> Quite a lot of people with accountants paid the highest tax bracket rates during the Clinton era, and the ~70% rates prior to the Reagan era.

The highest marginal rates in the Clinton era were about the same as they are now, and people did not pay ~70% effective rates prior to the Reagan era. The deductions they used to avoid that were eliminated at the same time as the rates were reduced.

> It's becoming increasingly clear the relationship between the stock market and interest rates, and the economy and possibly the politics will not accept an increase in rates. Even the most recent attempt at doing so caused an immediate backlash, even if it's good policy.

Because you can't just raise interest rates. Raising rates when people are heavily in debt is deflationary, which is catastrophic. You need to create inflationary pressures at the same time to counterbalance that or it all goes south.

> If there's a recession, how do we combat it by lowering already low interest rates?

Combating recessions by lowering loan interest rates is the bad policy. It's a corruption of the Keynesian policy of having the government borrow money so it can spend without collecting taxes, to stimulate the economy during a recession.

The problem is that in the original formulation the government was then expected to collect taxes during the next boom and use them to pay back the debt. This generally didn't happen anyway (the government debt keeps getting bigger), but the real problem is that it can't work that way in the private sector because raising interest rates doesn't generate money indebted people can use to pay back their debts with, it takes away money because they have to pay more interest on their existing debt, which induces defaults and tanks the economy.

> How do we get a more representative political class, when it functions on money as if politics is a product that you can buy? Establish only living persons can contribute a thing of value to a campaign, and perhaps even only citizens can do so?

This is really not the problem. The problem is that most politicians are shortsighted or bad at economics.

You take a policy like the mortgage interest tax deduction and you sell it to everybody. The banks like it, more people taking out bigger mortgages. Current prospective homeowners like it because it reduces their new mortgage payment. Current home sellers like it because it becomes easier to find a buyer to pay your price.

But the long-term effect is to gradually raise housing prices to an unsustainable level. And then it's hard to undo, because all those factors are still there. Getting rid of it reduces business for the banks, it raises mortgage payments for new home buyers until housing prices adjust (which takes a while unless there is a big crash), and it makes it harder for sellers to find buyers.

They actually staged a minor coup recently and did something genius by raising the standard deduction to the level that most homeowners are no longer taking the mortgage interest deduction. Which reduces the deleterious economic effect of the mortgage interest deduction, and in a couple years when they propose to get rid of it, not enough people will care to prevent it from happening. That's the kind of ingenuity we need to get out of this mess.

Just thinking about the campaign money misses the goal. Many of the problematic interest groups are the likes of the AARP, who get there not by having a lot of money but by having a lot of soft power and then advocating policies that aren't even in their own members' interests (e.g. expanding Medicare coverage in a way that unsustainably explodes healthcare costs while somebody else pays for it is not in the interest of someone who has working children and wants them to have a good life).

> Instead of borrowing $2 trillion in cheap loans in exchange for infrastructure assets, the political class chose to borrow $2 trillion for tax cuts primarily for the wealthy. So it isn't just poor people going into debt to buy things.

Government debt is bizarre and counter-intuitive. They never really pay it back, they just re-borrow it again from somebody else, and that's likely to continue indefinitely.

The tax cuts are a combination of good and bad. The idea of billionaires paying less is fairly idiotic, but companies are now finally repatriating money they've held offshore for years and returning it to shareholders, which is good because it allows the shareholders to invest it more efficiently -- Apple can stick to making iPhones and not have to manage an internal mutual fund because the tax code de facto requires it even though they have no specific competence in doing that. Which should mitigate at least some of the effect the previous rules had of growing these companies so large.

The problem is that the changes we actually need are more fundamental than a few little tweaks, but big changes are hard to pass. For example, one of the best things we could do is replace income tax with VAT or DBCFT and replace all federal welfare programs and subsidies with a UBI. You can make that as progressive as you like by adjusting the amount of the UBI.

But the benefit of doing that is why it's so hard to do -- there are so many interest groups with an existing carve out in the tax code that they all array against any clean slate proposal like that, even if it's against their own interests on net. Because they have a lobbying organization all set up for preserving the capital gains exemption for home sales but nothing exists to say "no, actually, this bill as a whole will benefit our own members in non-real-estate-related ways by more than the cost of not satisfying our organization's stated policy goal and we should just shut up and let it pass."

> De-feudalizing this system by either politics or law is going to be very difficult. And that leaves something economically breaking in order to compel some kind of political change, whether non-violent or otherwise.

I have some minor hope that we could get somewhere by convincing everyone on both sides that doing everything at the federal level is a bad idea and hand it all over to the states. Then different states can do different things and see which one works, then either adopt the policies that turn out to work the best or just agree to disagree and each do their own thing.

But that's as big a change as anything and has the same level of difficulty with challenging established interests.