Downsizing Blog

I see that I’m quoted in Annie Lowrey’s New York Times Magazine story, “Washington’s Economic Boom, Financed by You”:

A study [$] published in the winter edition of Political Science Quarterly considers two possible reasons for why the 2009 American Recovery and Reinvestment Act (ARRA) failed to sprinkle Uncle Sam’s magic dust onto those areas of the country that were being hardest hit by the recession.

The Federal Housing Administration (FHA)’s 2012 audit confirmed what has been obvious for some time: FHA is deeply underwater, with a negative economic value of $34 billion. With over $1 trillion in mortgages backed by FHA, even minor changes in the housing market could add tens of billions to that total. A taxpayer bailout is inevitable.

Speaker Boehner says that the House will not pass another increase in the debt ceiling unless the White House and congressional Democrats agree to cut spending by an equal or greater amount. That’s the same line in the sand that Boehner drew during the previous debt ceiling showdown in 2011.

There’s a debate among policy wonks about whether a no-tax-hike policy is an effective way of restraining the burden of government spending.

Twenty-three point nine trillion dollars. That will be our national debt in 2022 under the fiscal-cliff bill that just passed Congress. That’s nearly $4 trillion more than the current-law baseline, and while most of that comes from making the Bush tax cuts permanent for most Americans without offsetting the loss of revenue through spending cuts, at least $330 billion of the new debt results from the increased spending that was part of the deal. Our government debt will amount to more than 118 percent of GDP.

The faux drama in Washington is finally over. The misfits in Washington reached a deal on the fiscal cliff.

Rep. Gerald E. Connolly, a Democrat representing the federal workforce, frets over the impact of sequestration or any alternative on his Fairfax County district: “Undoubtedly, we will take a hit…It’s going to result in a steady retrenchment in government investment in both the civilian and defense sectors.

Cato has released a new study on capital gains tax rates. With rates scheduled to rise in January, the study describes the six reasons why capital gains tax rates should be kept as low as possible. The piece also notes that the new top U.S. capital gains tax rate in January of 28 percent will be much higher than the 16 percent average in the OECD.