Archive for the ‘Fiscal policy’ category

Megan McArdle: Is it her reading that’s the problem? Her comprehension? Her honesty? You Make The Call!

August 1, 2011

I know that this is all kind of moot in light of the events of the last few days, but someone passed word of this McArdle post to me yesterday, and it seemed to me to capture so much of what has gone wrong in the way the media engaged the debate over deficits and their discontents.

In this particular example of Village media retailing a false narrative, She Who Is Always Wrong™ took issue with a chart referenced by and a conclusion her actually, you know, accomplished colleague* James Fallows has been arguing for a while.

And yes, I know, a cage match between Fallows and McArdle is kind of like watching Ali (in his prime) against the Weehauken Regional Golden Gloves champion, at least as far as intellect and journalistic chops are concerned.  McArdle would win, no doubt, were the judges scoring condescension and high-school in-group wit.  But when it comes to actually reporting an issue, understanding what one has been told, and reporting both facts and (clearly demarcated) analysis/opinion, Fallows v. McArdle wouldn’t be licensed even in Nevada.

But that doesn’t stop the divine Ms. MM, unsurprisingly.  Her role is not to be responsible, or accurate, or even coherent.  It is to advance the approved Central Committee line — which, McArdle, loyal and very effective apparatchik that she is, seems to know before the word from on high need ever get spoken out loud.

Hence her attempt to deflect the hideously liberally biased facts of the history of the deficit.

For, you see, the Fallows post she seeks to undermine focused on this chart:

https://i2.wp.com/cdn.theatlantic.com/static/mt/assets/jamesfallows/debt_chart_wh_0.jpg

Fallows made the point, also raised by such raving loony left organizations as the Pew Charitable Trusts and the ever-liberal New York Times that such recourses to history and actual data suggest both a problem and solutions that are different from those we’ve just gone through the wringer trying to debate. (Both references supplied by the White House.)

The broad point is both obvious and obviously too painful for McArdle to contemplate:  George Bush the Lesser inherited significant surpluses and a budget that promised to generate further surpluses through times of economic growth, and transformed that extraordinary fiscal idyll into a crater, a truly spectacular failure of financial prudence.

As the chart above accurately depicts, the largest driver of the deficit is the Bush tax cuts that coincided with the eight years of desperately unspectacular economic returns, culminating in the catastrophic failure of global financial capitalism.** The next largest creator of new debt was expanding domestic spending, followed closely by the wars in Afghanistan and Iraq, both wars of choice.  The prescription drug benefit (Medicare Part D) is a smaller item on this list — just 10% of the scale of the tax cuts — but it’s worth noting for the argument to come below.

All this, of course, shows what we already knew:  Bush policies, supported overwhelmingly by a GOP party that controlled the House for six of the eight years of the Lesser’s adminstration, and the Senate for more than four of those years, are what produced something approaching half of the total still-outstanding debt accumulated to date by all administrations since the birth of the Republic.  This, the Obama administration contrasts with its own record of a 1.4 trillion dollar addition to what we owe now, composed mostly of the stimulus, some particular policy choices, and a bit (and the significance of this will become obvious in a moment) of the extension of Bush tax policies.

So, given that none of these claims are controversial to anyone but McArdle, why is The Atlantic’s Business and Economics Editor so unhappy with her colleague?

Let’s give her the floor for a a moment:

I’m a little less enamored, considering that this graph attributes decisions made by Obama and an all-Democratic Congress–like doubling down in Afghanistan–to Bush, while taking responsibility for basically nothing except the stimulus.  When Obama extends the Bush tax cuts for the rich under pressure from Congressional Republicans, that disappears from his side of the ledger, because after all, he didn’t want to do it.  When Bush enacts Medicare Part D under pressure from Congressional Democrats, the full cost is charged against his presidency.  The list of such silliness goes on.  Our president seems set to coin another presidential motto: “The duck starts here.”

Ah, word salad.

I’ve been enjoying ignoring McArdle, as life is too short to waste time on the negligible.  But that means I’ve forgotten the peculiar pleasure of watching someone lie so badly.  It really is an art, to say something contradicted within fractions of a column inch without noticing — or more likely, without caring, for the purpose of this kind of communication is not to advance an argument but to establish a talking point.

