Consistent with its present policies the editors of the Washington Post argue against trying to reduce the gap between federal spending and revenue and thereby the growth in the burgeoning debt by increasing taxes:

Budget reforms must be based primarily on spending constraints, not tax hikes. While some moderate tax increases could help reduce the deficit, it is not feasible to structure a tax system in which revenue grows faster than the economy every year, which is what would be necessary given current spending projections.

Even boosting revenue as a share of GDP to the highest levels in American history would close less than half of this year’s deficit, and such a large tax hike would destroy economic growth. No major tax proposal on its own, except perhaps a national value-added tax, comes anywhere near closing the deficit when the effect on economic growth is properly accounted for.

The graph at the top of the page illustrates their depiction of the limited effects of various tax increases.

More specifically taking all of the steps they list in raising taxes, e.g. increasing the personal income tax, a higher rate on the richest earners, a wealth tax, a higher corporate income tax, and a value-added tax, together would still not be enough to close the gap.

Even treating the chart’s revenue estimates as additive, and making no allowance for adverse effects on growth, the listed tax increases would not close the deficit. But closing it is not the editors’ stated goal nor mine. The aim is to slow the growth of debt relative to the economy. That still requires choices on both sides of the ledger: more revenue and slower growth in spending, particularly health care spending.

That leaves reducing spending.

I’ve already mentioned some of my preferred actions: restoring the income assumptions of the 1983 Social Security reform by raising FICA max, a prebated VAT, and changing out health care system to a capitation system. That last I presume would be anathema to the editors. The bottom line is that both tax increases and spending reductions will be necessary to put our fiscal house in order after years of irresponsibility.

Two more points. The editors’ argument highlights the irony of the Democrats’ “affordability” campaign plank. History tells us their first line of attack in making things more affordable will be to give people more money and that will have nearly the opposite effect they assume. And that our huge debt overhang impedes economic growth will render the Republicans’ preferred strategy, tax reductions, unable to produce enough growth to make the debt less dire is an empirical reality.

We don’t have a choice other than discipline.

As you presumably know five men were arrested outside RAF Fairford in the United Kingdom on charges of offenses under the explosives act and terrorism and later released on bail. It may be that is all, indeed, that is known about the incident or the authorities are merely being circumspect.

That hasn’t stopped all sorts of speculations about the incident being made including the men being affiliated with Iran or, as Secretary of State Rubio put it, “a foreign actor”, a training exercise, or some sort of cover-up. Perhaps the authorities are trying to prevent an overreaction.

The difficulty is that silence can have the opposite effect. Once officials publicly invoke terrorism but leave the central facts unexplained, the public may decide which rumors fill the gap. They may be trying to lower the temperature while inadvertently making speculation more attractive.

As Jonathan Swift put it nearly 300 years ago, a lie can get halfway around the world while the truth is putting its boots on.

There has been some kerfuffle lately about 760,000 names having been dropped from the Affordable Care Act rolls. I found the editors’ of the Washington Post’s explanation reassuring:

First, none of the accounts had a Social Security number or an immigration identification number. Second, all of the accounts had premiums covered 100 percent by taxpayers. That makes it easier for fraudsters to sign up unknowing enrollees, who don’t see money leave their bank accounts. Third, the plans had not been used. No claims had been filed. And finally, the insurer offering the plan never had contact with the enrolled individual.

Even if the account met all of these requirements, the insurer was still required to reach out to the individual via two forms of communication. Only when insurers received no response after 30 days was the account removed, according to CMS. Insurers had strong incentives to reach these people because the companies were receiving premium payments from the government for each account.

It seems to me that plenty of safeguards are built in to this action. Indeed, as far as I can tell the biggest scandal is that such purging of accounts isn’t a normal, regular practice.

So, what’s wrong with it?

