Bruce Bartlett: Tax Cuts and the Not So Great Economy

Bruce Bartlett says if conservatives want to argue for lower taxes, fine, do so. But do it honestly and leave the exaggerated claims about tax cuts and tax increases out of the debate:

Greatest Economy?, by Bruce Bartlett: For an interview with a reporter about the state of the economy, I looked up a few numbers that are interesting. I compared the state of the economy today to where it was at the exact same point during the previous business cycle. Thus, according to the National Bureau of Economic Research, the most recent recession ended in November, 2001. If you count forward 21 quarters to the first quarter of 2001 [2007], we see the following:

Real gross domestic product: Up 16.4 percent Real gross private domestic investment: Up 10.2 percent Payroll employment: Up 5.3 percent Standard & Poor's 500 stock index: Up 34.2 percent

Viewed in isolation, these numbers don't seem too bad. For example, real GDP has risen at a 3.1 percent annual rate since the end of the recession. But in areas such as this, there are no objective criteria for saying what is a good performance from a bad one; only experience can guide us. Thus it is interesting to look at the same numbers above counted forward the same number of months from the end of the previous recession, which the NBER tells us ended in March, 1991:

Real GDP: Up 17.9 percent Real investment: Up 51.2 percent Payroll employment: Up 10.8 percent S&P 500: Up 82.2 percent

It is obvious that by every standard, the recovery and expansion after the 1990-91 recession was significantly better than that after the 2001-01 recession. Recognizing this fact is important for several reasons.

First, when Bill Clinton ran for president in 1992, he repeatedly said that the economy was the worst since the Great Depression, and he continued saying so well after he took office--two years into the recovery. In other words, the recovery from the 1990-91 recession was so anemic that voters elected a new president in order to get the economy moving. Therefore, we are not comparing today's economy to one that was historically robust, but one that was widely viewed as being exceptionally weak.

Second, the data raise serious questions about the role of taxes. Republicans are convinced that the Bush tax cuts saved us from doom. But there is really no evidence whatsoever to support this claim. Unless one believes that there would have been no recovery at all and that we would still be mired in recession without the tax cuts, it is hard to find any positive evidence of their economic impact. Investment stinks, employment growth has been mediocre, and even the stock market increase is nothing to brag about.

Third, it is worth remembering that Clinton raised taxes right out of the box in 1993. Every Republican opposed it and virtually every conservative economist predicted disaster. Yet it is hard to find any evidence that the tax increase had any negative effect whatsoever. One can easily argue the opposite based on the economic results.

I am not arguing for a reversal of the tax cuts or in favor of a tax increase. I am just saying that one has to do more than mindlessly repeat mantras about the benefits of tax cuts or the horrors of tax increases if you want to be taken seriously in this debate.

I also wish the mindless repetition of false mantras would end, but I don't expect it to change much. In the media, the commodity being sold is entertainment, not information, so it shouldn't be too surprising that the two will come into conflict even on shows labeled as news. Still, I would have thought there would be more market discipline than exists now. There seems to be little penalty for providing false or misleading information (even if it leads to war) so long as the entertainment value is high enough (unless you count even more bookings and more exposure in the media as a penalty). I wish I knew how to bring the information and entertainment objectives into better alignment, we need it, but I don't know what the answer is. But one area that could stand improvement is the level of competition in the market for news and entertainment. We need to ensure that robust competition is present in this marker so that whatever market discipline does exist with respect to the presentation of accurate information and informed analysis has a chance to fully express itself.

Comments

[evagrius]

A "market" for accurate information and anaysis?

Who wants to buy the truth? It's too expensive to read or hear.

Illusion and delusion are far cheaper to produce and sell.

[howard]

bruce bartlett, as always, reminds us what an honest conservative looks (and thinks) like.

TB reminds us what a dishonest shill of the american right-wing looks like.

sadly, as our host noted, the ignorance of the TBs rules our discourse, while the honesty of bruce bartlett got him fired from a supposed think tank.

[Cyrille]

Oh my...

[Farrar Richardson]

TB -

As an unreconstructable left winger, I'll admit I'm biased toward thinking that tax cuts for high income brackets don't usually stimulate the economy, but I'm open to being convinced.

Now you have brought forth quite a bit of evidence to support your thesis that the Bush tax cuts for the rich did stimulate the economy. To me, however your evidence seems largely circumstantial. Other factors were involved, including exceptionally low interest rates, and a massive increase in government spending. There is also the question of timing.

This means that it's hard to prove your point with macroeconomic evidence.

What puzzles me the most is exactly what have the very rich done with all the money that Bush has left them? Bartlett claims that "investment stinks". What have you to say about that? I haven't noticed many industrial startups. Have you got any statistics on IPO's? In fact, what hits the headlines is companies buying back their stock, because they don't know what to do with their money. My impression is that the very rich are simply contributing to speculative bubbles while US industry continues getting hollowed out.

