Wednesday, July 22

Challenge to the left: state your limits

I know I've got a couple lefties (dunno if they prefer "progressive" or "liberal") who are fairly regular readers (and more sporadic ones, of course)

Here's a challenge for you, which I'll reproduce in full:
Several years ago, Matt Welch put up a "pro-war libertarian quiz" in an effort to get pro-war bloggers to go on record stating their limits when it comes to what powers they'd give the government in fighting terrorism.
In that spirit, I'd like to pose a similar query to the lefty blogosphere/opinionsphere on the growth and size of government. Every initiative announced by the Obama administration pushes us further into uncharted territory on both fronts, so it would be interesting to see what if any actual limits lefty opinion makers would put on the size, cost, and influence of the federal government. At what point would you be willing to finally say, "Okay, we've gone far enough"?
Note that the intent here is to find your limits, not what you consider to be ideal.
Next week, I'll post links to any responses to the survey.
Progressive Taxation
Currently, the wealthiest 1 percent of Americans make 19 percent of the country's income and pay 37 percent of the taxes. The top 10 percent pay 68 percent. The bottom 50 percent of earners pay 3 percent of taxes. (Note: These figures don't include payroll taxes.) Most on the left believe the current tax system isn't progressive enough, so they'd presumably favor shifting the tax burden up the income scale. But what is your limit? Should the top 1 percent pay 60 or more percent of the government's costs? More than 80? What's the maximum percentage of earners who should pay no income tax at all?
• Inflation
What's the maximum acceptable rate of inflation? How high would the inflation rate need to be for you to say, "This new government program is great, but we can't print anymore money to pay for it"?
• National Debt as a Percentage of GDP
Currently, the federal debt stands at about 80 percent of GDP. That's the highest percentage since the early 1950s. What is the maximum percentage of debt related to GDP that you'd be willing to accept?
• Federal Spending as a Percentage of GDP
For most of the last 50 years, annual federal spending has held at about 20 percent of GDP, the annual deficit at 2 percent. The CBO projects that by 2020, spending will soar to 26 percent of GDP, and the annual deficit to 7 percent. This is before factoring in the cost of Obama's health care plan. What percentage of spending with respect to GDP would you consider too high? The annual federal deficit?
• Unfunded Liability of Entitlement Programs
Right now, Social Security and Medicare face a $106.4 trillion future liability above and beyond what current payroll taxes would be able to fund. Before we start talking about new entitlements, where should we put the celing on unfunded future entitlement liability? That is, how much higher can that $106.4 trillion figure rise before you'd be willing to say, "Hold on, great as this new entitlement idea sounds, I'm not sure we can afford it"?
• Income Equality
As noted above, currently the richest 1 percent of Americans earn about 19 percent of the country's income. The bottom 50 percent of earners make 13 percent. Most on the left believe these figures are too lopsided. So where should they be? Presumably, the answer is somewhere between where they are now and the point at which every earner in the country makes the same amount of money. To phrase the question another way, at what point would you be willing to say the government has gone far enough when it comes to redistributing income? What is an acceptable level of income inequality?
• Individual Tax Rates
The top federal income tax bracket currently stands at 35 percent. What's the maximum top tax rate you'd be willing to endorse? Where should the cutoff be for the top bracket (it's currently $372,950)? Factoring in state and local taxes, the average tax burden on the wealthiest Americans in some states will approach 60 percent if the Democrats' health plan passes. What's an appropriate upper limit on that figure?
• Average Tax Rate
According to a new World Bank report, the average U.S. tax rate is 46.2 percent, putting us 102 out of 178 countries (meaning 101 countries have a lower total tax burden than the U.S.). Again, how high would you be willing to let that figure climb?
With the obvious exception of income equality (which I don't think we should be targetting directly) my own position is that all these figures are already too high and any policy that increases them should not be enacted.

Supporters of Obama's policies will disagree. So, what are your limits? How much is too much?

4 comments:

  1. Interesting. I actually don't see the point of setting arbitrary numbers for a lot of this stuff, because I think it belies a difference of how the two sides view government. Conservatives ask how big, liberals ask what it does. A lot of these questions seem more than a little skewed: I especially liked this note:

    (Note: These figures don't include payroll taxes.)

    Of course not, as they're the most regressive taxes around! When you look only at the progressive taxation, of course the rich are going to pay more. It's cherry-picking, of course.

    I guess my answer would be that, in addition to Obama's health plan and action on global warming, I'd like to see much more federal involvement in education--in terms of a national curriculum, longer school days and longer school years. I'd like to see America adopt some sort of paid family leave program. I'd also like to see a real effort on poverty, but that should be just as much a conservative concern, as minimizing poverty would shrink the role of government pretty significantly.

