Author Archives: WilliamThrelkel

Finally! It’s Tax Fantasyland Season Again!

Mother Jones

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One of the more entertaining aspects of the 2012 presidential race was keeping track of the ever-expanding array of fanciful tax plans from Republicans. Even after Herman Cain announced his absurd 9-9-9 plan, other plans that would cut taxes even more kept coming down the pike. No candidate was willing to give up the mantle of biggest tax cutter.

But that wasn’t the truly entertaining part. The entertainment came from the fact that the candidates were all willing to describe in almost loving detail what they’d cut: capital gains vs. regular income; different tax brackets; precise rates that millionaires would have to pay; and so forth. But when anyone asked which tax deductions and tax credits they’d kill in order to make their plans revenue neutral, they’d blush like schoolchildren and insist that only Congress could make that call. So brave!

Josh Barro reports today that even with only a few candidates yet in the race, Republicans are already tying themselves in knots over taxes:

There are a few ways the 2016 Republican candidates can avoid the Romney middle-class tax trap. They can break with party tradition and abandon the position that there should be significant tax-rate cuts for top earners. They can forthrightly defend the idea that people with low and middle incomes should pay more. They can abandon the promise of revenue neutrality — so a tax cut for the rich does not need to be offset by tax increases elsewhere. They can be as vague as possible.

So far, apparently, the scorecard looks like this:

Carson, Cruz and Paul are calling for flat taxes but are taking the classic position that they’ll talk about ways to stay revenue neutral sometime…..in the future. Like maybe the 14th of never.
Christie has a slightly modified version of the classic. He won’t talk about how he’ll stay revenue neutral either, but he’s also claiming that he might just let the deficit take some of the hit, which would mean fewer hot-button deductions to eliminate that could wreck his candidacy.
Rubio, the boy genius of the Everglades, goes even further, taking what I’ll call the Sam Brownback position: screw the deficit, he says. He’s just going to lower taxes and leave it at that. After that we’re in God’s hands.
Finally, Jeb Bush has taken the most unusual position of all: he’s not even talking about taxes. He’s generally in favor of lowering taxes, but that’s as much as he’s willing to say.

That’s only six candidates, and there are many more to come—and we can expect plenty of tax fantasyland from all of them, I think. I mean, can you imagine what Lindsey Graham or Carly Fiorina are going to come up with? The mind reels. With the exception of the poor shmoes at the Tax Policy Center, who have to pretend to take this stuff seriously while they trudge through their analysis of each and every farfetched plan, it should be plenty of fun for the rest of us. Which candidate will come up with the most ridiculous, most pandering plan of all? Your guess is as good as mine.

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Finally! It’s Tax Fantasyland Season Again!

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Medical Inflation Is Up, But It’s Probably Just a Blip

Mother Jones

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Sarah Kliff reports that health care spending ticked upward at the end of 2013:

A four-year slowdown in health spending growth could be coming to an end….Federal data suggests that health care spending is now growing just as quickly as it was prior to the recession.

….The Altarum Institute in Ann Arbor, Mich. tracks health spending growth by month. It saw an uptick in late 2013 that has continued into preliminary numbers for 2014. Separate data from the Bureau of Economic Analysis, which tracks the growth or consumer spending by quarter, shows something similar: health spending grew by 5.6 percent in the last quarter of 2013, the fastest growth recorded since 2004.

Inflation in the final quarter of 2013 ran a little over 1 percent, which means health care spending rose 4.5 percent faster than the overall inflation rate. That’s a lot. But it’s also only one quarter, and it’s hardly unexpected. Take a look at the chart on the right, which shows how much per capita health care spending has increased over and above the inflation rate for the past 40 years. There are two key takeaways:

Medical inflation has been on a striking long-term downward path since the early 80s.
There’s a ton of noise in the data, with every decline followed by a subsequent upward correction.

The HMO revolution of the 90s sent medical inflation plummeting. Then a correction. Then another big drop. And another upward correction. Then another drop. If that’s followed by an upward correction for a few years, it would hardly be a surprise.

Nonetheless, the long-term trend is pretty clear, and it shows up no matter how you slice the data. For many years, medical inflation was running as much as 4-6 percent higher than overall inflation. Today that number is 1-2 percent, and the variability seems to be getting smaller. What’s more, that 1-2 percent number matches the long-term trend during the entire postwar period (see chart below). There’s good reason to think that it might be the natural rate of medical inflation, with the 80s and early 90s as an outlier. That’s where I’d put my money, anyway.

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Medical Inflation Is Up, But It’s Probably Just a Blip

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