In two essays — one in the Summer issue of National Affairs, a second in the American — Arnold Kling and Nick Schulz, who are smart, predict that "wealthy industrialized countries such as America will shift their consumption toward education and healthcare over time relative to other goods and services." They may or may not be right about that. But I think they may be on to something with this:

The problem today is that government policy is impeding innovation and job creation in these sectors. Both education and healthcare are already heavily influenced or controlled by federal and local government. That means that the evolution of those sectors is driven by top-down command and control, rather than by bottom-up innovation.

The chairman of the House Budget Committee, Paul Ryan, has a short post up defending Speaker Boehner's budget bill, saying that while it is "far from perfect," it "takes an important step in the right direction by cutting $1.2 trillion in government spending over the next decade. Critically, it does this without resorting to Senator Reid's gimmicks and without imposing the president's preferred tax increases on American families and the struggling economy." The Congressional Budget Office, meanwhile, "estimates that the legislation would reduce budget deficits by about $850 billion between 2012 and 2021 relative to CBO's March 2011 baseline adjusted for subsequent appropriation action. As requested, CBO has also calculated the net budgetary impact if discretionary savings are measured relative to its January baseline projections. Relative to that baseline, CBO estimates that the legislation would reduce budget deficits by about $1.1 trillion between 2012 and 2021."

The Wall Street Journal has an editorial tonight making the same point about George Soros and regulation that was made here this morning.

It ain't over till it's over, and politicians being politicians, the House Republicans may yet cave. There's already some grumbling against the Boehner plan in the right-wing blogosphere. But for now at least, they sure deserve some credit for holding the line against tax increases under intense public pressure from President Obama. It's hard to trace the moment this Republican turn toward first principles began; maybe it was a reaction to ObamaCare. But if President Obama can misleadingly invoke the language of President Reagan, Speaker Boehner, if he holds on and wins some reductions in government spending without agreeing to President Obama's demand to raise taxes, may yet prompt his supporters to invoke President Kennedy and call him a profile in courage.

As a general rule I make an effort to keep the tone elevated around here by avoiding sweepingly dismissive adjectives, but if there were ever a moment for an exception, it would be this breathtakingly stupid article in today's New York Times by Michael Powell, which runs under the Web headline "Government Can't Improve Economy? Tell That To the South Bronx."

Mr. Powell writes: "what is there should (but almost certainly will not) give pause to those who argue that government lies at the source of our ills." He writes, "The Bloomberg administration will, in the end, have poured more than $8 billion into building and preserved 165,000 apartments....The era of government may be in danger. But it saved the South Bronx."

There are at least three problems with this tale.

Bill Kristol makes a good point about the line in President Obama's speech last night in which the president said, "what makes today's stalemate so dangerous is that it has been tied to something known as the debt ceiling – a term that most people outside of Washington have probably never heard of before." Mr. Kristol writes, "Consider the condescension implicit in the president's statement...These 'people outside of Washington' are not little children being lectured on an obscure subject by a worldly adult. These people outside Washington are ... citizens. Judging by the polls, most of us have opinions about whether, and under what conditions, the debt ceiling should be raised. We don't seem to be as ignorant as Obama thinks we are of the term or concept of a debt ceiling. But the president assumes we've never bothered our pretty little heads about such a thing."

Link via Mike Allen's Politico Playbook.

"Raise Taxes on the Poor?" is the headline on the latest piece from libertarian law professor Richard Epstein, who makes the case for a flat tax as an improvement on the alternative progressive rate structure:

Under a progressive system, the amount of a tax owed depends both on the person who earns the income and the year in which that income is received. Given the taxing difference between high and low brackets, high net-worth taxpayers have strong incentives to shift their taxable income to their low income relatives, artificial tax entities, into low income periods, or all three.

Michael Medved, writing in USA Today:

When President Obama pushes the idea of "taxing the rich," he's really talking about placing new obstacles before those trying to get rich. His desired tax hikes won't impact the "millionaires and billionaires" who draw his derision as much as they will cripple strivers who hope someday to become millionaires and billionaires. U.S. tax authorities don't go after wealth once it has been accumulated but rather grab their share from income; high rates hamper earning, not luxurious living.

This explains the puzzling predisposition of progressive plutocrats who live off their investments (like various Kennedys and Rockefellers) to favor high tax rates on top earners. It's not really noble for those who have already earned their pile to back new burdens on those hard-driving, up-and-coming challengers trying to enter the charmed circle of privilege. Those hurdles will hardly benefit the nation: isn't it obvious that America needs more, not fewer, millionaires?

