Tag "Michele Bachmann"

Greg Mankiw thinks he’s really clever:

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.

I’m not going to attack this particular point about PPACA, because others have done it already.

I do think, however, it needs to be pointed out that this is indicative of the alternate universe in which most of the mainstream GOP resides.  In this alternate universe, tax increases are not a means to reduce the deficit.  They point this out as if it’s some sort of joke that you don’t get.  From Michele Bachmann’s “tax cuts shouldn’t be considered a deficit,” to CUTGO, to the new slash-and-burn budget plan straight out of Paul Ryan’s wet dream, it is clear that, in the mind of the modern GOP, the only path to a balanced budget is with spending cuts.

This is horribly unrealistic.

Any serious plan to take control of our budget situation must include an increase in our average tax rates.  And that’s no joke.

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On Glenn Beck’s radio program:

BACHMANN: Let me tell you, there’s something that’s happening this week in Congress that could be the eventual unravelling for our freedom, and it’s this. I had asked the Treasury Secretary and Ben Bernanke, the Federal Reserve Chair, if they would categorically denounce–

BECK: I know.

BACHMANN: –taking the United States off of the dollar and putting us on an international global currency. Because as you know, Russia, China, Brazil, India, South Africa, many national have lined up now and called for an international currency, a One World currency. And they want to get off the dollar as the reserve currency.

BECK: Most people don’t understand what that means.

BACHMANN: What that means is that all of the countries of the world would have a single currency. We would give up the dollar as our currency and we would just go with a One World currency. And now for the first time, we’re seeing major countires like China, India, Russia, countries like that, calling for a one world currency and they want this discussion to occur at the G20. So I asked both the Treasury Secretary and the Federal Reserve chair if they would categorically denounce this. The reason why is because if we give up the dollar as our standard, and co-mingle the value of the dollar with the value of coinage in Zimbabwe, that dilutes our money supply. We lose country over our economy. And economic liberty is inextricably entwined with political liberty. Once you lose your economic freedom, you lose your political freedom. And then we are no more, as an exceptional nation, as we always have been. So this is imperative.

It’s clear that Michele Bachmann doesn’t know what a reserve currency is.  Fortunately, Matt Yglesias does:

This falsehoods here are coming so fast and loose that it’s hard to know where to start here. But to get to the main point, most countries hold “reserves” of various kinds—foreign currency and gold. Most countries, right now, primarily hold dollars. Euros are also popular, and Yen and British Pounds somewhat less so. The United States of America does not, obviously, hold any dollars in our reserves. We actually have quite a lot of gold. And different countries vary their practices in this regard. But most countries mostly hold their reserves in dollars. So the dollar is, in effect, the “global reserve currency.” The IMF also issues something called Special Drawing Rights that countries can use as a reserve asset. SDRs work as a kind of meta-currency, with their value based on a basket of major world currencies. A Chinese official suggested that it might be good for the world to tilt away from such a heavy reliance on dollars as the reserve currency of choice, since this leaves countries exposed to policy decisions in the United States, and toward something more SDR-like that would be balanced between dollars and euros and yen and pounds and so forth.

This has nothing to do with replacing the dollars in your bank account—or Michele Bachmann’s—with a new currency. Nor would it be the creation of a One World Currency. And to be clear, while the United States could prevent the IMF from formally creating any kind of new internationalized reserve currency, there’s nothing we can do to stop foreign countries from weighting their reserve baskets away from dollars. It’s just not up to us.

What is unfortunate, however, is that Michele Bachmann is a congresswoman from Minnesota, and Matt Yglesias is not.  So, congratulations, sixth congressional district of Minnesota! You’re congresswoman is an idiot.

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