In her column in the Washington Post Julia R. Cartwright makes a fairly standard libertarian criticism of James Galbraith’s book:

He is probably too optimistic about Russia’s economy, but the larger point stands: Sanctions are a case study in unintended consequences. The irony is hard to miss. Galbraith treats the failure to anticipate Russia’s adaptation as evidence against conventional economic policymaking without asking whether the same problem applies to the domestic planning he favors.

and

But the real case for markets rests on a problem he never confronts: local knowledge. Galbraith writes that when profit becomes “the accepted criterion of success,” the result is “pathological.” But prices — and profits — coordinate information about scarcities, technologies and wants, information that no central authority could assemble.

That’s a fairly convention von Mises/Hayek argument. But there are others.

Namely, businesses and consumers can modify their behaviors faster than planners can adapt their plans. However good the knowledge of the planners was at the time they made their plans, by the time they’ve issued their plans the environment has changed to the degree it no longer applies to the plan that was made.

That issue is particularly acute in the U. S. where the “long tail” phenomenon dominates many sectors. A few very big businesses control much of the sector, a smaller number of medium size companies also operate in the sector, and, potentially, thousands of small companies continue to operate in the same sector. And that phenomenon applies across the entire economy, in many sectors.

Said another way, China can coordinate certain sectors more readily.

There’s another challenge as well. Over time the “experts” who rise to positions of authority in the civil bureaucracy are increasingly those who follow the prevailing orthodoxy. The Soviet Union’s problem wasn’t that they didn’t pay enough attention to their experts; it was that over time their experts were increasingly telling them what they wanted to hear.

The difficulty is not merely that planners lack information. They must make decisions before that information changes in an economy whose participants can alter their behavior faster than a central plan can be revised. And the people authorized to interpret the information will, over time, tend to be those whose judgments fit the governing orthodoxy. A planning system can therefore fail while listening attentively to its experts: it may be hearing the experts its own politics selected.

Compare and contrast. Chloe Taylor reported on President Trump’s visit to China in May at CNBC:

U.S. President Donald Trump has landed in Beijing for a highly anticipated presidential summit with his Chinese counterpart, Xi Jinping.

Trump is being accompanied on the trip by a group of executives from some of America’s most valuable companies, including Tesla CEO Elon Musk and Nvidia
boss Jensen Huang.

The president was greeted on the tarmac by a brass band and flag wavers, who performed as he descended the steps of Air Force One.

He was received by China’s vice president, as the accompanying illustration confirms. In other words, he (and the various U. S. CEOs) was snubbed. That forms an interesting contrast with Michelle L. Price and Didi Tang’s report on President Xi’s arrival at Associated Press yesterday evening:

WASHINGTON (AP) — Chinese President Xi Jinping arrived in Washington on Wednesday, where he was met with a rare planeside greeting from President Donald Trump after their top officials agreed to extend a trade truce until January.

Trump’s Treasury Secretary Scott Bessent announced the extension of the truce — under which the countries agreed to scale back tariffs and refrain from imposing new trade restrictions — during a Fox News Channel interview as Trump welcomed Xi at Joint Base Andrews just outside Washington.

“I don’t know whether a bigger deal can be done. I don’t know whether we will just roll the current deal,” Bessent said in the interview, noting the extension to Jan. 10 could give the leaders more time to talk about the issues at upcoming international summits in China in November and Florida in December.

Xi did not meet Trump’s plane in Beijing; Vice President Han Zheng did. Yesterday Trump went further in one conspicuous respect: he personally met Xi’s plane. Whether Trump considered the earlier reception a slight is unknowable, but the difference in rank at the airport is plain. Xi has already received a rare public honor without having to alter China’s negotiating position. What, if anything, Trump obtains in return remains to be seen.

