I do feel the need to semi-object from the view that entitlement programs will require "large cuts in promised benefits or taxes vastly higher than anything ever experienced in U.S. history."  yglesias

I'm not sure I know what Matt's "semi-object[ing]" to, but Mankiw's statement is unremarkable.  Once baby boomers retire in substantial numbers the general budget subsidy provided by excess FICA receipts will be gone.  There are two solutions.

Reduce retirement benefits and maintain the subsidy or raise taxes to replace the lost subsidy.  [A third not mentioned is to reduce discretionary spending but there's not much savings there.]  

Addenda:  Last week Matt agreed that we'd need "massive tax increases" for the simple reason that Repugs have enacted massive income tax reductions which is generating an unsustainable deficit.

Mankiw may be an opportunistic careerist, but I'm not sure he and Matt disagree on solutions. 

"Vastly higher" in Matt's phrase last week was a rhetorical figure to create a parallel for comparison purposes. The current "massive" is modified by "higher than we've ever known" which is a wowzer.

Maybe I'm missing something, but sounds like Ellen's repeating the wingnut talking point that social security is going to be bankrupt. I thought we'd done that one to death, but I guess you can't stop the "repeat it until reality changes" crowd.

The libertarians are still peddling the same old scam. Adopt any economic policy as long as it doesn't require the super rich to give up any of their wealth. This country is wealthy enough to afford the social programs that are needed so that everyone lives a decent life.

Some stats (which I've pointed to before):

The actual use of federal revenues

The change in the wealth distribution over the past 20 years. (Some of the other items on this site are interesting as well).

My comparison between the rise in wealth and the rise in the national debt over a similar period 

Finally my 2 cents on what we could do about it:

Wealth Redistribution 

The history of political philosphy is always one of why it is important that the "haves" retain their wealth. Whether it is "the poor will always be with us", to "the divine right of kings", to "social darwinism" the message is the same.

We don't even need unproven economic theories to counter this libertarian nonsense, just look at how much better off the working class is in Western Europe, on average than here. Spending less on militarism and yachts, actually does allow for more money to be available for heath care and retirement. The fact that these examples are right in front of us is why the libertarians have to keep up such a barrage of  disinformation.

Why is it, if think tanks do such good economic analysis, the only people they can get to support their "scholars" are those with a vested interest in maintaining their privileged status? Why do the think tanks have to publish their own "research" results? Why don't they publish in peer-reviewed technical journals like scholars in other disciplines?

It's time to stop giving these economic whores any real consideration. Notice that little of their material gets cited by recognized academics in the rest of the world. 

Did anyone else notice how Mankiw's "good taxes" are paid by individuals, but "heavyhanded regulations" are imposed on corporations?

Even his seemingly shocking admission that not all taxes are bad is a formula for transferring the burden away from corporations and onto private citizens.

Also, why on earth shouldn't anyone bash the Fed? Unemployment is not some unfortunate side effect of hiking interest rates, it is the very mechanism by which rate hikes work.

Of course, the beneficiaries of high interest rates are banks, and that's exactly what the Federal Reserve is. The notion that it should be exempt from criticism is beyond ridiculous; it's destructive.

I agree for the most part; however I'm confused as to how hikes in the fed funds rate helps banks financially.  Not saying it doesn't, I just don't understand how that would work.  Can you explain?

 RG

Since low interest rates encourage the carry-trade and lower the costs of leverage, I would think that low rates benefit banks, greatly.  And too, high interest rates discourage ordinary borrowing activities and reduce the number of transactions on which banks earn their "spread" and their servicing fees.

