Subject: A wish list for Congress (AEI Economics Ledger) If you have trouble reading this message, click

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Tax reform
One of many wishes for the joint conference. Michael Strain: “My wish list for the current round of budget negotiations is pretty easy to spell out: Structural reforms of Medicare, Social Security, and Obamacare . . . major tax reform for households, including family-friendly reforms . . . corporate tax reform which significantly lowers the corporate rate (down to zero, ideally); and an increase in discretionary spending on socially valuable infrastructure, basic research, and other public goods. . . . Of course, if you think that will happen, then, to borrow from the metaphor, I’d like to sell you a major health insurance reform policy with the promise that if you like your current plan then you’ll get to keep it.” Who pays for corporate taxes? Matt Jensen: “A corporation, after all, is just a legal structure that brings together owners and employees. The true burden of a tax collected from corporations has to be borne by some of these people, not by legal structures. Assuming otherwise can yield absurd conclusions.” Evaluating Senator Mike Lee’s new tax plan. Jim Pethokoukis: “A cynic might describe the Lee plan, based on a 2010 National Affairs proposal from economist Robert Stein, as a laughably transparent attempt to make middle-class families into loyal political clients. . . . But think about the economic logic. Parents contribute twice to social-insurance programs: first when they contribute payroll taxes, then again when they incur the cost of raising the next generation of taxpayers. The Lee plan increases fairness because it helps to offset that penalty.”

Spotlight on tech
VIDEO — Jeff Eisenach discusses Obamacare security woes  MORE — One month into Obamacare, what do we know? Let’s give the Internet permission to improve. Richard Bennett: “Net neutrality is an argument that essentially defeats itself: On the one hand, it touts incidental features of the Internet simply because they’re imbued with history, and on the other it praises the Internet’s power to transform traditional industries such as journalism and retail and its potential to revolutionize other sectors, such as education and wellness, in the future.”

Strange new rules
Dodd-Frank’s shock and awe continues. Alex Pollock: “Should banking regulations refer to and discuss how credit ratings can sensibly be used by banks in credit risk management? Of course they should. Whoops—Dodd-Frank prohibits that, in a truly silly provision.” EPA fail. Benjamin Zycher: “The EPA’s analysis of the social cost of carbon, developed recently as justification for a rule constraining energy use by microwave ovens, ignores the fact that U.S. emissions of greenhouse gases are about 17 percent of the world total. Therefore, even an immediate reduction by half in U.S. emissions would yield a reduction in world temperatures of about one-tenth of one degree by

the end of this century, a change smaller than the standard deviation, and thus difficult to distinguish from statistical noise.”

The welfare state, where you least suspect it
End welfare for big business. Vincent Smith: “The current Farm Bill costs taxpayers about $20 billion a year in farm-oriented conservation and straightforward subsidy programs, of which $2.5 billion goes to private crop insurance companies. About 80 percent of the rest flows to the largest 15 percent of U.S. farms, whose owners are typically more than ten times wealthier than the average U.S. household.” Fast-food restaurants bilk taxpayers for billions? Oh please. Andrew Biggs: “National Employment Law Project has a new headline-generating report claiming that "Taxpayers are shelling out $1.2 billion a year to help pay workers at McDonald's”. . . Low fast food pay, the NELP logic goes, causes employees to become eligible for taxpayer-funded benefits such as Food Stamps and the Earned Income Tax Credit. If fast food chains paid a living wage, NELP argues, taxpayers would save billions.”

In other news
Deflation alert. Desmond Lachman: “One has to give the European Commission credit for becoming more realistic about its economic growth forecast for the Eurozone in the year ahead. However, one has to question whether the Commission fully recognizes the implications of its dismal economic growth forecast. In particular, one has to wonder whether the Commission is not understating the very real deflation threat that lower economic growth now poses for countries in the European economic periphery.” How quickly the FHA bailout is forgotten. Ed Pinto: “The National Association of Realtors recently suggested that if the credit scores required for a mortgage returned to the more normal levels of about 720 for conventional loans and 660 for FHA loans, home sales could be 15 to 20% higher. But virtually all loans with a FICO score below 660 are subprime ones insured by the FHA.”

Mark your calendar
11.8 Chairman Bernanke speaks to an IMF panel about the financial crisis 11.13 John Makin and Desmond Lachman testify before the House Committee on Financial Services 11.14 Jobless claims released

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