Dispatching Krugman and his "Crude Keynesianism" too

At Huffington Post, economist Jeffrey Sachs dissects Krugman's recent claims that we don't have a deficit problem and explains why Great Depression-era thinking does not apply to today's world.  Most importantly, Professor Sachs looks long-term and rejects the approach that "spending is spending" and short-term projects (or tax cuts) are as effect as the real thing.  A sample of the must-read below:

I have argued against short-term stimulus packages. Krugman has supported them, and indeed argued that they should have been even larger. I have been against temporary tax cuts and temporary spending programs, believing that instead we need a consistent, planned, decade-long boost in public investments in people, technology, and infrastructure. Such a sustained rise in public investment should have been paid for by ending the Bush-era tax cuts in 2010, or by adopting a comparable boost in revenues. Instead Obama and Congress have now made almost all of those tax cuts permanent, putting us into a deeper fiscal bind.

Yesterday, Krugman responded to my recent op-ed by digging in deeper on the deficit question. He argued yet again that the U.S. can and should incur more debt to pay for a short-term boost in aggregate demand. While he did not lay out a quantified plan (that has been the case from the start, so it's hard to know exactly what Krugman has in mind in a quantitative sense), the CBO has recently estimated that without the recent deficit-reduction actions of the White House and Congress, the public debt would rise to around 87 percent of GDP in a decade. I presume that Krugman would support that trajectory or something like it (he should tell us by now what path of deficits he actually recommends).

TED: An Innovative Approach to Recycling Plastic

Great talk about the challenges around recycling plastic, compared to metal, and about an innovative solution!  It makes you wonder, though, what economic incentives are needed to pull through this technology.  I wonder how many jurisdictions in the U.S. have flexible landfill taxes.  I know that several places just charge flat fees to be "on the grid" - that clearly doesn't give you much incentive to control your waste.

Tax Code Follies #1: The "Tools of the Trade" Exemption

As a student taking tax law, I occasionally find myself reading passages that simultaneously amaze and depress me.  I'm sure many of these provisions were well-intentioned, but the incentives they create are unbelievable.  I'll try to post them as I find them.  Today's inaugural folly: the "tools of the trade" exemption.

Short description: The IRS normally doesn't let you deduct expenses incurred commuting to work.  However, it grants an exception for expenses incurred bringing "tools of the trade" into work.  Makes sense, right?  But there's more: the deduction only covers the costs incurred for the tools, not any additional costs covered for you to commute with the tools.

How it plays out: A doctor who routinely commutes to her office via subway realizes she's going to have to take several patient charts home for the evening.  If she takes a cab home, lugging the charts, she cannot deduct the expense.  If she pays the cab to take her charts home for her (and keep the meter running until she arrives) and she takes the subway home, she can deduct the entire cab fare (which would be assuredly higher with the waiting time). 

Perverse incentives created:  Double-commuting, potential issues of leaving sensitive documents unattended.