You seem to be a proponent of faith based economics, which is often an important positive factor. So please restore my faith that capitalism is good for America.

[Cyrille]

That was no evidence whatsoever: in the Clinton case, TB claims that 93 tax increases were responsible for a slowdown in 95, but that 2003 tax cuts on the very rich were responsible for immediate growth.

So, the real message is: when there is a tax increase, we'll say that the next slump in the future is clear proof of the destructive effects of taxes, and when there is a tax cut, well any growth (however sluggish compared to previous recoveries) in the future or indeed at the very same time, even though there will not have been any time for investment to take place, shows us that tax cuts pay for themselves.

That's no evidence at all...

[Oupoot]

Cyrille, in simple times, TB's lag times for the effects of tax cuts / increases to work through the economy are different. Farrar R is spot on in saying it is erronous to state only one thing led to the economic growth that occured, while we all know reality is quite complex and a bunch of factors influence to a greater / lesser extent the economy at any particular time.

[anne]

Mark Thoma:

"Thus, according to the National Bureau of Economic Research, the most recent recession ended in November, 2001. If you count forward 21 quarters to the first quarter of 2001, we see the following:

Real gross domestic product: Up 16.4 percent Real gross private domestic investment: Up 10.2 percent Payroll employment: Up 5.3 percent Standard & Poor's 500 stock index: Up 34.2 percent

[Please note the important typographical error, as we count 21 quarters from December 2001 forward to March 2007. We should change 2001 to 2007.]

[anne]

Bruce Bartlett is quite right in analysis, since both the general extent of growth and even more so the quality of growth from the recession end in November 2001 has been inferior to that after the recession ending in 1991. The extent to which the middle class has gained since 2001 is distinctly inferior to gains made after 2001.

A nice and important analysis, though only a summary.

[anne]

The question of how economic structure has changed since 2001, limiting general economic growth and the ways in which the proceeds of growth are being shared is continually masked by looking beyond domestic economic structure to answers internationally, which I would argue is a distinct mistake. Policy matters and we have an economic structure distinctly shaped by policy and shaped curiously against investment and in favor of fostering income and wealth inequality.

[anne]

Mark Thoma:

"Still, I would have thought there would be more market discipline than exists now. There seems to be little penalty for providing false or misleading information (even if it leads to war) so long as the entertainment value is high enough (unless you count even more bookings and more exposure in the media as a penalty)."

Notice the way in which the problem is posed here, which for me is quite a novel and helpful way of asking what we have been missing and why from news coverage. Interesting perspective to think through, since I have absolutely no ready response, though Mark Thoma is wondering about the nature of competition here.

[anne]

Berkeley's school of journalism draws readily from voices from other academic fields through Berkeley, from a Michael Pollan to a Brad DeLong, who notably and poignantly complains about press coverage. The complaints are warranted and important, but why?

[anne]

Bruce Bartlett touches on or leads us to question the relative quality of government spending and revenue:

http://select.nytimes.com/2007/06/19/opinion/19herbert.html

June 19, 2007

When Dollars Trump Compassion
By BOB HERBERT

You won't see these stories on television, but Marian Wright Edelman and Dr. Irwin Redlener could talk to you all day and all night about children whose lives have been lost or ruined because they didn't have health insurance.

This is not a situation one associates with a so-called advanced country. That you can have sick children wasting away in the United States, the wealthiest nation on the planet, because medical treatment that could relieve their suffering is withheld by men and women with dollar signs instead of compassion in their eyes is beyond unconscionable.

Ms. Edelman is the president of the Children's Defense Fund, and Dr. Redlener is president of the Children's Health Fund.

Both are appalled at the embarrassing fact that nine million American children have no health coverage at all. Among them are children with diabetes, chronic asthma, heart conditions, life-threatening allergies and so on. In many instances they are left untreated until it is too late.

Leaving children uninsured is a form of Russian roulette, Dr. Redlener said.

"All children should be covered," said Ms. Edelman.

Congress and the president could do something about this right now. Of the nine million children without coverage, six million are already eligible for either Medicaid or the popular State Children's Health Insurance Program, or S-chip, which covers children whose parents earn too much to qualify for Medicaid but too little to afford private health insurance. The bulk of the funding for S-chip comes from the federal government.

S-chip, which had strong bipartisan support when it was established 10 years ago, is currently up for reauthorization in Congress. The program should be expanded as part of a broader effort to cover as many of the six million eligible-but-uninsured kids as possible.

Eligible children remain outside of S-chip and Medicaid for a variety of reasons, including the following: because there is insufficient funding to cover them; because families do not realize their children qualify for coverage; because red tape and complicated regulations discourage families from signing up.

A number of S-chip re-authorization proposals are being developed. The best-case scenario would be legislation — costing as much as $50 billion in additional funding over the next five years — that would cover millions of additional youngsters from poor and working-poor families. This would put the U.S. on the road toward universal coverage for children.

Ten billion dollars a year is considered a pittance when it comes to funding wars and tax cuts for the very wealthy. But it's suddenly a lot of money when the subject is the health of American children....

