Greg Mankiw’s Plan for Budget Balance
Over at his blog, Professor Greg Mankiw has a plan to help bring the deficit into balance. Since it uses a common refrain of those politicians who voted for the PPACA, or health care “reform,” it should be an easy sell.
I have a plan to reduce the budget deficit. The essence of the plan is the federal government writing me a check for $1 billion. The plan will be financed by $3 billion of tax increases. According to my back-of-the envelope calculations, giving me that $1 billion will reduce the budget deficit by $2 billion.
Now, you may be tempted to say that giving me that $1 billion will not really reduce the budget deficit. Rather, you might say, it is the tax increases, which have nothing to do with my handout, that are reducing the budget deficit. But if you are tempted by that kind of sloppy thinking, you have not been following the debate over healthcare reform.
Sorry, Mankiw, but you’re just not going far enough. With the 2011 budget deficit forecast at $1.4 trillion, your piddly little billions will do nothing! Instead, I propose cutting me a check for $1 trillion and offsetting the balance with $2.4 trillion dollars of “revenue enhancement.” What could possibly go wrong!?
(If you’re buying this, I have a bridge in Brooklyn and a totally, completely legit health care reform plan to sell you.)
****Update – It has recently come to my attention that Russ Roberts has posted a substantially similar idea at Cafe Hayek, but he did it a few days before me. Since Cafe Hayek is one of my favorites, I thought I’d call it out.