So, to the fisking:

On attributing to Bush costs for the two wars:  well, (a) the $1.4 trillion laid to the Bush account underestimates the long term budgetary consequences, reasonably accurately totals up the budgetary authority extended to conduct the war through FY2009, including homeland security and foreign aid costs of the choice made to go to war.   More to the point, it correctly attributes the decision to the administration that made it.  We are still paying for Medicare Part D, for example, and will continue to do so, because unless repealed, future administrations continue to administer decisions made by prior ones.

It’s true that Obama and his administration have continued to fight the wars launched by his predecessors — but unless you want to advance the claim that all decisions by a President vanish from their legacy the moment they leave office, it still seems appropriate to lay the bulk of the cost of any given decision to the President who made it.  It is fair to state that Obama has chosen to pursue war in Afghanistan while dialling down our commitment (and cost) in Iraq — which is indeed a commitment for which the US taxpayer must pay.  That would suggest one could add a chunk to Obama’s ledger of deficit spending for war, while the chart above suggests other choices are responsible.

But again, if you think about what that chart is actually arguing —  that you should look to new choices on spending, president by president, to understand our current budget predicament — then you grasp its logic.  Bush sent us to war that we must somehow finish.  Obama demanded stimulus, which has not proved to be sufficient.  Both of these are real decisions taken at particular points in time by distinct administrations.  And both choices are accurately reflected above.  To which McArdle responds by conflating our president with water fowl. (Sic — ed.)

Meanwhile, consider McArdle’s next claim:

When Obama extends the Bush tax cuts for the rich under pressure from Congressional Republicans, that disappears from his side of the ledger, because after all, he didn’t want to do it.

Oh snap!  I wish I could proffer such incisive analysis with such — how to describe it? — insouciance.

Except (and this is where my jaw hit the floor, even considering the source), if you take one moment to look at the chart in question, you’ll find, nicely colored in blue, attributed to Obama, $250 billion accounted for as part of the December, 2010 deal that extended the Bush tax cuts for two years.

It really doesn’t seem too much to ask that the Business and Economic Editor of an institution as venerable as The Atlantic might actually read the chart she’s analyzing.  But sadly, that’s just a bridge too far for McArdle.

Update 8/2/31:  reader Atlas Fugged caught an error here:  Obama lays claim to $250 billion of the $800 billion cost of the December 2010 deal; that covers the unemployment extension and other aspects of that bargain; the tax cut extension does, as McArdle says, lie on Bush’s side of the ledger.  I apologize for the error — but note that the argument made on the cost of war still applies:  the decisions made by presidents do not die with the end of a given administration; legacies are, after all legacies.  To be strictly fair, I’d say Obama should own the middle class portion of the tax cuts; the extension of the tax cuts on earners over the $250,000 was clearly a Republican ambition first and last.

And now for the capper:

When Bush enacts Medicare Part D under pressure from Congressional Democrats, the full cost is charged against his presidency.

This is called doing the best (worst) you can when the hand you’ve been dealt has no cards at all.  Just to recall.  Medicare Part D, the prescription drug benefit, was debated and passed in 2003, a year in which the Republicans controlled both houses of Congress.  Republican leadership in the House of Representatives famously bent procedure to the point of breaking to ensure the measure’s passage there.  It’s not clear what pressure that the Democrats could have brought to bear on any of the key players, and certainly not Bush himself:  this was a period of unequivocal Republican control of the legislative process.

McArdle hopes no one remembers when and what happened here, I guess.  She’s playing to the established meme that Medicare is a Democrat’s program, so any spending for it must be due to some nefarious Democratic strategem.  But facts do have that well-known liberal bias, and this claim of hers is simply false.  Whether it is a conscious lie or merely a reflexive one is unclear and unimportant.  That McArdle publishes obviously wrong statements — this one, and the tax gaffe above, for two — is what actually matters.

Enough, mostly…except for a quick take on what this is all about.  One thing among many has been driven home by the ongoing debt-limit debacle:  however poorly you may rate Obama’s poker skills, the GOP has been revealed, again, as a party that cannot govern.

