August 29, 2011

WE ARE ALL NEOCONOMISTS NOW:

Economic Adviser Pick Is Known as Labor Expert (JACKIE CALMES, 8/29/11, NY Times)

In tapping Alan B. Krueger on Monday to lead the Council of Economic Advisers, President Obama has picked an economist well known for his studies of labor markets just as the president is about to announce a renewed push for job creation policies as early as next week. [...]

Conservative economists also applauded the choice, including the top economic advisers under Presidents Reagan and George W. Bush -- Martin Feldstein and Gregory Mankiw, respectively. "Congratulations, Alan. An excellent choice by President Obama," Mr. Mankiw wrote on his blog.


A Future Consumption Tax to Fix Today's Economy (ALAN B. KRUEGER, /12/09, NY Times)
[A] 5 percent consumption tax would raise approximately $500 billion a year, and fill a considerable hole in the budget outlook. In addition, a consumption tax would encourage more saving in the long run. Many economists consider a consumption tax an efficient way of raising tax revenue, especially in a global economy. The prospect of greater revenue flowing into federal coffers would probably help lower long-term interest rates because the government would need to borrow less down the road, and further bolster the economy.

The main downside of this proposal is that taxes reduce economic activity. But the government must make critical trade-offs, and a consumption tax could be the most efficient means to raise revenue to finance essential government functions. Over time, if the budget picture improved, income taxes or corporate taxes could be reduced and the revenue replaced by the consumption tax.

Posted by Orrin Judd at August 29, 2011 10:15 PM
  
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