I'm not sure that higher rates benefit banks any more.  By and large banks have tried to insulate themselves from interest rate levels by using all sorts of sophisticated money market gadgets like derivatives etc.  So the actual level of rates is not the big factor it used to be.  What's more important is the rate of change: i.e. whether rates are going up or down quickly.  On the way up banks may get squeezed because they cannot raise the rates they charge customers fast enough to keep up with their money market costs, which are set by the day-to-day workings of the financial markets.  So on the way down banks are notoriously slow to lower their rates in order to make up for the squeeze they experienced before.
Higher interest rates do benefit those consumers who have interest bearing savings accounts, but that may be offset by the fact that higher rates are usually associated with lower corporate profits and therefore, presumably, a declining stock market.  Also higher interest rates typically occur in periods of higher inflation which is another problem for banks.  As inflation rises borrowers benefit since the value of the dollars they use to pay back loans is less, in purchasing power terms, than the dollars they originally borrowed.
BTW the rest of Mankiw's article is a real mixed bag.  For instance I don't recall him arguing, publicly, for a gasoline tax which would be far and away the best way to wean the country off gas usage.  Saying something like that when you're off the team strikes me as a bit lame!  As for the 'vastly higher taxes' comment: he completely ignores his own role in abetting the recklesss fiscal policy of this administration.  The choice is not just between taxes and cutting benefits.  It is between revenues and expenses in total including things like defense.  We have not had a clear debate about all the options because people like Mankiw try hard to keep the focus on the simple tax/benefit balance, while ignoring other sources of funding such as cutting the rampant waste at the Pentagon [which should surely anger anyone like Mankiw who seems to stress efficiency].
Finally Mankiw, like all right wingers, refuses to take a full view of the provision of health care.  He only frames it in the context of the piece currently paid for by the government [which he keeps arguing needs to be reduced in order to avoid those draconian taxes].  He completely ignores that part of the economy which is now privatized and which is horrendously inefficient: the value being provided by the mish mash of bureacracies like the insurance companies could most likely be more cheaply provided by the government thus releasing money into private hands for other things.  We, on the left, need to keep pressing the Mankiws of the world to include their precious private sector in the wider social benefits/cost discussion so we can reach a complete rather than partial solution.

Actually the trajectory of Manikiw's thinking is not the corporation vs the individual.  His real objective is the protection of inherited wealth.  He opposes regulations that control the use or movement of capital, and he opposes taxes on capital and the earnings of capital.  He favors taxes on consumption and income earned by individuals as long as the tax is reasonably regressive.  He claims to be championing the entrepreneur, but the primary effect of the policies he espouses is to line the pockets of those who have inherited wealth and to enforce a status quo that will ultimately kill individual initiative and feed an increasingly corrupt establishment.  The corporation is but a creature of capital.  I am amazed at how many of the readers here appear to be taken in by Manikiw's scam just because they like the idea of a gas tax.  In a similar vein, people just don't understand the real Social Security scam.  Greenspan et al engineered about as regressive a flat tax as you could imagine when they saved Social Security with a massive FICA tax increase.  That regressive tax is consumed annually in the general fund.  When the Social Security IOUs come due they will have to be repaid out of the general fund.  That creates a potential threat in the form of progressive tax increases that the protectors of inherited wealth like Manikiw want to guard against.  Their real goal is either to cancel the program and renege on the IOUs (i.e. reduce benefits) or to repay them with more regressive taxes.  In other words, they want to make sure that Greenspan's flat tax is permanent.  They need to do all of this while protecting the wealthy's cash cows such as the T Bill and defense spending.  Once you break the code, it is easy to see what these guys are about.  Nothing that Manikiw said contradicts the real policies of the Chimp administration and its real owners.  Admitting that the current fiscal policy is unsustainable is not a corrective.  It is just part of setting the stage for the next step phase of the con, and if you have any questions about how that will work, study the workings of the IMF.   

Toll booths?  Just how far behind the times are you Americans?  In civilised countries users have an e-tag that's detected by a sensor in the roadway and are either automatically billed or prepay the tickets (depending on their preference).  Voila, no toll booth queues. That's the "new technologies" Mankiw was referring to.

And it never ceases to amaze me that Americans would rather have intrusive CAFE regulations than a proper gas tax that does the same job far more efficiently, and allows you to reduce other taxes at the same time.

I agree that the rest of what Mankiw said is either hypocritical or just untrue. 

Actually, minting pennies is not a really significant expense because pennies circulate forever.  If we're really trying to save money on currency, it would make a lot more sense to eliminate the dollar bill, which has a circulation life of about six months.  Unfortunately the dollar is firmly cemented as a piece of Americana, which is why attempts to work in dollar coins (that switch would save a lot more money than eliminating the penny) have always failed.

There's no positive reason to get rid of the penny in terms of budget savings.  I admit there's also not much reason to keep minting it, since it's basically worthless. 

RG 

Much of the article is drivel, but i like carbon tax.  It is a nice regressive tax, a green policy that enlightened conservatives like (unlike Mankiw's erstwhile employers).

But it is a regresive tax even so, so the rest of the tax code should become more progressive once it is introduced.