It can make use of power, of course — that’s the what they’re doing now, as they attempt to transfer yet more of the burden of living in American from the rich to the poor and middle class.  (Just to anticipate the usual trolls, how else to characterize an approach to deficits that bans tax increases on the rich and the richest but explicitly raises all kinds of costs borne by the rest of us.)

But it can’t actually do stuff that makes the country go.  The Bush the Lesser administration was an eight year demonstration of that incapacity to do even the basics — from the catastrophic mismanagement of the Coalition Political Authority to “heckava job Brownie” adventures in abandoning an American city, to the sustained and successful campaign of failure in economic and fiscal mismanagement.  Remember:  Bush policies left us with debt, a burst housing bubble, and the near-death experience of the US and world banking system.

It shouldn’t require reminding folks of this:  the GOP had its hands essentially unchallenged on the levers of governance and they failed.  Full stop.  A crater.  We’re currently flying with a partly crippled FAA because the GOP still can’t find their asses with two hands behind their backs.  And above all, as the chart that the White House published, others have corroborated, and James Fallows correctly pointed out accurately depicts, any Republican who claims to care about deficits who voted for Bush-era spending measures is a fraud.

Which gets back, at long last, to McArdle’s real aim in her post.  She writes:

The focus on the past makes it a very bad guide to the relative magnitude of the future choices we need to make.  Some of these items (tax cuts, entitlements) will grow, and some of them (military spending, some discretionary items) won’t….Settling whether “Bush policies” or “Obama policies” were the “cause” of the deficit wouldn’t tell us a damn thing about what we should do

This is an attempt to bely the obvious: knowing what policies, chosen by whom actually created the federal debt tells us a great deal about what we should do.  E.g.:  GOP tax cutting creates recurrent fiscal disasters, leading, inter alia to the need for Democratic choices to spend on stimulus to try to recover from the mess.  Pace McArdle, looking at what was done, administration by administration, and then examining both the context and the consequences of those decisions is precisely what you need do in order to frame choices here-and-now about what we should do.

That McArdle knows this at some level, I have little doubt.  But the consequences of becoming aware of such knowledge are insupportable: she’d have to come to grips with the realization that much of what she has written and supported in the past is turning to ashes in her mouth — not to mention the difficulties it would cause her with her patrons were consciousness to descend upon her.  So, again, she is a pretty straight forward illustration of the truism that it is very hard to grasp that which would cost you to understand.

That’s it, but for this last bit of snark:  McArdle near the bottom of her post contrasts the White House chart with one that she “just happen[s] to have handy.”  I invite you to enjoy it, for it is a peculiar masterpiece. It is both one of the worst examples of the graphic display of information I’ve seen since the great Tufte began to show us the way — and it is, as one would expect, a deeply dishonest depiction.

I’ll leave it to you to pick out the various ways in which the chart conceals relevant information, while just noting that I find it … interesting … that McArdle does not provide a source for this handy chart.  Would it’s provenance be that embarassing?

And with that, enough.

*I know that it must hurt Fallows, an actual journalist, to be thus labelled by McArdle. But, in fact, she’s right, with all the implications for both that follows from that harsh reality.

**I know that sounds like hyperbole — but as the Michael Lewis work at that link documents (as many others do), it ain’t.

Images:  Joachim Beuckelaer, Vegetable Seller2nd half of 16th century.

Gerard ter Borch, The Reading Lesson, 2nd half of the 17th century.

And Now, An Update From Reality

July 29, 2011

As we head towards either the completely unforced self-immolation of default, or the almost as self-defeating response of belt tightening amidst a recession, it’s worth taking yet one more swing at the piñata:  does the US have a debt/deficit crisis?

There are lots of ways to say “no.”

Here’s Kthug, debunking yet again the myth of out-of-control federal spending.  DeLong reminds us  (yet again)that the bond market thinks our debt is nothing to write home about.  Karl Smith reminds us that the US is borrowing money at a rate that amounts to a negative real return — which is to say that right now it is cheaper for the US to borrow than to pay cash for what it buys.

