"The incentive seems to me to be simple: Work less:"

I take it you can't grasp the concept that capital works. Any sound economic policy creates an environment where people with access to capital actually employ that capital. What happens next? That capital investment adds to the economic pie and eventually creates more wealth, not less wealth.

That is what we want in this country. We want to be a friendly home to domestic and foreign investment, because it's that very investment that helps secure the jobs of those waiters and waitresses you seem to love so much.

Or, we can make like Europe and be resigned to permanent near double-digit unemployment and a big fat socialized care system - a kind of "spread the misery" system.

"and especially the proposed elimination of capital gains, there is no reason to think this will happen"

Every time we have cut capital gains taxes, revenues to the treasury have increased. In fact, during the 2008 debates this is the only question Charlie Gibson posed to Obama when he queried Obama's desire to raise capital gains taxes out of some misplaced desire of fairness.

"So what you have is economic growth whose only beneficiaries are the owners of the capital."

This is an absolutely fascinating comment. I believe you're saying that there have been times in the past where the economy has grown and only people who hold revenue producing financial assets have benefited - is that what you're saying?

The economy is not growing today, or it's growing so anemically its not generating any ancillary benefit; It's just growing enough to keep itself from falling back into an abyss (AKA- Depression).

If the economy was growing at a normal 3-4% pace, EVERYONE would benefit - the rich and the poor, the holders of equities and bonds and those who just clean tables for a living. A rising economic tide raises all boats, despite what the idiotic campaign commercials of the AFL/CIO have to say.

This is the most bass-ackwards understanding of the economy I've ever confronted! As you've formulated it, the purpose of the economy is to create work for the people and money for the government. In reality, these are both necessary evils that we endure to get the real economic benefits: namely goods and services that people want.

The theoretically ideal economy would be one in which everyone gets everything they want, and no one has to do anything to get it. Obviously, that's impossible, both because you can't get something for nothing, and because human ambition can never be completely satisfied. But the quality of the economy can be measured by the degree towards which we approach that ideal. That is why, for example, the fact that people work 40 hour weeks today is an improvement over the economy of the 1890s, when the average was 60-85, depending on who's numbers you believe.

Have to agree with Greetings Earthling's post. What Pawlenty and other Republican pols increasingly support is a tax on the middle class (taxes on wages and salaries, purchases, and property) but not the earnings of the wealthy. I'm a lifelong Republican, have contributed to several Republican campaigns, and have even donated to NR fundraisers, but I cannot and will not support a Republican Party or candidate who supports shifting the tax burden to the middle class while slashing taxes on the wealthy.

I suppose Pawlenty's argument is that tax cuts would stimulate job creation, but because of the tax cuts the government would see no new revenue to reduce the deficit, and, because of Republican support of mass immigration, the new jobs would not necessarily go to US citizens. Employers would have no incentive to raise wages in tight labor markets, because they would no longer even exist.

I'm a conservative, but a middle class conservative who supports these types of policies is a fool. I'd sooner vote to re-elect Obama.

I don't find the results of a non-conservative Republican administration to be substantially more desireable than the results of an Obama Administration.

See: President George W. Bush, 2001-2009

It seems to me that nobody who wants to get elected is going to tell the hard truths that the American people need to hear about the sorry state of our country's balance sheet and income statement. For the eventual winner, that will probably not occur until after the election. President Obama gets this and has positioned himself accordingly, and now so has Tim Pawlenty. It's really a shame that this situation exists, but it is what it is. As every day passes, it becomes increasingly likely that it will be the currency market that shares the hard truths with the American people.

Wow, can't remember ever thinking a candidate wanted too big of a tax cut. But two points that may make this more reasonable than it sounds at first glance. First of all, it gives him some negotiating room if he gets elected. But more importantly, I wonder how much of the revenue impact from reduced rates would be counterbalanced by eliminating credits, deductions, etc. Actually taxing everything at the 10% and 25% rates Pawlenty proposes might even be a tax increase if you got rid of all the credits and deductions.

The Fed does not know how to keep the growth of nominal income stable so it would be extremely unwise to have that as a policy target. Nor, for the record, does anyone else as it is a mix of real and nominal variables.

Focus on roughly maintaining a stable price level. This would be a big contribution to economic stability and is, by the way, about the only thing that any central bank has ever shown any ability to do.

Re: the big problem with the capital-gains tax is that the assumed underlying investments in capital producing industries are illusions.

Most capital gains come from moving electrons around the secondary and tertiary equity, commodity and currency trading markets. It's merely economic churn that the underlying companies never see. There is no investment in manpower and machinery to provide tangible products and services.

You can lower the capital gains tax all you want, but the way the Ponzi Scheme U.S. financial infrastructure is set up the benefactors only be the investment banks and the hedge funds swapping exotic derivatives with absolutely no intrinsic value.

P.S. While Joe Sixpack gets hammered by the IRS.