Mallaby's Death Tax Dreck

Suppose your spouse comes to you and states that he/she has just discovered that your near-retirement mother-in-law's finances are in a shambles. She had some money to tide her into old age, but a combination of things like injudicious spending and a moderate gambling habit have whittled down her resources. So your mother-in-law's care is now your and your spouse's responsibility. Let's further suppose that you make an above average living in a stable career and your spouse makes pocket change doing odd jobs, bringing in only enough to cover incidental luxuries like a cell phone or your daughter's gymnastics lessons. Faced with the new liability of your mother-in-law's future expenses, is the absolute dumbest thing that you could be to let your spouse cease doing their odd jobs? Sebastian Mallaby of the Wash Post would think so:

"The federal government faces a future of expanding deficits. Thanks to the baby bust and medical inflation, spending is projected to rise by nearly 3 percent of gross domestic product by 2030, a growth equivalent to the doubling of today's Medicare program. What is the dumbest possible response to this? Take a source of revenue and abolish it outright."

Failing to focus on the real problem, the mother-in-law's finances, both now and how they might evolve. That is not the dumbest thing you could do. Failing to contemplate and explore alternative uses of your spouse's time and skills. That's not the dumbest thing you could do. Obsessing over a measly amount of lost income that has no hope of achieving a solution for you is the dumbest thing you could do naturally. Since Mallaby doesn't shy away from labeling the opposite argument dumb, I won't shy away either. Mallaby is a dope. Regardless of your solution, the necessary approach to addresing a funding gap is to attack the largest sources of the gap first. I think they even teach this in high schools (although one can never be sure just what they teach in high school these days), it's called the Pareto Principal. In business you either attack your largest costs or go after your largest revenue opportunities. With household finances, you get a better job or downsize your living space or sell assets or cut out vacations, you don't waste too much time thinking about the impact of reducing your daughter's allowance from $5/week to $3/week.

Alas this argument can't really hold water, so that is why he supplies a litany of squishy egalitarian platitudes to buttress his position - fostering equality and preserving charitable giving and so forth. I think these arguments are easily rebutted and even reprehensible for other reasons, but at least they are aren't patently illogical like obsessing over medicine drops of revenue that are needed to fill a fiscally empty pool. Greg Mankiw, even displaying his trademark over generosity to policy opponents, points up the large gap.

UPDATE: Well, after I've gone ahead and posted this, Mankiw takes on Mallaby as well. I think it is pretty clear that Mallaby, like Krugman et al., doesn't have much in the way of cogent economic arguments but is more or less in a huff.