Above the fray

I like to be above the fray if possible. And, given my substantive views, I am willing to consider responsible proposals from both sides. For example, like many on the right, I'm skeptical about the political process, believe that markets can work well in a lot of areas (albeit less so for healthcare and the financial sector), and do not share the left's intense commitment to existing entitlement programs.

The problem I have is that Republican devolution over the last 15 to 20 years leaves me all too often sounding more shrill than I would like.

For example, I've been forced to agree that the Ryan plan is neither serious, professional, credible, brave, nor responsible, even though (a) I would like to be able to reach a more positive conclusion, (b) someone with his general views could have met those criteria, (c) I appreciate that he's better on tax expenditures than the Norquist Republicans, and (d) I think it is within the realm of debates we should be having to argue for a more market-driven healthcare approach with vouchers (although in recent years I've moved away from agreeing with that view).

I'm therefore happy to be able to link to an excellent post in today's New York Times by Alan Viard of the American Enterprise Institute.

In particular, I agree with Alan about the following:

"The Obama and Ryan plans have one striking similarity, as neither specifies which tax preferences will be curtailed or eliminated. Each plan will face hard choices when it comes time to spell out the details. Significant base broadening cannot be achieved by eliminating unpopular loopholes.

"Instead, it will be necessary to make major changes to at least some of the most widely used tax preferences, such as the exclusion of employer-provided health insurance and the deductions for state and local taxes, mortgage interest and charitable giving. If the political will is found to make such changes, the income tax can be redesigned to facilitate a more efficient allocation of resources across economic sectors. For example, while such a tax system might still promote homeownership, it would no longer provide lavish subsidies for expensive houses.

"The economic gains from income tax base broadening are limited, though, because this approach does little or nothing to mitigate the saving and investment disincentives arising from the taxation of business profits, interest, dividends and capital gains. Long-run economic growth could be better advanced by replacing the entire income tax system with a progressive consumption tax, but neither President Obama nor Representative Ryan has embraced that far-reaching reform."