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Home Publications Blogs Beat the Press A Budget Proposal From A Commission Without a Single Member That Saw the $8 Trillion Housing Bubble That Wrecked the Economy

A Budget Proposal From A Commission Without a Single Member That Saw the $8 Trillion Housing Bubble That Wrecked the Economy

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Wednesday, 17 November 2010 06:20
Yes, that would be the Rivlin-Domenici commission. In elite Washington circles ignorance is a credential.
Comments (9)Add Comment
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written by joe, November 17, 2010 7:54
They suggest a 6.5 percent "debt-reduction sales tax" while congress considers adding 700 billion to the deficit with most of that going to tax payers in the top .1%.
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written by izzatzo, November 17, 2010 8:57
Obama's next economic commission will decide how to deal with those on prior commissions who were blind to the bubble. To insure objective balance, everyone must demonstrate unawareness of the bubble and current unemployment to avoid biased conclusions.
Rivlin and Domenici could have got a job re-arranging the deck chairs on the Titanic as it sank.
written by Ralph Musgrave, November 17, 2010 10:16
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I wouldn’t be too harsh on those who failed to forsee the housing bubble: 99% of the population, economists included, failed to see it coming. The more important point is that Rivlin, Domenici & Co have absolutely no grasp of macroeconomics (at least if the Washington Post article is anything to go by). That is, I see no hint of their being aware that if the private sector saves, the public sector must run a deficit, else demand declines. Nor do I see any hint of their being aware that a public sector deficit does not necessarily mean a rising national debt. (The deficit can perfectly well accumulate as extra monetary base, which is to some extent is what has happened over the last year or so, and is what Keynes recommended.)

Their proposals, namely raising taxes here and cutting taxes there, are no better than re-arranging the deck chairs on the Titanic as it went down.
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written by liberal, November 17, 2010 11:54
Ralph Musgrave wrote,
...99% of the population, economists included...


That just means that economists as a group should be laughed at, not that they should be excused for missing something that was obvious. Paid by their masters to miss something, I might add.
Your choice?
written by Jack, November 17, 2010 12:06

With many educated, informed readers come to this site, cannot believe you cannot get more advertisers here so you can get some ad $.
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written by J-Bentham, November 17, 2010 8:31
Can we get a comment on Krugman's latest pro-VAT tax post?
Plans to tax the undeserving rich until the budget is balanced and the national debt is paid.
written by Scott ffolliott, November 17, 2010 10:57
A Budget Proposal From A Commission that plans to tax the undeserving rich until the budget is balanced and the national debt is paid.
Krugman's column
written by S.D. Jeffries, November 18, 2010 8:58
Here's a comment on Krugman's blog entry regarding the VAT tax:

He begins the article by saying he hasn't had time to evaluate the Rivlin/Domenici proposal, and then compares the social programs offered in countries that rely on a VAT tax. His approval of such a tax policy comes with an enormous caveat, however, "All of which says that if I can trade a somewhat regressive VAT for guarantees of decent retirement and universal health care, I’ll take it."

Unfortunately Krugman's assumptions may be attributing too much causation to the VAT tax scructure for the extensive benefits offered in those countries that have instituted the tax, although I do understand his consideration that such a tax structure might change the politics of the situation.
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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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