Friday, May 09, 2003
GIMMICKS AND DECEPTION
Paul Krugman is upset again because Bush and the Congressional GOP are using a sunset clause to bring down the cost of a proposed tax cut:
Here's the story: in 2001, as now, some swing senators insisted on a budget resolution limiting the size of any tax cut. No problem. House-Senate negotiators pushed through a huge tax cut anyway, "saving" several hundred billion dollars by making the whole thing expire in the 10th year.
Yes, this is a gimmick, one that I don’t particularly like. But we need to ask ourselves, why do we hyperventilate about the size of a tax cut in the first place? The answer is to be found in the gimmicks used by Democrats, liberals, and, of course, Paul Krugman.
The first gimmick is to call a tax cut a “cost,” as exemplified in this quote from Krugman’s column:
The Center on Budget and Policy Priorities estimates that the true cost of the House bill, without the sunset scam, would be $1.1 trillion over the next decade. You know, $550 billion here, $550 billion there, and pretty soon you're talking real money.
The term “cost” implies that the money belongs to the entity that is paying the cost. For example, if my rent is $300, then the money I use to pay the rent is clearly mine to begin with. The “cost” to me, obviously, is $300.
If a tax cut is a “cost,” presumably it is a cost to government. That implies that the money belongs to the government in the first place. SURVEY SAYS: XXXXXXX. The money belongs to the taxpayers. All a tax cut does is let them keep more of their own money. Unfortunately, Democrats and liberals have used this rhetorical trick effectively over the years, and their willing accomplices in the press have never called them on it.
Once the Dems and libs have convinced enough folks that a tax cut is a “cost”, the next gimmick they use is called static analysis. This enables them to enlarge the “cost” by assuming that tax cuts have no effect on economic activity. Dynamic analysis, on the other hand, assumes that if people get to keep more of their after tax money, they will engage in more of the activities that create wealth such as working more and investing. The new wealth will yield additional tax revenue for the government offsetting some of the revenue loss “cost” of the initial tax cut. Naturally, Krugman doesn’t think too much of dynamic analysis.
One final note about Krugman’s column. He bashes the tax cut gimmick as “scam” and claims “it is a measure of our leaders' contempt for the intelligence of the public — or maybe for the press — that they think they can use the same tricks a second time.” I bring that up because Krugman then writes:
And bear in mind that Bush-style tax cuts now have a track record. Of the 2.1 million jobs lost over the past two years, 1.7 million vanished after the passage of the 2001 tax cut.
Surely Krugman knows that most of the 2001 tax cut was going to occur in 2004, 2005, and 2006. The current package before Congress is intended to speed that up. Up until now, the 2001 tax cut has been too small to have a huge economic impact. So why does Krugman try to pull this fast one? Perhaps it’s because recent experience has taught him not to think too much of the intelligence of his readers.
In conclusion, a sunset provision is a gimmick. It’s probably even deceptive. But then, turnabout is fair play.
. . .
Thursday, May 08, 2003
YOU NEED TO FEEL GUILTY
It’s time to play that favorite bleeding-heart liberal game again, “GUILT TRIP!” This time the Des Moines Register editorialists will see how many ways they can make you feel guilty by juxtaposing “tax cuts for the rich” against other things.
Here’s one:
Imagine that. Children in the richest country in the world are living in families that somehow survive on a few hundred dollars a month.
It's shameful. It's embarrassing.
More embarrassing is that while this goes on, lawmakers continue to push for tax cuts that will benefit the richest Americans while cutting general-revenue dollars that could help needy Americans.
Here’s two:
If Greenspan's advice is followed, it comes down to a choice between big tax cuts for those who derive their income from dividends or big cuts in services such as medical care and education (since military spending is unlikely to be cut).
For a Congress and a president who put the interests of ordinary Americans first, the choice would be obvious.
And here’s three:
Information on the executive compensation of publicly traded companies during 2002 is just now being disclosed. According to one survey of the filings, the mid range of CEO salary and bonuses was $1.8 million in 2002, an increase of 10 percent over the previous year….
Despite war, despite a weak economy, despite poor corporate earnings, despite common sense, rewards keep piling up for a fortunate few. President Bush thinks they deserve to be further rewarded with more tax cuts.
Of course you’ll hear no discussion of how tax cuts would help the economy, or about how it’s the “rich” folks’ money to begin with. Of course not. That would defeat the purpose of the game GUILT TRIP. Which is….
. . .
…..FORK OVER MORE OF YOUR MONEY IN TAXES….
….to help the “less fortunate.” That’s certainly the purpose of the editorial griping about the number of black children in poverty:
As the rich get richer, more poor black children are falling into a category known as "extreme poverty." According to the Children's Defense Fund, the number of black children living in dire circumstances is the highest it has been in 23 years.
Worse than in a very long time.
Although studies indicate overall poverty among black children is down, about 1 million lived in households with annual, after-tax incomes below $7,064 in 2001. That's half the $14,100 that defines poverty for a family of three.
The reaction they want out of you is “Oh, that’s terrible. We need more government programs to help those poor people. I can do without my tax cut. After all, it’s for the children.”
But before you get your dander up at all those selfish rich people who run the Bush Administration, let’s take a little look at why those households earn so little. Specifically, I turn your attention to Table HINC-06 of the Current Population Survey (thanks to Thomas Sowell.) This table breaks down households by income quintiles. If you scroll down a bit, you’ll notice a line that reads “Work experience of householder”. Now compare the statistics for those that “Worked at Part-Time Jobs”. You’ll notice that the number is highest, over 2.5 million, for the lowest fifth of households (2nd column). That number falls as you move up the income quintiles. Also notice how the number for “Worked at Full-Time Jobs” rises as you move up the income quintiles.