[ndd]

Re: no "market discipline" in journalism re RW lies.

A good place to start is to read Prof. Eric Alterman's "What Liberal Media?"
The demise of the "fairness doctrime" in Reagan's era meant Rush Limbaugh could spew whatever he wanted without fear of response.
Increasing concentration of the news media into large media conglomerates meant the news divisions were taken over by the entertainment division, and became more ratings-driven.
Short term financial goals meant budget cuts in newsgathering in newsrooms. "News" in the old media these days is largely the regurgitation of press releases.
Since large corporate conglomerates aren't known for their progressive economic views, RW economics was the only economics broadcast over the MSM. Even if they had been willing to challenge the RW economic narrative, the journalists who would investigate had also all been inculcated in college with econ 101 and were trained to believe that was the Truth.
That same oligopolistic concentration meant the owners had to go hat in hand to the FCC for waivers if they wanted to buy even more media in any market -- this gave the Executive a powerful weapon to use to keep them in line: oppose my war, you don't get your waiver.

The nadir of all this was when MSNBC let go of its top-rated host, Phil Donahue, for the sin of opposing the Iraq war.

The creation of the RWNM took a generation. It will take a generation to push it all back. The creation of the blogosphere is a start.

[howard]

Farrar, here's an additional piece of evidence for you, one i remember offhand in the available time to me this morning: when the 2003 bush tax cuts were passed, the bush administration claimed that 5.5M new jobs would be created between july 1, 2003 and december 31, 2004. some point in 2006 we made it.

so the "results" by the metric the bush administration cited failed to deliver.

that's what i call evidence, although TB seems to have different standards.

[anne]

Underlying then what Bruce Bartlett is implicitly explaining, is that taxes and growing deficits are much the same in that growing deficits will in time have to be compensated for by taxes. When I say growing deficits, I refer to deficits that are growing fater than economic growth since a deficit that grow only as fast as the economy can be indefinitely sustained.

We have a relatively low tax structure and a deficit that does not currently worry me but that through the costs of war in and occupation of Iraq and spending needs already given will grow faster than the economy can grow. Congress has agreed to limit deficit growth by accounting for a revenue stream to cover future spending, but this will set Congress a continual funding problem as in meeting the need of health care insurance for children.

Where then is the leeway?

[evagrius]

Yes. We must never bother the very rich in their sacred duty of buying luxury goods, second homes, and other desirable good,activities and pleasures.
It is their sacred duty that enables the society to function well since it is through that sacred duty that so many people are able to make a living helping the very rich succeed in that sacred duty.

[anne]

Aside; so that we understand how sensible Bruce Barlett's analysis is, after 3 years of lowering and holding the Federal Funds rate to 3% as commercial banks re-built assets, the Federal Reserve began a dramatic, sustained series of rate increases in February 1994 to guard against a possible inflation increase.

The Fed raised short term interest rates till 1995, and purposely took the economy near a zero growth rate for a brief period by which time it was understood price pressures were contained if they were really ever threatening.

Alan Greenspan was convinced through the 1994 Fed tightening that inflation had become structurally less of a threat.

[reason]

Please everybody stop replying to TB you only encourage him to fill up the threads with his nonsense. He is not interested in a serious debate, he never concedes anything.

[anne]

The slowing of the economy as 1994 progressed was remarkably a show of just how effective the Federal Reserve could be, and should continue to give us confidence. Comparing the period after 1991, and the period after 2001, in economic terms in quite insturctive.

The question we will have going forward, is how to sustain spending on essential social programs with the current tex base, this especially so for a country in the midst of war and occupation.

[evagrius]

You won't see these stories on television, but Marian Wright Edelman and Dr. Irwin Redlener could talk to you all day and all night about children whose lives have been lost or ruined because they didn't have health insurance."

Yes, and that is 100% the fault of the parents.

Yes. They were stupid enough to have jobs that provided no health insurance or paid too much or had too much savings, ( over $3k will make a family ineligible), so that they're not eligible for medicaid or couldn't afford private health insurance.

Stupid parents shouldn't have children

[Objectivist]

TB is right; whats wrong with serfdom?

[anne]

Sorry, my comment should have read:

"The extent to which the middle class has gained since 2001 is distinctly inferior to gains made after 1991."

Please, I have in no way addressed "you" and will never address "you." I find you offensive and even frightening, and only sort to respond to Mark Thoma and other comments on the threat which I hold important. I ask that "you" ignore my comments which will never be meant in any way for you. I never read "you" and only happened to notice my name used.

[anne]

Among the ways in which middle class workers have lost ground since 2001 as compared with gains after 1991, we can look to record profits compared with limited wage gains, loss of health care insurance or increasing work costs for insurance, loss of surrounding work benefits, a falling employment participation rate, weakening of unions, rising public college and university costs, rising prices for energy and food, increasing income and wealth inequality, and on....