    This would all cost money, and it should all be paid for. Much of this quiz tends to assume that liberals are as fiscally reckless as Bush, but of course congressional Democrats are making sure that they're paying for everything. As for the financing of entitlements: unlike many liberals I'm open to means-testing to help pay for it, and instituting a millionaires' tax bracket at 45-50% would also be helpful for the new programs, though I don't think going much higher than that is a good idea. As for income inequality--in the 70s, a CEO made about 20 times what the average worker did. Seems like a reasonable goal when that has bloated by a factor of fifty.

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  2. You're welcome to find figures that include payroll taxes and cite your limits in those terms. It's more complicated.

    of course congressional Democrats are making sure that they're paying for everything

    Laughable. As if the American Recovery and Reinvestment Act didn't include enormous, un-paid-for give-aways to Democratic interests.

    And paying for things by raising taxes is being covered here. You could tax everyone at a 90% rate and "pay for" a great many things, at least initially before you turn us into Mother Russia. This is trying to identify some limits--a point at which you'd say "more federal involvement on education, family leave, and anti-poverty efforts would be great, but we can't afford to pay for it".

    > Minimizing poverty would shrink the role of government pretty significantly.

    How so? And this assumes that minimizing poverty is even possible. Plus, the U.S.'s definition of "poverty" is quite a bit different than, say, a 3rd world country's definition. If there's no absolute threshhold and it's all relative...well, then it's all relative. I'm not sure how minimizing relative levels of poverty is supposed to "shrink the role of government", as all liberal-led efforts to do so have grown the government considerably, AFAIK. (See: LBJ's Great Society)

    > in the 70s, a CEO made about 20 times what the average worker did. Seems like a reasonable goal when that has bloated by a factor of fifty.

    In the 70s there was sluggish growth. People having more money than they need for their own consumption is critical for capital formation, and goes hand in hand with high rates of economic growth. I'd much rather live under a 2000s economy than a 70s economy.

    But I think we're getting sidetracked here, as you don't seem interested limits.

    Would, say, an effective 90% tax rate be ok with you if it provided very many theoretically-wonderful services? No? Then you have some limit. The point of the exercise is to try and identify it.

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  3. I am willing to admit that I have no theoretically imposed limit. If you have a theoretically derived limit (do you personally have maximum threshhold of redistribution?) I would worry that your philosophical position is simplistic. It is not obvious to me at all that people are morally entitled to keep a certain percentage of the income they earn when that income is made possible only by living in a certain kind of historically contingent democratic liberal society. It is simply false that every time someone makes money that it is only been a result of their own initiative. Especially when people do make a lot of money, however, they are usually blind to the contingent factors that helped them have success: the schools they went to, the financial support or connections of their parents, the cultural background they have which shapes perceptions of others.

    Now, I have no philosophical /moral objection to income redistribution because I don't think anyone is owed a cent--income is simply a means to the end of human happiness. What does demand a limit to redistribution is not a sweeping philosophical formula about freedom or justice, but simply a pragmatic limit on the motivations of people to make money. Will taxes stifle the risk-taking and individual initiative and the and greater prosperity for all that follows from this? That is the question. The only philosophically valid objection to socialism that we make should have nothing to do with individual freedom--it should simply be a concern about whether or not human beings are the sort of species that can be motivated to work and create prosperity (which alleviates suffering and promotes happiness) apart from the potential to earn a great deal of money for themselves.

    To tell you the truth, if it happened one day that we did an experiment and gave everyone the exact same salary and they kept their old jobs ...and it actually worked; people remained as productive and innovative as they were before though now being motivated to work purely for personal pride or because they loved their country or their fellow citizens, I would sign on in a second. The only hang up that I would have would simply be doubt as to whether or not human beings could be motivated to work for such reasons.

    So, all that said, your question--if it is posed not for moral philosophical reasons, but for pragmatic troubleshooting reasons--seems perfectly valid. At what point do we lose more happiness than we gain from income redistribution because we become more unproductive? Unfortunately I don't think anyone has a limit--but to the extent that libertarians or conservatives always suspect that it will be a bit lower than current numbers and progressives always think that it will be a bit higher than the current numbers, at least our system will not remain stagnant but will keep experimenting, troubleshooting--and hopefully we can pay enough attention, we can look at the facts rather than distorting the facts for purposes of defending our ideological-political identity, to when this trouble-shooting has good effects and when it has bad effects.

    In my current opinion, I suspect like all progressives, that there could probably be a "little bit more" redistribution than there is now. However, in economic hard times I think we should hold off with more redistribution, and in an ideal world possibly even dial back the current amount we have for a bit(if it wouldn't be such a b*** to put them back in place again in the future, that is) and redistribute when times were a bit better. My view on the specifics, as you can see, is vague and naive and needs to be backed by some empirical evidence, rather than simply a political ideology however.

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  4. But if we want to get our philosophical position straight, perhaps John Rawls can help us: http://plato.stanford.edu/entries/original-position/

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