Process Reform

October 10 - Gene Steuerle released an opinion piece yesterday arguing that the United States is due for a new "fiscal turning," or a fundamental reorientation of the government's approach to economic policy. Steuerle identified a first fiscal turn in the period after the Revolutionary War, when the young country expanded the financial powers available to the federal government. The second fiscal turn came at the beginning of the 20th century, when the country modernized its banking system and created an income tax. Now, Steuerle declares, the country is in need of a third fiscal turning. He writes that:

"The third fiscal turning, like the first two, is about far more than fixing programs we know need to be fixed. It's about creating flexibility and slack for government. It's about making possible the resources necessary to modernize and meet new needs, many of which we cannot yet identify. It's about removing automatic and eternal built-in growth in programs - not so much because they failed or succeeded in meeting past needs, but because their constant claim for more and more automatically means less and less for other, potentially more worthwhile endeavors, both public and private."

October 6 - On Sunday, McCain's senior policy advisory Douglas Holtz-Eakin told reporters that the cost of McCain's health insurance tax credit would be offset (and achieve budget neutrality), in part, by reducing Medicare and Medicaid spending. The bulk of the $5000 per family credit would be offset by eliminating the tax exclusion for employer-provided health insurance. This would still leave a hole of roughly $90 billion in 2013 - although it would shrink over time and eventually become self-financing. While not revealing exactly where this money would come from, Holtz-Eakin pointed to eliminating fraud and reforming Medicare payment policies. We estimate savings of roughly $40 billion from the policies Senator McCain has already proposed.

September 16 - With Lehman Brothers' announcing itsbankruptcy yesterday, and Merrill Lynch agreeing to be purchased by Bank ofAmerica for $50 billion, the presidential candidates are increasingly beingasked to outline their positions on federal regulation of Wall Street.  McCain saidin a press release:

"I am glad to see that the Federal Reserve and the Treasury Department have said no to using taxpayer money to bailout Lehman Brothers...The McCain-Palin Administration will replace the outdated and ineffective patchwork quilt of regulatory oversight in Washington and bring transparency and accountability to Wall Street. We will rebuild confidence in our markets and restore our leadership in the financial world."

Obama also releaseda statement to the press:

August 20 - The presidential candidates' debate on taxes and fiscal policy is making waves overseas. The BBC wrote an online article about a debate that Austan Goolsbee and Douglas Holtz-Eakin had on the BBC's World Service Report. Notably, the advisors clashed on issues like the individual and corporate tax rate, the U.S.'s dependence on foreign oil, and the need for closer oversight on the housing market. Holtz-Eakin said McCain would support policies for small business which would:

"keep them in a position where they don't have onerous health care costs and mandates to provide expensive benefits to their employees."

Goolsbee, on the other hand, stressed that:

"Failure to address the fundamental challenges of oversight of the housing market - an issue that Senator Obama identified 18 months ago - could prompt ‘a second wave of the foreclosure crisis in the United States.'"