Baum's View on Money
Good morning. Here are some recommended articles for your reading (and listening) enjoyment.
Channeling Milton Friedman (again)
The question of whether Milton Friedman would have supported the Fed's large-scale asset purchases was answered by the Nobel economist himself, who recommended such a strategy to the Bank of Japan in 2000. It's hard to understand why he would have had different advice for the Fed once the benchmark rate was cut to 0 to 0.25 percent in December 2008.
A "blank-slate" approach to tax reform
Tax Foundation President Scott Hodge discusses the economic impact of eliminating tax expenditures, which amount to more than $1 trillion a year, and using the revenues raised for broad-based rate cuts for individuals.
Easier said than done
Reducing the U.S. corporate tax rate, which, at 35 percent is the highest in the world, is on everyone's to-do list. Paying for the cut isn't so easy. Cutting the rate to 25 percent, for example, would reduce revenue by $1.3 trillion over the next decade, according to the Joint Tax Committee. Eliminating some tax expenditures (see above) is the obvious solution. It may be obvious, but there is a well-funded constituency behind every tax break. How do you think they got there in the first place?
To cut or not to cut
Speaking of the corporate tax rate, Japanese Prime Minister Shinzo Abe may be looking to cut the rate to spur investment and offset the pain of the proposed doubling of the sales tax over the next two years. Concerns about Japan's ability to withstand a tax hike are vying with worries over a gross public debt that is twice the size of the economy.
It's growing! It's growing!
The euro zone economy, that is. Real GDP rose 0.3 percent (not annualized) in the third quarter, Eurostat reported today. That follows six consecutive quarterly declines on the heels of a barely perceptible recovery from the recession. Germany (+0.7 percent) and France (+0.5 percent) showed the strongest growth among the 17 countries that share the euro; Italy (-0.2 percent) and Spain (-0.1 percent) remain in recession. No one said one size fits all when it comes to the common currency.
(Caroline Baum is a Bloomberg View columnist. Follow her on Twitter.)