Sausages

The old saw holds that politics and sausages are two things one should not watch being made.  I have seen people make sausages; I'll take that over politics any day.

In a triumph of expediency over principle, House Republicans have endorsed a bill that both raises the federal minimum wage and cuts the estate tax:

The House last night voted to boost the minimum wage for the first time in nearly a decade while also permanently slashing the estate tax, a coupling that GOP leaders calculated might garner enough Senate support to become law.

Principled advocates of small government should cringe at the prospect of such deals.   To begin,  nothing guarantees the "good" parts of these compromises (reduced estates taxes) survive longer than the "bad" parts (a higher minimum wage).  A future Congress might increase the estate tax without lowering the minimum wage.

Worse, endorsing minimum wage hikes means small government advocates have conceded the moral high ground.  Minimum wages are a badly targetted method of helping the poor (see Greg Mankiw's most recent blog).  The estate tax is bad policy on both efficiency and equity grounds (see Greg Mankiw's earlier blog).   Thus the compromise is doubly evil: it endorses a policy that seems to help the poor but probably hurts them; and it implies the estate tax is an evil "pro-rich" policy that must be balanced with a "pro-poor" policy.

The problem, of course, is that many Republican politicians are politicians first and small government advocates second (if then).  That is understandable given the realities of self-interest, but it is also sad.

Kielbasa anyone?

Comments

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There's a lot of areas the government should let the market just work. I don' think there should be an estate tax. Let the money pass to heirs, who likely will buy things that are taxed anyway. It isn't my money or the governments. It's seems that simple to me.