Now, via Zachary Karabell writing at Time.com, we learn of a new way to parse the blunt truth:  we have real policy challenges facing us — mostly how to get sufficienthell, any — growth going in the economy that could lead to actually getting our fellow citizens back into paying jobs.  But what we don’t have is an unsustainable debt burden, as revealed by perhaps the most direct metric of all:  how much it costs us as a percentage of GDP to service the supposedly unprecedented, unsustainable flood of red ink in which the United States is (not) drowning:

…what matters about the debt isn’t the dollar amount per se, but how much it costs us to service it. And by that measure, the debt isn’t nearly as big a problem as it’s being made out to be.

Yes, the federal debt has grown by nearly $3 trillion dollars in the past three years. And yes, the dollar amount of that debt is quite large (in excess of $14 trillion and headed toward $15 trillion should the ceiling be raised). But large numbers are not the problem. The U.S. has a large economy (slightly larger than that debt number). And, crucially, we have very low interest rates.

Because of those low rates, the amount the U.S. government pays to service its debt is, relative to the size of the economy, less than it was paying throughout the boom years of the 1980s and 1990s and for most of the last decade. The Congressional Budget Office estimates that net interest on the debt (which is what the government pays to service it) would be $225 billion for fiscal year 2011. The latest figures put that a bit higher, so let’s call it $250 billion. That’s about 1.6% of American output, which is lower than at any point since the 1970s – except for 2003 through 2005, when it was closer to 1.4%.

Under Ronald Reagan, the first George Bush, and Bill Clinton, payments on federal debt often got above 3% of GDP. Under Bush the second, payments were about where they are now. Yet suddenly, we are in a near collective hysteria.

Yup…for a debt burden that in budgetary terms is about half of what Saint Ronnie dealt with, we are now contemplating dismantling the safety net and gutting the investment in education, research and infrastructure that are essential for any future economic security for our country and our kids.

The good news is that this comes from an unequivocally MSM source.  The bad news is that the Village, for the most part, has failed to convey to the American people that what we are seeing is simply the smokescreen the GOP is using to hide its pursuit of policies that it could never sustain in the full light of day.  Too much of our government has fallen into the hands of fools and knaves.  And the press — not enough of it, even now — has left it way too late to confront that fact.

And yes, as Karabell and the others have noted, the Democrats have either gone along with too much of this nonsense, or else mounted ineffective opposition to the folly, avarice and/or pure stupidity of their opponents.  But consider the alternative — and, it seems to me, we gotta work, however resentfully, as hard as it takes to hold what we have and to grab the House back fifteen months from now.  “Not that bad” may be cold comfort…but your modern GOP is terrifyingly worse.

Image:  Jacques de Gheyn (II), Vanitas Still Life, 1603.

Who’s Taxing Whom

July 19, 2011

Fair warning: what follows is a bit of a rant and contains nothing particularly new.  But the fiscal follies of our overlords are unhinging me, and as misery loves company, I hope to share my derangement.

———–

I’ve been a little obsessed with light bulbs lately, as regular readers know.  I  continue to be dumbfounded at the depth, passion, and naked-mole-rat-stupidity of the GOP drive to ensure Americans waste money on illumination.  Following a thought from one commenter, I’m bracing for the claim that bans on whaling are really an unconscionable assault on the liberty of the people to light their homes with oil lanterns.

But as I thought about the implications of the Republican House caucus’ relentless drive to undermine America’s energy security, I started to fixate on a penetrating glimpse of the obvious:  the entire GOP approach to the federal government’s fiscal policy is a vast tax hike on most Americans.

That the GOPsters approach to policy will raise the cost of living in America is, I think obvious by this point:  when you privatize public goods, by and large those goods cost more for the individual user to access.  (There is a lot of detail obscured by that blanket statement, and certainly some instances where it might be otherwise, but the health care system (about which more below) is a familiar example of the basic problem, and there are many more.)

Republicans would say, I think, that cost isn’t the issue.  Government shouldn’t pay for much that it does now and that individuals can make better choices about priorities and so on.  They’d add that government musn’t pay for that which it can’t; that, to use a cliche repeated over and over again, that the government must behave like any household would, and not spend money it doesn’t have.

That last is nonsense, of course.  I’m actually working on a next book that tells a grand story of fraud and deceit at the birth of the idea of government debt — and that tale turns on the ways that governments aren’t like households or small businesses.

For now, though, the point is that if you take the Republicans false metaphor at face value, then you see that despite the brave promises of “no new taxes,” the practical, household consequences of their actions add up to a huge stealth tax increase that differentially falls on to working people, the middle class, and the poor.

And yes, as noted above, I know I’m restating the obvious, but bear with me.  Let’s  take my lighting fixation for a spin.  Recall that the energy efficiency standards that so offend the current Republican caucus* are predicted to save each American household $50 a year.

Now back to that bill-paying session over the kitchen table Republicans are so wont to imagine.  Maybe liberty is beyond price.  Whatever it’s called though, this extra hit of four or five bucks a month would feel exactly the same as if the GOP had voted a $50/home surcharge on each of us to subsidize light bulb makers or power generators:   We wouldn’t have that money no more, and it’s by GOP choice that this increase in our burdens would such cash out of our pockets.

A latte a month may in fact be a worthy price to keep the dead hand of statism from our necks.  But what about cost of aging?  Remember the Paul Ryan plan that virtually the entire GOP congressional caucus has endorsed.  That scheme switches the cost of medical care for the elderly to those old, ill people and their families.  Now we’re not talking cups of coffee any more, mere Franklins a year; rather, we’re in the realm of beaucoup  Benjamins.

Again this is surely familiar to all here, but just as a reminder, the gap between the vouchers Ryan’s plan provides and the projected actual cost of senior’s health care is about $12,500,  according to a CBO analysis, $6,000 more than the out-of-pocket charges to be borne were Medicare left unchanged.

And is there any choice here, really, for any household that loves its grandparents (or just folks of an age that in my case is coming up rather sooner than seems plausible)?

No there is not.  We could enact the old Jewish mother light bulb joke,** but our only real options were the GOPsters to achieve their long-cherished goal of killing Medicare is to pay the freight or die faster.

Death and taxes — there’s a reason the two are such close kin, after all.

Old news, get over it — I get it.

But the point I want to make, the meme, to use a word I mistrust, or a shove to the Overton window, is that all this talk of the holding the line against taxes and so on is bullsh*t when we’re working at the level of that holy kitchen table.  There, the only thing that matters at the level of individual Americans’ bank accounts is that GOP policies raise the cost of being an American in ways that are indistinguishable from brutal, huge tax increases.

If politics is perception then it’s important to do what the Bush clan was brilliant at — take your opponents’ seeming strength and hang an anvil around its neck.  And here, as we see every day (and many posts here remind us), the GOPsters using the power of government to impose huge new costs on us all that we have in practical terms no way to avoid.  The resulting drain of our dollars is not a tax in law, of course, but the resulting holes in my wallet feel exactly the same as if it were.  And, of course, the bitter last jest is that under the Republican approach, we pay more to get less.

So I’d like to see every Democrat running, and the chattering classes as well, all raging about the GOP stealth tax on the American way of life.  I’d like to see the ads that make that connection with couples in their kitchens talking about this GOP tax assault, how cleverly it’s been disguised, how hard it bites.  I’d like to see sneering and rage and bitter remorse at the thought that any all-American family of voters was taken in by all that no-tax deceit.  I want to make it impossible for any GOP thug to hide behind Grover’s tissue of a pledge when next the polls open.

No new taxes?  Hell and death (and taxes)!  No GOPster should be allowed to say that unchallenged.

*Recall also that the standards were approved with bipartisan support in 2007 (including sponsorship by GOPster Fred Upton, currently  chairman of the  House Energy and Commerce Committee, who now fights the good fight against light bulb efficiency), and signed into law by that notorious state-socialist, George W. Bush.

**Q:  How many Jewish mothers does it take to change a light bulb?

A:  “None!  I’ll just sit here in the dark.”

Images:  Vincent van Gogh, The Potato Eaters, 1885

Rembrandt van Rijn, Portrait of an Old Jew, 1654

 

What Do You Call It When A Herd of Pigs Takes Flight? A Wallow of Swine? A Flutter of Trotters?

July 14, 2011

Via GOS, further signs that the apocalypse is upon us — or at least is descending on the GOP.

Yup, Alan Simpson, Catfood Commissionaire Extraordinaire,  he of the milk cow with 310 million tits, has noticed that we might do with a bit more tax revenue just now, not to mention a Republican Party that actually, you know, cared about the country:

“The stuff that’s going on in my party, where the -– pettiness overcomes the patriotism -– it’s just disgusting to me,” he told ABC News. “Reagan raised taxes. We’ve never had less revenue to run this country since the Korean war.”

Also as noted in that DKos story, Bill O’Reilly — yup, that one — is calling for more revenue.  Admittedly, and unsurprisingly, his is the worst possible idea, a truly regressive 1% national sales tax.  Heaven forfend that he and his stratospheric income buddies should actually have to pay even proportionately in any tax plan, much less progressively.   But still:  BillO is saying we need to raise taxes — and in this as in so much else, there’s no such thing as being mostly virginal.  If a sales tax is on the table, then so is an income tax rate change, hedge fund loophole closing and all the rest.

And back to the point:  it’s getting to seem like the only ones who think that the GOP Congressional delegation could manage a rowboat, much less a country, is some falling fraction of that caucus itself.

I’d feel schandenfreude if I hadn’t sat with my college-bound nephew last night, reviewing yesterday’s events, and then feeling compelled to apologize to him for hideous mess we are preparing for him and his.  I couldn’t even think what I might say to my eleven year old.

But here’s hoping that we might just be seeing the collapse of the Grand Old Party.  There are lots of real arguments a true oppposition party could make that would matter.  But not the GOP as it now.  It’s tearing itself apart along lines long noted here and many other places. It couldn’t happen to a more deserving bunch…but for this:

The collateral damage. What we don’t know yet is whether the current Republican Party will merely collapse in self-destruction, or will manage to drag the rest of us down in what would amount to a murder-suicide.

Image:  Éduoard Manet, The Suicide, 1877-1881.

Pigs Fly; Satan Cuts Ribbon on Hell’s Newest Ski Lift…

July 8, 2011

…and Bobo makes sense.

…in the middle of this golden age of behavioral research, there is a bill working through Congress that would eliminate the National Science Foundation’s Directorate for Social, Behavioral and Economic Sciences. This is exactly how budgets should not be balanced — by cutting cheap things that produce enormous future benefits

….

People are complicated. We each have multiple selves, which emerge or don’t depending on context. If we’re going to address problems, we need to understand the contexts and how these tendencies emerge or don’t emerge. We need to design policies around that knowledge. Cutting off financing for this sort of research now is like cutting off navigation financing just as Christopher Columbus hit the shoreline of the New World.

Maybe this is just a case of a blind pig finding its once-a-year acorn…

__

…or perhaps (we live in hope) David Brooks has finally noticed that the party he’s been touting for years is on a catastrophic mission to destroy America, a quest that depends, in part, on ensuring we never, ever put ourselves in the way of learning inconvenient truths about the world.

I do hope it is the latter.  These are parlous times, and I’ll welcome even the latest of late-comers to the fray.  If I were a betting man, though, I’d guess we’ll see a reversion to the BoBo mean by early next week — but even so, we have a few days to bask at the glow of David Brooks saying something useful.

Image:  Gustave Courbet, Peasants from Flagey Returning from market, 1850

In the Integer-Based Community

June 21, 2011

I’ll give that unnamed Bush staffer credit.*  It is possible to create an alternate reality — if only for a time — given the willing complicity of all those watching (and transmitting) the useful fantasies of the powerful.  Just look at the success the Koch brothers’ subsidiary political arm, aka the GOP et al. have had in persuading so many that wealth transfers to the rich are the solution to all ills.

Hence the significance Bruce Bartlett’s entry today in The New York Times Economix Blog, in which the former Reagan, Bush I, Ron Paul and Jack Kemp policy advisor writes that, in essence, the entire Republican presidential field is lying about taxes to the American people.

He doesn’t quite put it that way — but he comes pretty close:

For years, Republicans have [said] …over and over again that taxes in the United States are exceptionally high and the primary obstacle to growth, and that a huge tax cut would do more to raise growth than any other policy.

For example, former Gov. Tim Pawlenty of Minnesota, a candidate for the Republican presidential nomination, has proposed reducing the top statutory income tax rate on individuals to 25 percent and abolishing the taxation of interest, dividends and capital gains. The Tax Policy Center estimates that this plan would reduce federal revenues by $8 trillion over the next decade.

Governor Pawlenty contends that unprecedented growth will result — to such an extent that there will actually be no revenue loss at all.

I am not picking on Governor Pawlenty; all of the candidates for the Republican presidential nomination support similar policies, and not one has criticized him for making outlandish claims.

Yup — that’s as card-carrying a conservative (per commenter wvng below) stalwart as you can get, stating as fact (which it is) that the fundamental Republican position on tax policy is “outlandish.”

__

Now this is, or ought to be obvious.

Bartlett here is actually responding to critics of an earlier post in which he made the following points:

The economic importance of statutory tax rates is blown far out of proportion by Republicans looking for ways to make taxes look high when they are quite low. And they almost never note that the statutory tax rate applies only to the last dollar earned or that the effective tax rate is substantially lower even for the richest taxpayers and largest corporations because of tax exclusions, deductions, credits and the 15 percent top rate on dividends and capital gains.

The many adjustments to income permitted by the tax code, plus alternative tax rates on the largest sources of income of the wealthy, explain why the average federal income tax rate on the 400 richest people in America was 18.11 percent in 2008, according to the Internal Revenue Service, down from 26.38 percent when these data were first calculated in 1992. Among the top 400, 7.5 percent had an average tax rate of less than 10 percent, 25 percent paid between 10 and 15 percent, and 28 percent paid between 15 and 20 percent.

The truth of the matter is that federal taxes in the United States are very low. There is no reason to believe that reducing them further will do anything to raise growth or reduce unemployment.

Remember, this is just propaganda from  your typical liberal conservative economist with longstanding ties to reliably anti-tax members of the Republican party.  Also, note, that along the way in that post Bartlett called out the conservative punditocracy as, again, liars:

Stephen Moore of The Wall Street Journal recently asserted that Democrats were trying to raise the top income tax rate to 62 percent from 35 percent. But most of the difference between these two rates is the payroll tax and state taxes that are already in existence. The rest consists largely of assuming tax increases that no one has formally proposed and that would be politically impossible to enact at the present time.

Ryan Chittum, in Columbia Journalism Review, responded with a commentary that called the Moore analysis “deeply disingenuous.”

Nevertheless, one routinely hears variations of the Moore argument from conservative commentators. By contrast, one almost never hears that total revenues are at their lowest level in two or three generations as a share of G.D.P. or that corporate tax revenues as a share of G.D.P. are the lowest among all major countries.

This is what apparantly appalled Bartlett’s readers, and this is what prompted him to … well, not defend himself, but to double down on the key point:

A typical middle-class family, on the other hand, is paying less in federal taxes than it has since 1967. Its marginal rate is also down substantially since it peaked in 1982 at 31.7 percent. The well-to-do family, too, has seen its average and marginal tax rates decline substantially.

Of course, these data do not prove that taxes are not too high. That is a subjective judgment related to issues of fairness and the value that people assign to the government benefits they receive in return. Many in the Tea Party talk as if the value of government is zero; consequently, they would probably complain about any tax level above zero.

Nevertheless, it is clear that federal taxes have not been rising and are, at least in historical terms, lower for most taxpayers than they have been since the 1960s.

There is a famous line from the history of mathematics:  “God made the integers.  All else is the work of man.”

That quote has had plenty of glosses, but let me appropriate it here to describe what Bartlett has just done.  We have real numbers about taxes.  We know what they are, and Bartlett in both of the cited posts provides handy historical references to allow any reader to trace the trajectory of those numbers.  They are facts, chunks of experience quantified, and they have autonomy:  Moore’s claim that a 35% rate is really a 62% rate is not a matter of interpretation; it’s just wrong.

But, of course — as Moore’s sin illustrates — what we do with such numbers,  the calculations we perform, the conclusions we draw from them, the interpretations we derive or force on them, why, all those are down to us.  It’s no god’s nor FSM’s fault when we turn the actual knowledge we have into fashion accessories cloaking choices too ugly to pass unadorned.

That’s what Bartlett, seemingly now irrevocably committed to the reality — or perhaps, better —  the integer-based community, is actually saying here.  To reiterate:  a leading conservative policy thinker and economist has just demonstrated that the entire Republican presidential field is talking nonsense about fundamental economic policy.  The implication couldn’t be more clear:  if these views gain direct power over US policy, WASF, even more than usual.

The question, which so far answers itself, is whether or not the media as a whole, and not just some (albeit prominent) blog-contributor, will pick up on this theme, and present the choice in 2012 as that between destructive fantasy and reality.

I live in hope, but not in expectation.

Bartlett himself demonstrates why.  This is the very last line of his post:

Those who assert that taxes are rising or are at confiscatory levels simply do not know what they are talking about.

That may be true of some — but people like Pawlenty or Romney or Gingrich, any of them, really, have no such excuse.  Pawlenty governed a state for two terms.  Romney, we are told, is a smart money man.  You get the point.  They do know what they are talking about, and they choose to divorce themselves from the facts.

These are not potential Presidents.

Factio Grandaeva Delenda Est.

*Said to be Karl Rove.

Images:  Vincent van Gogh, The Corridor at the Asylum, 1889.

Martina Schettina, Fibonacci’s Dream, 2008.

Attack of the Mutant Ninja Fiscal Conservatives

May 16, 2011

Oh Noes!

Via TPM:  the GOP-led budget insurrection over the six-month spending bill in March actually boosted spending over that period by $3 billion, according to the latest CBO analysis:

“Total discretionary outlays in 2011 will be $3.2 billion higher as a result of the legislation, CBO estimates–an increase of $7.5 billion for defense programs, partially offset by a net reduction of $4.4 billion in other spending,” reads a just-released report from the Congressional Budget Office — Congress’ non-partisan scorekeeper. Analysts there conclude that increase is due in large part to the fact that the six month spending bill shifted defense spending to more immediate activities, which means the bills will come due sooner than later.

It is true that the bill will, if unchanged in any future budget, lead to about $122 billion in spending reductions…(wait for it)….over the next ten years.

That’s barely more than what the Republicans road into office swearing they’d cut this year alone…not to mention that $122 billion out of a truly unrealistically conservative estimate* of ten year expenditure of $25.4 trillion dollars amounts to a rounding error — a reduction of on the order .5% over a decade.

Way to go!

The initial reports of $38 billion in cuts, by the way, were Teabagger bait, which means that the Republican party has some ‘splainin to do to its base, and the rest of us should help tell that story as much as we can.

Here’s how the scam worked:

the approximately $38 billion in advertised cuts spanned the entire federal budget, including locked-in “mandatory” spending programs, and it reflected reductions in “budget authority” — how much the government is allowed to spend — as opposed to projected “outlays” — how much the government truly will spend.

Ah, that old problem for the GOP and its voters — the difference between what the tooth fairy promises, and what actually happens in the real world:

When viewed more narrowly — how many fewer dollars will the government spend this year as a result of this bill — the results flip.

Which is to say, the GOP rookie congresscritturs and the Tea Party electorate were promised one thing, and got…played.

The moral, dear faux Minutemen:  the GOP’s central command has exactly no interest in actual lower-case “c” conservatism.  They serve different masters…or to put it another way:

If you can’t tell who the patsy is at the table, it’s you.

*That number comes from the simple-minded multiplying the (pre-stimulus) 2008 numbers — an arithmetical gesture of maximal kindness to our GOP arithmetic-challenge friends.

Image:  Follower of Hieronymous Bosch,  The Battle Between Carnival and Lent, (A subject sometimes titled The Dance of Fools, Carnival.), c 1600-1620.