[anne]

Forgive me, I will not post on this thread again. I never thought there would be vituperative attacks, and I am in this case intimidated. Please do not attack me again.

Thank you, Mark Thoma and Bruce Bartlett, for the post which I can respond to on another thread.

[anne]

Please do not attack me again. I am asking you not to attack me. Please.

[Lee A. Arnold]

Mark, in order to provide a "penalty for providing false or misleading information," please start banning the trolls.

[save_the_rustbelt]

"....Yes they were, it is up to them to provide insurance for their children, if their jobs don't provide it and they can't afford insurance then it is up to them to get jobs that does provide insurance or pay enough so they can buy it for themselves...."

TB had some interesting ideas until this gem, at which time he proved himself a tried and true dittohead.

The extreme libertarian wing get caught by their own rhetoric.

So TB, if the economy is doing so well, why are there so many jobs with relatively low wages, few or no benefits and poor or nonexistant health insurance?

[calmo]

howard drills another home run I see...but Lee worries about troll contamination and I know we could never share the same kitchen (I can work around the dirty dishes for weeks. [Have you no environmental decency?]
From Mark There seems to be little penalty for providing false or misleading information (even if it leads to war) so long as the entertainment value is high enough (unless you count even more bookings and more exposure in the media as a penalty). which may have spurred Lee's choice of language ("penalties"), but for me it is the media omissions...starting with the "illegal aliens" --long before w gets in office but greatly exacerbated in his terms. I cannot think of a better parody than building that wall with that help...unless it is the media with other help keeping it off our screens.

[Rick DeMent]

What I (a decidedly non-economist) thinks is chuckle worthy is the fact that in both the 80's and in the 00's government spending increases rose several times the amount of the tax cut. In both cases the federal government cut taxes and then turned around and borrowed that money back (and then some), at interest, to fund the deficit. On which planet does that makes sense?

[Bruce Webb]

"but that 2003 tax cuts on the very rich were responsible for immediate growth."

There was no real growth. Since TB is fond of number sequences maybe he can make sense of the Productivity Series:
BLS: Productivity by year
2001: 2.5%, 2002: 4.1%, 2003: 3.7%, 2004: 2.9%, 2005: 2.1%, 2006: 1.6%

"Only the ignorant would think that tax increases are an economic stimulus"

People who live in glass statistical houses shouldn't throw stones. Using TB logic Bush tax cuts took growth from a very robust 4.1% in 2002 to an anemic 1.6% last year. Of course Q1 2007 kicked up, hmm, okay slid to 1.0%. Which would mean by that same logic that tax cuts are growth killers.

TB can you point to a metric that actually shows the tax cuts led to net increases in investments in productivity? And then explain why by all the evidence none of that worked?

[ki]

TB, you should look on BLS.gov, which proves Howard's data.

[ki]

TB: "Only the ignorant would think that tax increases are an economic stimulus."

TB: "There is overwhelming evidence, the Bush tax cuts of the lower three tax brackets were enacted in mid 2001 and for almost the next 2 years we had negative job growth and anemic GDP growth. Almost immediately after the top two tax bracket cuts were enacted in June 2003 the economy exploded into growth and since then we have a net gain of over 9 million jobs created. And now, as in the expansion of the 90’s, real wage growth comes in late in the expansion and we have had very solid wage growth."

I guess YOU ARE IGNORANT since you claim in your first post that immediately after the top 2 bracket cuts that the ECONOMY EXPLODED IN GROWTH!!

[pgl]

I feel honored. I post a follow-up over at Angrybear and Bruce makes a comment to my post. Then again - Bruce and I have exchanged comments before. He is a class act imho.

[robertdfeinman]

The issue of "truth" in media is discussed frequently, for example by the Media Watch Group at fair.org.

In the good old days (say around 1900) there were hundreds of newspapers and each could adapt its position to its own political viewpoint. Those who bought the paper knew what they were getting.

With the rise of broadcast the limited spectrum caused this number to become much smaller. The original licensing requirements expected neutrality. This happened in good measure because of the moral principles of the heads of NBC and CBS (Sarnoff and Paley). After they left the scene and their firms became parts of bigger enterprises there was a shift in the expected role of the news by the corporate owners.

The news became a burden on the bottom line and was changed to support the interests of the corporate owners. Recent media consolidation actions have further limited the range of outlets and the rise of cable has freed broadcasters from any need to be neutral.

For a news operation to be reasonably objective it needs to be decoupled from special interests and profits. In the UK this means the BBC (funded by a special tax) and the Guardian (owned by a foundation). In the US the outlets are restricted to small, independent magazines like "The Nation" and "Mother Jones". They have little clout.

Perhaps the internet will help restore a balance and allow new voices to be heard. So far, however, blogs mostly rely on the major news outlets for information and then just riff on these stories. There are very few online original reporters. The only one who comes to mind is Josh Marshall at Talking Points Memo.