For man who is claimed to be so thin-skinned and quick to seek retribution against those he perceives slight him, that is a remarkably warm and expansive greeting. Either President Trump did not see his reception in China as a slight, it didn’t matter to him, he genuinely respects President Xi, he wants something from him, or several of the foregoing. President Xi can accept the honors without visibly changing China’s position, while Trump has already made the gesture. That gives Xi the immediate symbolic gain. That all may seem trivial to Americans but it’s interpreted differently by a Chinese audience.

We left Juneau that evening and by morning had docked in Skagway. Skagway is a small tourist-y Gold Rush town a little farther north.

We avoided the curio shops in town and immediately headed for the scenic railway. The railbed was an engineering marvel, winding its way up the steep side of the mountain, passing over trestles and through tunnels. We were told that one of the tunnels was the longest train tunnel in the U. S.

The train climbed the mountain all the way to the Canadian border and then returned to Skagway. It was a remarkable and somewhat harrowing trip.

North to Alaska
Next Stop, Ketchikan
Port of Call: Juneau

I found this report from Global News interesting:

A rare form of sudden and potentially permanent vision loss is becoming the latest safety question surrounding blockbuster GLP-1 drugs, with patients filing lawsuits in the U.S. even as regulators overseas have already added warnings.

The condition is called nonarteritic anterior ischemic optic neuropathy, or NAION. It occurs when blood flow to the optic nerve is reduced, potentially causing abrupt vision loss that can be permanent.

The complication appears to be extremely rare. The bigger issue is that researchers still disagree over whether drugs such as Ozempic and Wegovy actually cause it.

That uncertainty is now moving from medical journals into courtrooms and regulatory agencies.

The EU has already taken action:

The European Medicines Agency reviewed clinical trials, post-marketing surveillance, scientific literature and other available evidence before concluding in 2025 that NAION should be classified as a very rare side effect of semaglutide.

European regulators estimated that it could affect up to roughly 1 in 10,000 people taking semaglutide.

Several large epidemiological studies reviewed by European regulators suggested semaglutide exposure among adults with Type 2 diabetes was associated with approximately twice the risk of developing NAION.

Warnings or information about NAION have also appeared on drug labeling in countries including the U.K., Japan and Australia.

I think that as a stop-gap measure the EU action is prudent but I saw a great opportunity for AI. Give AI everything known about both a significant number of patients who developed NAION and patients who didn’t including whether they took GLP-1 or not and whether they went on to develop NAION: retinal/OCT images, visual acuity, refraction, blood pressure and medications, A1c trajectory, renal function, sleep-apnea information, age, BMI, lipids, and so forth.

More importantly, give it the trajectories. What happened after GLP-1 treatment began? How rapidly did the patient lose weight? How rapidly did A1c fall? Did blood pressure fall while antihypertensive treatment remained unchanged? Was there dose escalation, vomiting, dehydration, renal impairment, or some other change shortly before the event?

Then use AI to look for combinations of characteristics and changes that distinguish the tiny number of patients who develop NAION from the thousands who do not. Freeze the associations it discovers and test them prospectively against a separate population it has never seen.

The useful question may not ultimately be whether semaglutide can cause NAION. It may be why semaglutide appears to cause NAION in one particular patient while having no such effect in thousands of apparently similar patients.

That should be doable nearly as quickly as the data can be collected.

I found Peter Tanous’s piece at The Hill advocating a value-added tax (VAT) frustrating for a number of reasons. The first reason is that I agree with him. We do need a VAT. Just not structured or implemented as he suggests. His argument, basically, is that if you eliminate Medicare, Medicaid, and Social Security it still doesn’t mean we won’t be running the federal government at a deficit, i.e. adding to the debt:

Start with the hardest number in Washington. Medicare costs about $1 trillion in fiscal 2026. Eliminate it entirely — as politically unthinkable as that is — and you close only about half of the current deficit. Social Security, at $1.7 trillion and rising every year, is even further off the table. Wipe out every domestic federal agency most people call “waste” — the EPA, the Department of Education, the State Department, foreign aid, all of it — and you’ve touched only 13–14 percent of the federal budget. There is no spending-cut path that closes this gap. The math forces the conversation onto revenue.

