Thursday, November 04, 2010

Conservative Domestic Policy Reform in US and Canada

Reihan Salaam sets out an attractive domestic agenda for the Republicans here. Everywhere and always the biggest villains are tax expenditures. Next are cost-plus gummint contracts (and disguised cost-plus contracts). The right sometimes views the first as tax cuts and the second as being friendly to business. It needs to realize that tax expenditures are just welfare and cost-plus contracts are corporate welfare.

The Pithlord's not against a welfare state, but of course we have problems with affordability, especially in healthcare and moral hazard, especially in income support. A bad way to reform is just to means-test everything, since that effectively makes for punitive marginal tax rates on the working poor. The better way is to impose deductibles and then co-payments, which could be means tested. The welfare state needs to think more like an insurance company.

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