What we are seeing now is an exact analog of the days of yellow journalism and the cause is the same. Too much media power and too close a relationship between the media owners and government leaders.

[Farrar Richardson]

Way back toward the beginning of this thread, I asked what the very rich had done with the extra money Bush had left them. No one has ventured an answer, especially not TB. Nor has anyone challenged Bartlet's assertion that "investment stinks", which Bruce Webb's input backs up. Not being an economist and not knowing where to look for the data, I remain with my left wing layman's assumptions that those with high incomes squandered their money on conspicuous consumption and speculation. Of course, they have every right to do this, but is this a desirable outcome for the US economy?

[ki]

Sorry, my mistake TB. I misread.

[Lee A. Arnold]

Farrar, they made up for their losses in the last stock crash, then it went into the asset bubbles, most recently housing. The economy is probably just about where it would be in almost any case, because growth (as opposed to the business cycle) depends more on available resources, education, and freedom of thought.

[Lee A. Arnold]

Mark, in order to provide a "penalty for providing false or misleading information," please start banning the trolls.

Yes Calmo, I directly quoted Mark. But I don't worry about "troll contamination." It is just boring and time-consuming, and Mark is going to lose serious readership. These trolls are not coming from poor ignorance, and you are being fooled if you think so. It is well-funded bad faith.

Rational argument is not the aim. It is falsehood, confusion, and filling up the space in order to deter people. Which it does, because who wants to read through continuous perversion of facts and theory.

And this is only the beginning: Because if you think this is bad, wait until the campaign heats up. This blog and all the other good ones are going to be inundated by paid propagandists posting reams of brainless crap, pasted right from huge prompt lists.

The way to go is to start now, and expel people who are purposefully getting obvious things wrong. Run it like a classroom.

[Farrar Richardson]

Thank you TB - you wrote

"Higher income groups had a higher MPC than lower income groups with regard to the money not witheld due to the 2003 tax cuts."

Extremely interesting. Obviously, I was not reading the economic news as much then as I am now. I hope you can get the rest of that URL up there so I can read the whole article.

This article backs up your thesis to some extent
http://money.cnn.com/2003/10/30/news/economy/gdp/
that reduced tax withholding rates were mainly responsible for a big increase in consumer spending, although it does not suggest that increased spending came from the higher income brackets.

Also, by "very rich" I was thinking about incomes considerably higher than those mentioned - earned by the kind of people who we used to count on to build or rebuild US industry through investment.

If they are all using their big incomes to buy Ferraris and McMansions, that may help GDP for a few quarters, but how long can we count on it? And investment still stinks.

Although I am almost ready to concede your point (subject to further analysis and data retrieval by the smart people on this blog), high bracket tax cuts don't seem to lead to the kind of economic growth I would consider desirable. This is my idealogical bias showing and I don't expect we will ever agree.

I also expect that even George Bush was secretly disappointed. Didn't he sell the tax gifts for the rich on the basis that they would promote investment?

[kthomas]

Nothing like a little war to distract people from their ever-shrinking economic piece o' the pie.

President Cheney is so clever.

[Farrar Richardson]

Lee Arnold,

Not so fast. I think TB is wrong on the big picture. But has he posted any erroneous info? One might advocate exclusion on the grounds of name-calling. But would an all left-wing blog be interesting.

[kthomas]

Nah, let's keep TB.

He/She keeps reminding me why haven't voted Republican since '92.

[ki]

Good point Farrar. Different views amount to more interesting conversation.

[Nicolas]

Macro is maybe the branch of Economics where Economists starts sounding less like scientists and more like members of a religious cult.
No mather how weak the evidence is, how impossible to isolate any variable from the hundreds of others, how bad the models are at making predictions, they will defend their beliefs no matter what.
I'm more sympathetic to Bruce Bartlett's humility in this respect. Which vaguely reminds me this:

"There are two kinds of forecasters: those who don't know, and those who don't know they don't know." - J K Galbraith

[Lee A. Arnold]

Farrar: "But has he posted any erroneous info?" Why don't you do the homework this time? Research every line starting with the first post, and tell us what you come up with.

[anne]

Lee, thank you for your remarkable patience and please do not fret.

[Bruce Webb]

TB "Ah the productivity strawman argument again. Sorry but GDP growth is not measured by productivity."

Except that it is.

"There are three basic components that determine the U.S. GDP:

Consumption, the amount that consumers pay for goods (durable and non-durable).
Investment, the amount of money spent on new production facilities, that is, plants and facilities.
Services, the amount that consumers pay for the services they use."

Consumpton and Services are largely driven by population growth, real growth is driven on the Investment front and can and should be measured by consequent productivity.

