: The Worst Tax, McCain and Taxes, and HSAs in the Labs of Democracy

Three quick items of interest as we slog through the summer again today:

• Richard Rahn examines which federal tax does the most harm to economic growth
• Jack Kemp and Peter Ferrara argue why McCain's tax plan will promote economic growth
• North Carolina might be able to learn from Florida's HSA-style Medicaid reforms

Person Richard Rahn

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News Roundup: Free Market Medicine and A "Shocking" Friedman Development

A couple of noteworthy articles today in the news:

Paul Howard has a good overview of some of the problems facing our health care system in NRO.  His take on the tax treatment is interesting:

Imagine charging low-income Americans more for health insurance. Outraged yet? We already do that. The tax deduction for employer-provided health insurance favors higher-income workers, who get a bigger deduction and are more likely to work at firms that offer insurance. Low-income Americans working at jobs that don’t offer insurance end up paying much more for their insurance out of pocket — if they can even afford it. The tax penalty against individually purchased health insurance (30 percent or more, depending on income) is regressive and unfair.

A tax deduction or tax credit for everyone who purchases their own health plans would be much more equitable, giving millions of uninsured access to insurance. A risk-adjusted voucher for our poorest, sickest patients (think cancer) would allow them to buy into insurance markets and encourage insurers to seek them out. Employers, unions, and other civic groups could act as buying clubs for their members — helping them navigate the system and find the best values.

Also, a bizarre article by Thomas Frank in the WSJ, where he laments that the new Friedman Institute at the University of Chicago will advocate...get this...free market public policy.  I'm shocked!  This snippet below explains the very rational behavior of the donors:

"When you think about the big battle between socialism and free markets," mused Edward Snyder, dean of Chicago's Graduate School of Business, in a Bloomberg interview, Friedman "led the charge on behalf of the University of Chicago. There are a lot of people who will give back because of his name and effort and legacy."

AT&T: Reaching Out to Touch Health Care Consumer Choice

Kudos to AT&T for defending consumer-driven health care (which they offer to employees) in general and health savings accounts (HSAs) in particular:

The emergence of consumer-driven health care plans, and the health savings accounts available to participants in these plans, could play a key role in reining in runaway health care costs while expanding preventive care options.

Health savings accounts are an important corollary to consumer-driven health care plans. With a health savings account, the employee gets a tax break to fund medical expenses.

We believe that our plan is paying off in several ways. Our employees are taking a closer look at managing their health, and we're keeping a cap on our health care costs. We hope our experience can serve as a positive guide for other companies considering this path for their employees.

Obama Tax Plan: The Opposite of Supply Side Economics

Peter Ferrara has a good analysis of the Obama tax increase plan in the WSJ today.  Here's a snippet:

Barack Obama's tax plan is the opposite of supply-side economics. He proposes to raise marginal rates for just about every federal tax. He also proposes a raft of tax credits that taxpayers can receive if they engage in various government-specified activities...The latest Congressional Budget Office data shows the bottom 40% of income earners already pays no income taxes. Indeed, they receive a net payment from the federal income tax system -- meaning from the taxpayers -- equal to 3.8% of all federal income taxes, because of the refundable tax credits under current law. The middle 20% of income earners, the true middle class, pays 4.4% of federal income taxes...Overall, the bottom 60% of income earners pay less than 1% of federal income taxes on net. When "tax credits" primarily go to this group in the form of checks from the government (rather than a reduction in their tax burden) it is simply an abuse of the language to call the spending a tax cut...Consequently, to say, as the campaign does say, that the candidate's tax plan is a tax cut on net -- and that it would limit taxes to 18.2% of GDP -- is grossly misleading. The Obama tax plan would sharply increase real taxes. It also would come nowhere near to paying for the massive increases in federal spending he has proposed, including the spending that is disguised in the form of refundable tax credits.