We reserve the right to comment on aggregate economic conditions. From the inbox:
What would you suggest regarding taxation or lack thereof to help change the economic mess we're in right now? Many people are saying taxing high profit companies and industries but wouldn't that tax get passed on primarily to shareholders and employees? What is the most efficient way in your opinion to stimulate the economy and start widdeling down the deficit?
My reply:
What mess? Seriously: Inflation, unemployment and economic growth are all at acceptable levels -- in a historical sense -- for an economic slowdown. Federal Reserve policy contributed to the housing bubble and there is little the Feds can down to speed the correction up. The Feds can ease the pain of individuals who made big personal financial mistakes but that could create a moral hazard problem.
If we are going to tax anything I'd tax carbon, but that won't stimulate the economy (every new green job created in the long run will simply replace a brown job lost in the short run), and I'd let the Bush tax cuts expire. Reducing the budget deficit now may be necessary to help avoid a real economic mess in the future (i.e., the potential growth of social security and medicare with a big budget deficit could lead to a huge budget deficit that discourages foreigners from buying our bonds ... spiking interest rates [crowding out ain't smooth])
In other words, I'm not in favor of revenue recycling right about now.