Ignoring for the fact that I don't remember anyone making GDP the metric to start with. All your GDP table shows is that a one shot injection of cash will lead to a spike in spending and so GDP, as will continuing increases in Government spending. I also find it interesting that you chose to end your series with Q3 2005, which might have a little something to do with Q4 2005 coming in at 1.7%
http://www.bea.gov/newsreleases/national/gdp/2006/gdp405f.htm

Let's continue TB's series shall we
Q4 2005: 1.7%
Q1 2006: 5.6% one for TB
Q2 2006: 2.6%
Q3 2006: 2.6%
Q4 2006: 2.5%
Q1 2007: 0.6%

TB there is a word for someone who cuts off data series at the precise point they stop being useful or their purposes. Dishonest only begins to touch it.

And only a economic cretin would imagine that the real growth effects of a tax cut, to the extent that they exist, would pop up in the next quarter.

BTW you really should know a little more about economists before calling Bruce Bartlett a liar. He for most purposes is the leader of the pack for tax cutters, he wrote the book on freaking tax cuts. No not figuritively, literally.
Reaganomics: Supply side economics in action . He has come to a more moderate position on the growth effects, but he is still a leader among tax cutters. Pretty much what you are doing is be a puppy pissing on the Alpha Male. I doubt he will notice, or care if he does.

[Bruce Webb]

Farrar: "But has he posted any erroneous info?"

Erroneous? Worse than erroneous is cherry picking and or/laziness. It is not like I had to go to some other data source than TB did. The latter numbers didn't support his argument so he dropped them.

That is a sophomore debating trick, that is data cooking, not a contribution to a reasoned economic discussion.

[evagrius]

"Yes they were, it is up to them to provide insurance for their children, if their jobs don't provide it and they can't afford insurance then it is up to them to get jobs that does provide insurance or pay enough so they can buy it for themselves."

From the biography you gave, I surmise that your parents were remiss in providing you with health care since they obviously couldn't or wouldn't find employment renumerative enough so that they could pay for health insurance. I must also conclude that you had such an excellent constitution that you never, ever, once needed medical care while a child. Such luck is quite rare. You should count your blessings. Perhaps your parents had excellent genes.

[evagrius]

TB- Then why aren't you dead? Obviously somebody provided health care for you so that you are with us still. I guess they didn't suscribe to your views. Too bad.

[2slugbaits]

TB: "And late into that recession there were tax cuts, the capital gains tax cuts of 1997 were a huge economic stimulus for the expansion of the late 90’s."

You need to get your stories straight. I thought your side always argued that the capital gains tax cuts were responsible for the surplus. Wouldn't the surplus have a contractionary effect?

[2slugbaits]

TB: "Yes that is the whole point of cutting taxes, leave cash in the economy to allow more spending and investment. It primes the pump, the extra spending and investment then creates more jobs which creates more jobs and so on."

Gee, I always thought it was to stimulate aggregate demand so as to soak up idle capacity.

After reading your posts it's pretty clear that you don't quite understand the difference between a supply side tax reform and a demand side stimulus.

[skeptonomist]

Don't forget that top marginal tax rates from 1945 (actually even earlier) through 1980 were always above 70% and often above 90%. The period through the 60's is often regarded as the golden age of the American economy. The Clinton tax increases, which Republicans liked to describe as the "largest in history", obviously did not lead to disaster, rather were followed by one of the largest booms in history.

One can argue that tax cuts _may_ stimulate the economy, _if_ they lead to increased investment. The historical record proves that high taxes do not lead to economic disaster.

says...

TB

My personal circumstances are completely irrelevant to my stated position that each of us is responsible for providing what we need or want in life and have absolutely no right to what belongs to others.

Then quit bringing up your personal circumstances whenever it suits your point. Since you started it, it is relevant.

[evagrius]

Then quit bringing up your personal circumstances whenever it suits your point. Since you started it, it is relevant.

I believe I started that particular trend. I was interested in the genesis of Mr. "B"'s particular opinions and thought they might be linked to his life circumstances, ( as most people). I find the link to be most curious.

[calmo]

Very crisply penned skeptonomist. Bartlet says I am not arguing for a reversal of the tax cuts or in favor of a tax increase. I am just saying that one has to do more than mindlessly repeat mantras about the benefits of tax cuts or the horrors of tax increases if you want to be taken seriously in this debate. and only some of us are hearing this message.
Do we need to trot out the stats to show that the investment derived from these tax deferrals (to use pgl's more accurate term) were not spent expanding plants in the USA? Can we just look at GM investment in China to provide a clear picture of the impact of globalization on this "investment"? Do we need to remind ourselves of the repatriotization of foreign earnings at almost 6% (over-riding the 35%)?
Crisp, but conservatively penned, I would say.

[ilsm]

TB,

You are the strawman master.

Stop worrying "they" won't take what is "yours".

Maybe.

[Farrar Richardson]

It seems obvious that most of us who frequent this blog have more or less the same idealogical outlook - somewhat to the left of center. I started reading coming here because I discovered that I could read Krugman for free, and stayed on because I could update my slim economic education in an atmosphere congenial to my political views.