What irony that regulation, which George Soros' political spending in America has done a fair amount to increase over the years, is now, if you believe the explanation in this Bloomberg article, responsible for shutting down the business that made Mr. Soros his fortune:

Soros's sons said they took the decision because new financial regulations would have made it necessary for the firm to register with the Securities and Exchange Commission by March 2012 if it continued to manage money for outsiders. Because the firm has overseen mostly family assets since 2000, when outside money accounted for about $4 billion, they decided it made more sense to run it as a family office, according to the letter.

The rule calls for hedge funds with more than $150 million in assets to report information about their investors and employees, the assets they manage, potential conflicts of interest and their activities outside of fund advising. Registered funds will also be subject to periodic inspections by the SEC.

President Obama, in his televised talk tonight, trotted out the same false choices he provided in his USA Today oped. The same objections apply. He draped himself in Reagan, as I predicted in my column last week. He was more pointed and aggressive than he's been in some other recent appearances in aiming at the "wealthiest," a term he used four times in a short speech. His delivery, particularly early on, was awkward, with almost a deer-in-the-headlights uncomfortable look. And even its internal logic was inconsistent. First, he praised his own "balanced" approach because it "asks everyone to give a little without requiring anyone to sacrifice too much," and because "the burden is fairly shared." He faulted the Republican approach because it "doesn't ask the wealthiest Americans or biggest corporations to contribute anything at all." (As if they aren't contributing anything at all now.) And then, he says, "Keep in mind that under a balanced approach, the 98% of Americans who make under $250,000 would see no tax increases at all. None." It's totally contradictory: first he brags about fairly sharing the burden and asking everyone to give a little and faults the Republicans for not asking the wealthiest to contribute anything at all, and then he turns around and promises "the 98% of Americans who make under $250,000" that they aren't going to have to sacrifice or share any burdens.

My weekly column, up at Reason.com, focuses on "Five under-appreciated points about the federal budget and debt ceiling."

Paul Krugman makes some sense, for once:

Wait, you say: won't raising taxes reduce incentives to work and create wealth? Yes, it will (although such effects are greatly exaggerated in our political discourse.) But means-testing benefits does the same thing. Conservative economists love to point out that means-tested programs like food stamps in effect create high marginal tax rates for low-income families, since they lose benefits if they work and earn more. Well, means-testing Medicare would do the same thing: your reward for a life of hard work and accumulation will be higher copays and deductibles....What we need is actual control of health costs. Means-testing of Medicare is just a badly designed, unfair form of taxation.

Hedge Fund manager Daniel Loeb, who manages between $7 billion and $8 billion at Third Point, has a new investor letter out: "while Washington burns, President Obama is fiddling away by insisting that the only solution to the nation's problems — whether unemployment, the debt ceiling, or deficit reductions — lies in redistribution of wealth. Perhaps the difference between President Obama and many Americans is that the President sees prosperity as a sign of 'unfairness' that needs to be corrected by government via higher taxes and increased regulation. Perhaps a plan that led the way forward by expanding opportunities rather than redistributing outcomes and emphasized growth and opportunity for all would be met with less political resistance."

Michael Barone, writing in the Washington Examiner:

He has encouraged the pliant press to depict Republicans' opposition to "revenues" -- translated into English that means tax increases -- as "intransigence."

But it's Obama who has been intransigent about insisting on tax increases that voters endorsed tepidly at most in 2008 and that they clearly repudiated in 2010.

Obama promised to fundamentally transform America and he and his party have managed to increase the federal government's share of gross domestic product from 21 percent to 25 percent -- a huge policy change. They are striving now to keep it at that level, permanently.

Republicans want to reverse that enormous policy change, and many are ready to denounce any debt limit deal that leaves them short of that goal.

Before doing so, they ought to consult the Constitution. To achieve the changes they want and that voters endorsed in 2010, they need to win again in 2012. The deal that gets them closer to that is what they ought to be seeking now.

Right-wingers like Paul Ryan and the Heritage Foundation who want to means-test Medicare or Social Security have a new ally: Rep. Barney Frank. From Talking Points Memo:

"A means test done in an efficient way isn't a problem," he said. "I understand that. Like in Social Security. We already have a partial means test. I get Social Security. My Social Security income is taxed as it should be. I would increase the tax rate on my Social Security income. You don't want to means test it up front -- that becomes awkward -- but say you're making more than $100,000? Tax my Social Security at 95 percent. That's fine. There's an easy way to do that."

On Medicare, "I would be for increasing copays for people above a certain income," Frank said. "I think high copays for people making more than $100,000 is perfectly reasonable."