Here’s the full picture. The Congressional Budget Office’s fiscal 2026 baseline shows total federal spending of roughly $7.7 trillion. Of that, 73 percent, about $5.6 trillion, is mandatory spending set by law — no annual vote required — and covers Social Security, Medicare and Medicaid. Discretionary spending, the part Congress actually votes on each year, is roughly $2.0 trillion: about $900 billion for defense, about $1.1 trillion for everything else, “waste” categories included.

Since Mr. Tanous never defines what he means by a VAT, I will assume he means a conventional credit-invoice VAT rather than merely a federal retail sales tax collected at the point of final sale.

Although Mr. Tanous mentions some exemptions he fails to mention what are extremely likely to be exempt: medical service fees. Legal services are also an obvious candidate for exemption. Lawyers would have an extraordinary degree of influence over the drafting of the legislation not least because Congress itself contains so many lawyers and the historical record gives little reason to expect Congress to resist demands for preferential tax treatment from politically influential professions. That changes his mathematics considerably, I would argue to the point that it no longer solves the problem he claims it will. I would add that I find exemptions objectionable. That’s picking winners and losers which increases the incentives for lobbying to exempt your own sector from the tax. That’s a slippery slope whose endpoint is no VAT.

At present many state and local governments are highly dependent on sales taxes. According to the Tax Foundation, 35 states receive 25% or more of their revenues from sales taxes. Increasing prices by adding a VAT will decrease consumption which will in turn reduce state and local revenues. And, as I’ve mentioned before, reducing household consumption in an economy as dependent on ours will have a deleterious effect on the economy at least in the short term. History suggests that the Congress will respond to such effects either by spending more which will reduce or eliminate the effect of the tax or by eliminating the tax.

The editors of the Washington Post and Wall Street Journal columnists are against Social Security. I think that’s the simplest way of explaining their editorials this week. Joseph Sternberg opposes raising Social Security max:

while the editors of the Washington Post oppose raising the payroll tax:

As Congress stares down the estimated 2032 insolvency date for the main Social Security trust fund, some politicians — even some Republicans who normally oppose tax increases — are talking about raising the payroll tax to fund the program. While some tax increases will probably be necessary to improve America’s overall fiscal predicament, the Social Security payroll tax is the worst candidate for a hike.

I don’t oppose changing the retirement benefits formula so that the higher earners who are not already retired receive lower Social Security retirement payments. Unfortunately, that won’t “save” Social Security even if you eliminate it entirely.

Neither provides a financially plausible alternative for preserving Social Security’s present function. What the Post proposes isn’t a way of saving Social Security. It’s a way of changing the subject from how to finance Social Security to what might replace much of it. It’s a proposal for what should replace part of Social Security after the financing problem has somehow been solved.

That’s a not unreasonable argument for the top quarter of income earners but it’s a lot weaker for everyone else for several reasons. The first is that roughly the bottommost half of income earners own no assets. They don’t own their homes, equities, bonds, or mutual funds. They depend on Social Security when they become too old to work. They’re not just being opportunistic.

There are two additional issues worth mentioning. First, that assets always rise in value is not a law of nature. IMO it’s an artifact and the most likely explanation is what’s called the “Greenspan put”—the operation of the Fed. That might be explained simply by the Fed’s target of 2% rather than its statutory mandate of “stable prices”. The effect of that is to hurt lower income earners and benefit higher income earners.

There are also the macronomic effects of eliminating Social Security. Social Security isn’t merely a retirement program. It is also a very large transfer of current income to a population with a substantial propensity to consume it. Reducing benefits therefore reduces consumption and aggregate demand. CBO itself projects that Social Security benefit reductions would initially reduce consumer spending, GDP, and employment. Reducing that would have a deleterious effect on an economy as dependent on consumer spending as ours.