It is extremely disturbing when someone new comes along and starts agressively and persistently attacking what the regulars have come to regard as self evident truths. It can be infuriating when the agressor dogmatically refuses to recognize that the regulars may have even a slight bit of truth on our side. This leads to name calling, insults, mind fucking, and generally gets in the way of productive discussion.

What is more disturbing to me is that it may also lead us to deny simple truths which the "agressor" may bring to our attention.

I am referring to TB and his statement that the Bush tax cuts of 1973 increased GDP. It seems obvious to me after reviewing the question only superficially that they did increase GDP. The IRS sent out refund checks for a backdated child credit increase, and that lower withholding taxes kicked in, both in the middle of 2003. We can hardly deny that consumers - even high income consumers - spent some of this increased disposable income, that they are still spending it, and that this has been reflected in increased GDP, which most people consider to be growth. This may not have been the kind of growth we would have preferred, or the benefits may not have gone to the "right people", but it was growth.

For estimates on the amount of growth take a look at the FRB paper reference that TB gave us -

The Household Spending Response to the 2003 Tax Cut:
Evidence from Survey Data
Coronado, Lupton, and Sheiner

Abstract
"The Jobs and Growth Tax Relief and Reconciliation Act of 2003 has been
described as textbook fiscal stimulus. Using household survey data on the self-
reported qualitative response to the tax cuts, we estimate that the boost to
aggregate personal consumption expenditures from the child credit rebate and the
reduction in withholdings raised the average level of real GDP in the second half
of 2003 by 0.2 percent and by 0.3 percent in the first half of 2004. We also show
that households in the survey were well aware of their tax cuts and tended to
spend equally out of the child credit rebate and the reduced withholdings, a result
that is contrary to the conventional wisdom. "

To me it looked like the writers were making a lot of guesses and perhaps unwarranted suppositions to force amorphous data into shape, but it does support the thesis of a fairly strong boost in consumption as a result of the 2003 tax cuts.

Part of the problem was in the way TB presented the data - a simple progression of quarterly data, and to my mind an innaccurate analysis of the difference between the 2001 cuts and the 2003 cuts, along with accusations of mendacity, and questionable data comparisons.

You will also note that the claim of a higher MPC shown by the higher income brackets is not even mentioned in the abstract, possibly because it is one of the least well supported conclusions of the paper IMHO.

Nevertheless, it seems to me that some of us were prone to a knee jerk over-reaction to TB's attacks, and that this contributed more heat than light to the discussion.

[Lee A. Arnold]

Farrar, don't worry about anyone's kneejerk reactions. TB was wrong in his main argument, and wrong in some of his details. He also cast the first epithet, unprovoked, although then he claimed otherwise. (I say: infantilism also should be banned. But most readers, sadly, are used to that sort of thing.) Much more important, everyone here ALREADY knows the short-term effects of tax policy in the business cycle. Propagandists have been using it to claim miracles for years. Of course, they can't use it to explain other examples, such as the "explosive" growth of GDP in 2006, ("explosive," in not atypical trollic hyperbole) after Clinton's tax increase yet before the capital gains cut -- but then, "Consistency is the hobgoblin of small minds." Another jury-rigged explanation is on its way, no doubt... Anyway that is not the issue. The issue is, how does ANY of this make Bruce Bartlett's column incorrect?

[Holly W.]

Farrar Richardson: Nevertheless, it seems to me that some of us were prone to a knee jerk over-reaction to TB's attacks.

I don't think it's knee-jerk so much as a reaction to his combination of monomania and inconsistency. I pressed him for details when he first appeared regarding his assertions that [a] government hand-outs keep people down, and [b] he has pulled himself up by his own bootstraps. After all, his could be an inspiring story. His response was that [a] he himself had never received any government assistance in his life -- only the people around him did (nevertheless, it took him until he was 37 to change his life and get out of the hole that government hand-outs -- or the lack thereof, since he wants it both ways -- were keeping him in); and [b] he didn't have to tell me how he improved his life, because it's not important; what matters is that anyone can do what he did and pull themselves out of poverty -- even though he can't tell us what he did, or what he's doing now to make $70k a year (which he expects to double in the next five years). It's this combination of roundabout arguing, boasting, and secretiveness that made me decide that he's simply not worth interacting with.

We have intelligent, practical conservatives on this board -- Save_the_Rustbelt, for one -- and I enjoy seeing their questions and points.

In addition, I feel as if I know a little something about most of the regular posters here -- where they live, what they do for a living, what countries they've lived in, etc. I know my own personal information seeps into some of my posts, too. But I don't get any sensation that I'm getting genuine information from TB. Yes, I know the rest of us could be lying about our circumstances in order to seem genuine, and just doing a better job of it -- I'm sure someone must run a course in "how to be persuasive on the internet," and adding personal tidbits would surely be one of the topics covered -- but I prefer to think that the regular posters that I've come to know a little over the past year or so are truly being themselves. When someone is very secretive, a la TB, it has the potential to poison the well a bit, and make everyone trust each other a little less.

