Attempted DeLong Smackdown Watch: Origins of Central Banking Edition
A Remark on Friedman's "The Social Responsibility of Business is to Increase its Profits"

Differences Between Obama and McCain...

Paul Krugman:

Baselines, shmaselines: Wise words from the Tax Policy Center:

There is an easy way to cut through this palaver. Forget the baseline. Just think about three numbers: How much would either candidate collect in taxes as a share of the Gross Domestic Product? How much is government likely to spend? And, how much would they have to cut that spending to keep the national debt from ballooning.

TPC estimates that in 2013, Obama would collect revenues of 18.2 percent of GDP. McCain would bring in about 17.8 percent. Spending that year would be about 19.5 percent, according to the Congressional Budget Office, assuming the Iraq war will be winding down.

The key point, again: because of all those middle-class tax cuts in the Obama plan, he collects only 0.4% of GDP more in taxes than McCain. The tax collection comes from different people: lower and middle-income Americans would be substantially better off under the Obama plan. But where is the money for health care reform?

This is why I think that Obama ought to be proposing a big oil tax, with substantial parts of it used to pay for people's FICA and extend the EITC phaseout range. This:

  • raises revenue, and puts us in a much better position for long-run growth
  • improves national security by reducing our long-run dependence on foreign oil from unstable parts of the world
  • helps on the global warming front
  • makes America a less unequal country

I think that that the Democrats ought to offer America a choice between:

  • Paying higher gasoline prices but also paying less in Social Security taxes

  • Continuing to leave our national and economic security hostage in the hands of unstable political-military events in the Middle East--which requires that we spend a fortune continuing to project a huge amount of military power into the Persian Gulf for essentially forever.

This seems like a no brainer to me.