So, let me venture a flimsy idea—no, not even an idea really, just a half-baked particle of a thought, as to why those children are in poverty: Perhaps because their parents don’t work enough!
No, that just doesn’t cut it. Those children are in poverty because we don’t spend enough on government programs.
. . .
SPEAKING OF WHICH….
With all the bitching and moaning the Register editorialists do about how government doesn’t have enough to fund “basic services,” you might think they would hesitate before endorsing government funds to be spent on business grants. Are you kidding?!?!?
When Gov. Tom Vilsack unveiled the Iowa Values Fund in January, it became the centerpiece of the 2003 Legislature. It was the best idea out there for boosting growth in Iowa. It still is.
No, it’s a piece of crap that deserves to be in it’s proper place: the toilet.
Putting money into business development and assistance is risky. It may or may not pan out, though it's worth a try.
No, it won’t pan out. I’m working on a survey of the literature on economic-development spending. Guess what? The vast majority of the literature finds that such spending has no significant impact on economic growth.
Building recreational trails, improving state parks and promoting cultural and entertainment districts in cities are a sure bet to make Iowa a more enticing place - especially for people who already live here and who want to stay.
BWA-HA-HA-HA-HA-HA-HA-HA-HA-HA-HA-HA-HA-HA!!!!!!!!!!!!!!!!!!
Have they never heard of “Vision Iowa”? You know, that $250 million fund that spent money on “recreational trails, improving state parks and promoting cultural and entertainment districts in cities”? It was so successful that it turned Iowa into an economic dynamo. That’s why we’re not having a debate over how to transform Iowa’s economy. Oh, wait a minute.
So now the Register wants Iowa taxpayers to pick up the bill for another such boondoggle. I wonder, what will the average income be of the folks who receive the business grants under the Iowa Values Fund? Hey Register, here’s a hint: it won’t be the ones that are making only $7,064 a year. The Iowa Values Fund will take money from all Iowa taxpayers and give it to those who already well off. At least tax cuts have the virtue of letting people keep money that they themselves have earned.
Given that government supposedly doesn’t have enough money to meet basic needs, one wonders why the Register is in favor of allocating state resources to wealthy business people. Perhaps the principle of let the government meddle in the economy supersedes the principle of spend government money on the poor?
. . .
Wednesday, May 07, 2003
GUESS WHO WAS MENTIONED IN THE WASHINGTON TIMES AND THE WASHINGTON POST?
Thank you Greg Pierce. And thank you Howard Kurtz.
. . .
BACK TOMORROW
Will return on Thursday. For now, enjoy this Thomas Sowell smackdown on Dennis Kucinich.
. . .
Tuesday, May 06, 2003
CRY WOLF
My new column at the American Prowler.
. . .
Monday, May 05, 2003
BILL BENNETT, PROBLEM GAMBLER?
As someone who considers myself a pretty serious poker player, I can’t let the current Bill Bennett controversy pass without commenting on it. The blogosphere is abuzz with commentary (see Andrew Sullivan, Josh Marshall and TAPPED, for instance). The Weekly Standard defends Bennett, while the American Prowler criticizes him.
What troubles me about this is an emerging consensus that Bennett has a gambling problem. To me, it’s not entirely clear that he does. What is driving this consensus is the amount that Bennett has lost over a decade, which Newsweek and The Washington Monthly put at about $8 million. Yet, in terms of problem gambling, the amount only matters relative to income. If that $8 million loss put a financial strain on his family, then, yes, he has a problem. But if Bennett made in the neighborhood of $100 million over that period, then that $8 million is not really a big deal. It reminds of the shock that some people expressed when it was revealed that Michael Jordan lost $10,000 gambling on one hole in golf. As Mike Royko pointed out, that was pocket change for Jordan. If you make ten times what you gamble every time you sneeze, it doesn’t matter how much you gamble.
That said, I’m not ready to argue that Bennett doesn’t have a problem. Being a poker player, I’ve taken an interest in the literature on problem gambling (for reasons of self-preservation). What I think most suggests that Bennett might have a gambling problem is this quote:
Bennett acknowledged he gambles but not that he has ended up behind. “Over 10 years, I’d say I’ve come out pretty close to even,” Bennett says, though he wouldn’t discuss any specific figures. “You can roll up and down a lot in one day, as we have on many occasions,” Bennett explains. “You may cycle several hundred thousand dollars in an evening and net out only a few thousand.”
Now, if you know anything about slot machines and video poker—the two games which Bennett says he plays—it is highly, highly improbable that one could come out “close to even” over ten years. The games are “rigged” so that the casinos make money over the long run. The odds that Bennett would come out “close to even” are infinitesimal. (Although, as Josh Marshall wryly notes, Bennett’s statement leaves a lot of “room for wiggle.”)
What is troubling about Bennett’s statement is that it is indicative of Phase II of problem gambling, according to 1-800-BETS-OFF. Part of that phase includes “gamble and then lie about it” and “hide their losses.” It seems that Bennett is trying to cover up his gambling; if so, it’s likely he has a problem.
We should not blame an addict for his addiction. We should hold him morally accountable if he does not treat his addiction. Thus, if Bennett has a gambling problem and has not sought help, then it is a moral failure, and it undermines his credibility as a morality spokesman. But what we should be concerned about is not necessarily how much Bennett has lost, but how he behaves regarding his losses. That’s what will reveal whether Bennett indeed has a “moral problem.”
. . .
|
. . .
|