Sorry for the long lecture, and I don't really mean to discourage you from debating with TB if you're enjoying it. I do, however, object to the way he has managed to hijack this blog, and I will not be acknowledging his existence after this post.

[Lee A. Arnold]

TB: "That is factually incorrect, I only respond in kind to personal attacks."

And that is why the very FIRST use of abusive epithet in these threads is "will you and your kind stop mindlessly repeating your idiotic mantras"

[Lee A. Arnold]

And your reasons for the GDP increase in 1996 but NOT 2004 are?

[calmo]

Holly, a genuine person (looking for market share against the cheap and shoddy goods that are diluting the quality of this fine blog...forming a duet with Lee, or maybe a small ensemble with more.) [A Wagnerian Opera with a cast of thousands!] who is up against it with this case and doesn't want to be perceived as a failure in her valiant efforts at reformation of the wayword...reconstitution of the 37 yr old pighead...personal salvation of the "debaters" (some debate when the moderator is also the debater...you figure there is evidence to the contrary? U would be wrong. U R wrong.)
Well, let me see if I can inflict an injury on me self to get some of that attention...I am soon to be so wounded.

[Lee A. Arnold]

Despite all this nonsense, I would like to know what Mr Bartlett thinks about my theory that long-term economic growth responds more to available resources, education (and social capital,) and freedom of thought (to innovate,) than it does to any tax and deficit policy but the most onerous. I'm not backing it up with any facts though!

[Holly W.]

Bon mots from Calmot! (Calmo, you are a 10 on the Cal-mohs scale [so I do not believe it's possible to wound you.]) I am going to read your post as supportive -- and I am not so earnest that I can't take some good-natured ribbing about my love of parentheses.

[Lee A. Arnold]

And your evidence to support your claim "through to this day," and clearly distinguished from your other "many factors that affect the economy," is what, exactly?

Now don't go jumping to another claim. Prove this one, first.

[Lee A. Arnold]

And: You perceived the phrase "one has to do more than mindlessly repeat mantras" as, you called it, a "personal attack?"

[calmo]

Merciful heavens Holly! Of course I am woundable. It is my only strength. How can I possibly get to those savvy nursing skills bein Mr. Titanium?
I may not recover from this blow which has already reduced me to typing with my nose...15 minutes to get this far (damn capitals) an more.
"...my love of parentheses" a note from a Salinger reader...or just another marginal multiple personality disorder?...the best kind.

[Bruce Webb]

"only that the tax cuts of 2003 directly stimulated economic growth which continues through to day."

The BEA reports Q1 2007 GDP at 0.6%. The BLS reports Q1 Productivity at 1.0%.

The fact is that the last six quarters of GDP numbers simply don't support your claim. This statement is simply dishonest: "No more quarters were needed to show that GDP growth increased substantially after the tax cuts as opposed to before." No the numbers stopped being useful, so you deliberately omitted them. That kind of data cooking would get you thrown out of any well run graduate program. You committed an act of intellectual fraud and got caught. Deal with it.

[evagrius]

"One doesn't need health care to remain alive. The first bit of health care I received at the age of 43 with minor knee surgery."

You mean you delivered yourself when you were born? You bought and administered your own child immunization shots?

Amazing. It's a first in human history.

[evagrius]

"Yes it is the "self evident truths" that people have a right to what belongs to others, that our individual rights are subordinate to the social good that I am intensely opposed to."

Interesting. So you oppose "social good", ( your term). Shouldn't it be "social evil"?

[evagrius]

"You don't need health care to be born, and you don't need immunization to stay alive."

So...what did your mother do, just plop down on the ground and out you came?

You received no shots for diptheria, smallpox, etc?

As I wrote, amazing!

[evagrius]

"Interesting. So you oppose "social good"

Yes, when it is at the expense of the individual rights"

Well, there must a reason for your moniker. I think I found it.

[evagrius]

So you were born without a doctor or a midwife to assist your mother?

Midwifes are health care providers. That's how most people have been born. That's one of the foundations of health care.

And you don't need health care in order to live?

Hope you don't get sick. Weren't you ever sick?

Give it up....

[Lee A. Arnold]

TB: "Are you saying there isn't economic growth up to this day? Because the data shows there is."

"Deliberate misinterpretation of a question" is your flipside M.O. to: "blind assertion as proof." If you care to hide your analytical poverty from the rubes, rhetorically you must do MUCH better than this... And I thought he was calling ME mindless, you fool!

[Bruce Bartlett]

I have posted some additional material here:

http://bartlettblog.townhall.com/g/f0e56288-323e-458c-9b65-e90696b6c255

[run75441]

TB:

Gee whiz TB . . . did overall employment grow which is a sure indicator of the economy growing. Be careful what you answer as Unemployment Ratio is a game when comapred to Participation Rate. We have not hit the point where baby boomers deplete the Civilian Labor Force. But then to Immigration has increased it and has kept the median age at ~35 years. We are one of the fewest countries with a young and growing work force.

[AlexPeterrs]

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