- if the Republicans accede to the Democratic demand for tax increases, that is not a permanent change--it's something which will be changed down the line. Look at tax rates after the Reagan/Rostenkowski tax deal in 1986--they've gone up and down as it seemed appropriate and according to the power of the parties.
- if the Democrats accede to the Republican demand for changes in entitlement programs, those are permanent changes. Look at the Greenspan/Reagan Social Security "fixes" in 1983--the change in the age for full eligibility for Social Security was changed to 67. No one expects that change to be changed--it's a ratchet effect.
Tuesday, November 22, 2011
Compromise and the Ratchet
One aspect of the discussion over the deficit and possible compromise is the ratchet effect: