Tuesday, November 03, 2015

Fiction Can Be Fun-- Guest Post From Oren Jacobson


In watching the GOP debate I couldn’t help but wonder if the party exists in some sort of alternate reality? They claim to be the party of fiscal responsibility even though they increase spending more than Democrats. They hammer Obama over the debt. Yet, they worship at the altar of St. Reagan, a man who pushed the federal debt as a percentage higher than any other modern administration. Are we living in parallel universes? How else you can explain these claims?

Trump thinks his tax plan can leave us with a balanced budget.

No, Donald, it can’t. Don’t take my word for it, though. The conservative Tax Foundation said your plan will cost us $10T over the next decade. To top it off, Donald claims that the rich can afford to pay more but his plan gives top earners an income bump of 21% after taxes.

Dr. Ben Carson thinks we can run the country on a 15% flat tax.

Think this sounds like a fantasy? So does Republican Governor John Kasich. You both would be right. That’s not really the worst part of this, though. Dr. Carson said our GDP is big enough to take 15% and fund the government. There is just one problem with that statement. We don’t pay taxes based on the gross production of our country. We pay taxes on the net profit. Those aren’t the same thing.

Sen. Cruz stated emphatically that we need pro-growth policies and the key to growth is to cut taxes.

Remember in 2001 and 2003 when the GOP pushed through those supposed job creating, growth spurring, tax cuts? Buyer beware. The Bush tax cuts actually cost at least $2.5T and that’s being conservative.

Sen. Paul thinks threatening to default on the debt to in order to cut spending is a good idea.

The last time the GOP played chicken with our economy they cost the country $24B. Beyond that, Paul ignores the reality of our government’s borrowing costs which, despite our challenges, remain low. Why? Compared to the rest of the world we still have “relatively” healthy economic conditions and a (somewhat) functional government. Thus, we remain the global safe haven.

This keeps our borrowing costs down. When we demonstrate that we can no longer be trusted to govern ourselves the cost of our borrowing will go up. A default on our debt will certainly lead to an increase in the deficit, debt, and an economic disaster. Fortunately for us, Sen. Paul won’t be able to try and use this tactic again until at least 2017. At least Sen. Paul answered the question. Sen. Cruz used his time responding to this very substantive question by attacking the moderators for a lack of substantive questions.

Gov. Chris Christie says Social Security will be insolvent in 7-8 years.

Governor, you were cool in the debate. Leaning on that podium, relaxed, with a coy grin. You repeated endlessly that politicians should stop lying and stealing from the people. Too bad the fact checkers said you were the one lying about Social Security.

Donald Trump says there is nothing wrong with taking advantage of the laws of the land.

He used the bankruptcy laws on the books to his advantage so this is a factually accurate statement. What’s the big deal, then, right? Check out this Princeton study on the influence of wealth (and special interests) on policy. It says people with money influence policy and people without it don’t.

Of course he is following the laws. That’s not hard to do when you pay to have them say what you want. That’s the problem.

Gov. Jeb Bush stated that the middle class has $2,300 less in their pocket than when Obama came into office and Sen. Cruz said the median wage is down $733 under Obama.

How about a deal? We will stop blaming Bush when you stop trying to pin the economic impacts of the recession on Obama. Sound fair? If not, here is some real interesting information for you. In 2007, before the recession, the middle class had lost about $18,000 (chart above) since 1979 due to income inequality. And, wages have been essentially flat since 1973 (chart below) for the bottom 90% of Americans. Is that Obama’s fault too?

Sen. Rubio thinks his tax plan benefits the average worker more than the rich.

When pushed by moderator John Harwood, Rubio defended his tax plan stating that those at the bottom see the biggest gains. When you dig into the details, though, you see the top one percent do in fact do better than working Americans in his tax plan with one exception.

How much money are you making to be a part of the group, the bottom 10%, who benefit from Rubio’s tax plan? The bottom 10% earn about $13,000 per year. Or less.

To Rubio’s credit that is the group he was accurately describing in the exchange, although if you read the transcript of the original question that’s clearly not what Harwood was asking. He wasn’t lying, though, unless you consider this information.

For any American making above $13,000, but below $385,000 (roughly the threshold to be in the top one percent), you actually receive a smaller NET benefit from Rubio’s tax plan. In other words the top one percent of earners in the country receive a bigger tax break than 89% of Americans.

Three amazing notes to this:
1. The right wing media thinks Harwood is wrong for suggesting that the top does better than average Americans.
2. If the scoring of this plan is accurate (which is doubtful) the top one percent would see at least a $67,000 after tax raise. That means their tax break alone is in no less than the top 38% of earners in the entire country.
3. Just their tax break. Let that sink in. Rubio thinks this is a good plan.
Why can’t any of these candidates come up with a tax plan that provides a bigger percentage break for people below the top one percent?

Carly Fiorina claimed that women have been left behind in Obama’s economy while declaring that when government increases its role in the economy growth slows.

First, women saw a net increase of 416,000 jobs during Obama’s first term alone, so the fact checkers disagree. Secondly, the greatest period of economic growth in the last 100 years came during the New Deal when government was heavily involved in the economy to fix a crisis. Government isn’t always the answer but history seems to contradict her claim.

All the candidates unequivocally believe that the policies of Barack Obama have failed.

Somehow our job growth trend is bad. Somehow adding 8 new million jobs, which includes assigning all the job losses at the start of his term to his record, is bad. Somehow the longest period in American history of sustained private sector job growth is bad. Somehow the gains in the stock market are bad. Somehow the unemployment trend and rate is bad. Somehow these manufacturing trends are bad. Somehow these real estate trends are bad. Somehow these gas prices are bad.

Republicans will counter all of that, as they did during the debate, by attacking the poverty rate under Obama. What they never share, though, is that the Reagan administration also experienced poverty as high as 15%. In fact the poverty rate under Reagan, who was dealt a far better economic hand than Obama, was between 14% and 15% for half of his presidency and never dropped below 13%.

Another GOP trick is to compare the Obama economy to other recoveries, and attack the results, despite the complete lack of contextual similarity. However, there is only one economic period in our history that is comparable: The Great Depression. The Great Depression started in 1929. It took until 1941 for our national GDP to exceed the pre-Depression levels. And, FDR had the government funding of a world war to drive his economy.

There isn’t a Democrat in America who thinks that the work is done. That things are good enough. Not even President Obama. But, the GOP lives in some alternate reality in which the economic record of the last seven years is the real disaster, not The Great Recession. If the GOP plans to make this election a question about which party should be trusted to guide our economy every Democrat should welcome that fight.

Fiction can be fun. But, I prefer the reference section.

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At 3:46 PM, Anonymous Anonymous said...

It's real hard to read the lies of lying liars, for I get so angry I only risk a stroke or a coronary.


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