Posted tagged ‘Budgets’

Lies, Damned Lies, Statistics: Andrew Sullivan, Brit Election edition

May 6, 2010

Update:  The original of this post mischaracterized the Treasury figures for government spending as a percentage of GDP; I repeatedly referred to them as the percentage of GDP due to the deficit year over year.  It’s been corrected below, and thus, in fact, tracks the figures Sullivan was citing.  The argument remains the same, though in a post piously demanding attention to what numbers tell you, I can’t say I’m not embarassed.  Do not blog after too effusive a dinner party the night before; that’s my motto.

Thanks to friend-of-the-blog Lovable Liberal for the catch.

Andrew Sullivan has been blogging the Brit election extensively, and his reflexive loathing for Labour has come through on a number of occasions.

He has some considered loathing too, I’ll grant you, but he admits that “in my native land, unlike America, I have residual partisan loyalty…” to the party of his youth.

That means its just a bit hard to assign a root cause for his rote repetition of a favorite anti-Labour meme, that the party is a bunch of big government spendthrifts.

It could be Sullivan’s difficulty in dealing with facts presented in the form of quantified data (see for example, this old chestnut). Or it could be a leap to unexamined conclusions propelled by his self- acknowledged Tory partisanship. Or, perhaps most likely, both.

In any event, he parrots the charge that the 13 years of Labour government produced a spending regime that has dramatically changed the size and cost of British government.  He writes:

Britain’s debt piles higher – because 13 years of Labour’s reckless spending has neither solved the country’s social problems nor stabilized the country’s economy….

…And then he attempts to put meat on the bones of that “reckless spending” cliche by borrowing from The Wall St. Journal vie The Corner:

Since 2000, public spending in Britain has grown faster as a share of GDP than any other country in the 28-member OECD — up 17 percentage points to 53% of GDP, compared to 15 points for Ireland and 10 points for Iceland

Sullivan might have wanted to consider his sources.  Doesn’t he know that any statistic with political consequence that emerges from The Wall St. Journal has to be considered guilty until proven innocent — that is, checked for oneself?  And by all that the FSM considers holy (semolina, for one), he of all people has had enough experience of The Corner to realize that they are what Ronald Reagan should have been talking about when he said “don’t trust and verify.” (What — RR didn’t say that? Sorry — ed.)

Shoulda, coulda, woulda … but here, he takes on face value a number that should have provoked more scrutiny.

That would be the date for the start of the time line, 2000.  Why 2000?  First because that marked the lowest deficit figure for all thirteen years of Labour governance — and thus choosing that date, rather than the start of Labour rule in 1997, would make any increase since that time loom larger in percentage terms.  This is called gaming your data.

And then there is the question of context and trend.  What should we make of that one number for a deficit in 2000?  Was it much different from other years’ and other governments’ budget work?  Did what come after trace a steady trend, or were there distinct outliers that need particular explanation?

I’m not going to pretend for a moment that I am an expert, or even knowledgeable about British state finances.  But even from a state  of near total lack of information, it just isn’t that hard to find the broad outlines of the history of UK government deficit spending.  A moment with Teh Google, leads one, for example, to this.

So what happened?

Well, from 1997 to 2007-8, the Labour government spent at levels that ranged between a low of 36.6.% to a high of 41.1% of GDP

From 1990-1997, a Tory government led by John Major, ran budgets that ranged from a low of 39.4% of GDP in the year he took over from Maggie Thatcher, to a high of 43.7% in 1993, from which it declined slowly to the number he handed off to Tony Blair.

Go back to the Thatcher years, and you see the same story.  She inherited a budget that accounted for 45.1% of GDP in Fy 1978-9.  She brought in a slightly reduced percentage the next year, her government’s budget spending coming in equal for 44.7% of GDP in FY 1979-80, but that figure rose for the next several years, and only dropped to the level she inherited in 1985-6.  Her high was 48.1 percent of GDP, and her best year was still above that best number achieved by Blair, with Brown as his Chancellorof the Exchequer — right around 39% for the Tories, compared with the Labour best figure of roughly 36 1/2 percent.

In other words:  for most of its time in office, Labour budgets included deficits well within the historical range established over the previous 18 years of Tory rule.  Just not much change in it — and often below that of their Tory predecessors.

Repeat:  for most of Labour rule, budget deficits were in a very familiar range.  You can debate whether Thatcher, Major, Blair and Brown were all drunken sailors ashore, but that’s a different question than whether or not Blair/Brown/Labour have a distinctively different record on spending than their friends on the right.  You can argue who will best deal with the situation going forward, Cameron, Brown or Clegg — and that’s a different question.  Nothing I’m writing here bears very much on that question (except, perhaps, to call into question the presumption that Cameron will be more fiscally responsible than his peers — but others have much more directly made that same point).

But hold on to the key point:  Most of the recent Labour record is one of ordinary, familiar approaches to the broad outlines of what British governments have approached spending levels for more than three decades.

Still, there is no doubt that the budget deficit is huge now, and the leap in government spending over Labour’s starting point quite noticeable.   From spending 41.1 percent of GDP of 2006-7, Labour governments produced a budgets amounting to 43 percent of GDP in 2008-9, with spending levels that are projected to rise as high as 48.1% in 2009-10 and 2010-11 — the same level as Thatcher’s high.

So, yes, a leap in government spending under Labour in 2008-10 period, just as there has been a leap in spending and deficits under Obama’s adminstration around the same time.

Now, refresh my memory:  what happened in September of 2008?

Oh yeah. The global financial system went into cardiac arrest, the American real estate bubble burst, and economies around the world shuddered under the impact.  US and UK governments responded in classic Keynesian fashion, perhaps not expansively enough, and spent much more than they had to pump capital into the banking system and cash into the daily economy.

Sullivan, of course, has lauded this on the American side, in grand tones and  little posts.  He does not do so for poor Gordon Brown.

Why he didn’t isn’t really that important.

The fact that he didn’t is, as it is a specimen of a dangerously common failure of modern political reporting.

Here’s my credo:  Numbers matter.  Understanding what they do and don’t tell you in any encounter with them is the crucial task for any would-be serious political journalist — hell of anyone who wants to take him or herself seriously as an observer of contemporary life.

Failure to do so means that you will get lots of your writing wrong — and you won’t know it, you can’t know it — until rude and wordy bastards like myself point it out (and one deigns to notice such gnats gnawing on the body politic).  But it matters, to audiences and to any writer who takes their craft seriously.

And in this story, here’s the bottom line:  it is certainly true that government deficit spending in 2010 in Britain (and the US) is much higher as percentage of GDP than it was in 2000.  But it is so for a reason, and that reason is not the one either Brown’s or Obama’s critics say it is.  Stating that out loud, as often as needed, ought to be the job of someone who aspires to be “of no party or clique.”

That is all.

Image:  Martina Schettina, “Fibonacci’s Traum (Dream)” 2008.

Why it helps to run the numbers…

July 23, 2008

and why it matters.

Brad DeLong reproduces a  memo from Obama campaign econ. policy director Jason Furman.   In it, Furman discusses the latest Tax Policy Center report on the true costs and beneficiaries of the Obama and the McCain tax plans.

Money quote from the TPC report:

The two candidates’ tax plans would have sharply different distributional effects. Senator McCain’s tax cuts would primarily benefit those with very high incomes, almost all of whom would receive large tax cuts that would, on average, raise their after-tax incomes by more than twice the average for all households. Many fewer households at the bottom of the income distribution would get tax cuts and those tax cuts would be small as a share of after-tax income. In marked contrast, Senator Obama offers much larger tax breaks to low- and middle-income taxpayers and would increase taxes on high-income taxpayers. The largest tax cuts, as a share of income, would go to those at the bottom of the income distribution, while taxpayers with the highest income would see their taxes rise significantly.

For extra credit and reading pleasure, see the extensive comparisons the Center made between the tax proposals as described the candidate’s advisors, and as set out in stump speeches and or campaign policy documents.

The key point there, at least as the Obama campaign would have you know, (PDF here), is that there is a $2.8 trillion gap between what the McCain advisors say the GOP nominee-apparent’s plan would cost, and what the number is in what we laughingly call the real world.

These are important numbers, and as important, they are not, in the last analysis subject to that much controversy.  That is:  while it is possible to argue a great deal about the long term economic effects of different tax policies, coming up with the immediate or even the medium term costs of different proposals is not a black art.

These are what scientists call deductions.  They are not quite facts, not yet.  But starting from a baseline of factual knowledge — the current tax code, revenues, analysis of earlier changes in tax policy and so on — it is possible to make well grounded predictions of what would happen if each candidate were able to impose the policies they now promise.

The bottom line:  well, my argument that a McCain presidency will be disastrous for scientific, technological and medical research is strengthened by this latest report.  With non-defense discretionary spending already squeezed by the disastrous Bush brew of tax cuts for the top brackets and an unfunded war, McCain’s proposed tax and spending priorities leave essentially nothing for such luxuries as advanced education, basic and applied research and all the rest.

If our investment in science lags, of course, we will suffer along every axis from national security to our ability to relieve human suffering or to uncover novel sources of human happiness (who knew the ARPANET would enable us to Twitter at each other.  Hmm.  Perhaps I should rethink that example.)

But the key here is that you cannot make this argument without the baseline numbers.  McCain can and does say that he supports research and innovation to solve such fundamental problems as America’s energy needs.  I don’t doubt that he believes it when he says it.  But such commitments are meaningless, lies in fact if not in intent, given his tax and budget policies — or else his tax promises are lies.  That’s what you can say when — and only then, you actually dig in the weeds of the data.

In this context, TPC study offers one more valuable yardstick against which to weigh all the other commitments McCain is making.  The question is will anyone (but your earnest, but rather low-profile blogger) do so?

But not to snark before time, I’m waiting.  This is my question: will the reporting on this story emphasize the actual differences between the two plans and the consquences?  Or will it focus instead on some variant of the “McCain counters Obama’s tax sally.”  That is — do the voters/audience get an account of the facts that McCain would wish to dispute, or just the dispute?  Will the story make it onto the news budget at all?

We’ll see.  As an extra credit question, I’m wondering whether Marc Ambinder will engage this at all?  He’s reproduced a lot of Scheunemann.  So how about a little domestic substance from the “Reported Blog on Politics?”  Will update as events warrant.

Image: James Gillray, “A great stream from a petty-fountain; or John Bull swamped in the flood of new – taxes,” hand colored etching, 1806.  Source:  Wikimedia Commons.