Memes and Damned Lies
Posted: October 11, 2011 Filed under: The Media SUCKS, the villagers, U.S. Economy, We are so F'd | Tags: 53 percent astroturfers, economic myths 28 Comments
I posted a group of statistics in the Monday Morning Reads to offset one of the most specious memes floating around the right wing these days. I think it first gained some traction when Michelle Bachmann introduced it in one of the debates right after Obama introduced the idea that millionaires need to pay their fair share of taxes. It’s basically billionaire blowback for some one suggesting they pay for the roads they drive on, the schools they attend, the police and fire fighters they call when they are in trouble, and the soldiers–yes even the gay ones–that protect their assets here and abroad. The little whiny boys think they pay more than their fair share and it’s the damned poor that are getting off easy! Poor little babies!
There’s this incredibly misleading statistic being bandied about that over half of the taxpayers don’t pay federal taxes. I also talked about the fuzzy math and logic in this post about 10 days ago. It keeps popping up in response to the so-called Buffett rule that would ensure that billionaires don’t pay lower effective tax rates than their secretaries. Well, it’s now turned into an Astroturf movement called “We are the 53%” that turns the class war back to one between the poor and working class that includes the Dread Pirate Eric Ericson among others. All this is based on an anomaly for the 2009 tax year and ignoring all taxes but the income tax. There are memes and then there are out and out lies. My Monday post linked to this analysis at the CBPP. Here’s a highlight if you don’t want to follow this link.
A recent finding by Congress’ Joint Committee on Taxation that 51 percent of households owed no federal income tax in 2009 [1] is being used to advance the argument that low- and moderate-income families do not pay sufficient taxes. Apart from the fact that most of those who make this argument also call for maintaining or increasing all of the tax cuts of recent years for people at the top of the income scale, the 51 percent figure, its significance, and its policy implications are widely misunderstood.
- The 51 percent figure is an anomaly that reflects the unique circumstances of 2009, when the recession greatly swelled the number of Americans with low incomes and when temporary tax cuts created by the 2009 Recovery Act — including the “Making Work Pay” tax credit and an exclusion from tax of the first $2,400 in unemployment benefits — were in effect. Together, these developments removed millions of Americans from the federal income tax rolls. Both of these temporary tax measures have since expired.In a more typical year, 35 percent to 40 percent of households owe no federal income tax. In 2007, the figure was 37.9 percent. [2]
- The 51 percent figure covers only the federal income tax and ignores the substantial amounts of other federal taxes — especially the payroll tax — that many of these households pay . As a result, it greatly overstates the share of households that do not pay any federal taxes. Data from the Urban Institute-Brookings Tax Policy Center show only about 14 percent of households paid neither federal income tax nor payroll tax in 2009, despite the high unemployment and temporary tax cuts that marked that year.[3]
- This percentage would be even lower if federal excise taxes on gasoline and other items were taken into account.
The bottom line is that it’s an outlier created by the recession, the “Making Work Pay” tax credit, and ignoring all the other taxes people get socked with including the highly regressive FICA taxes. Cannonfire has a great post up today that summarizes exactly how a group of extreme narcissists with antisocial personality disorder (e.g. Libertarians) are using this misleading statistic to draw attention away from Occupy. Of course, there are the other usual right wing memes floating about the Occupy protestors as you’ve read here and many other places. They are “paid union thugs”. They are spoiled kids who don’t want to pay their credit cards. They are poor because they are lazy. They are Marxists. They are Leninists. They are anti-American. It’s an Obama plot! It’s a DNCC plot! It’s just been one canard after another. I’m sure well be buried chin deep in the lies by the end of the next Republican Debate Debacle tonight. I’m just wondering what hard working American they’re going to boo or send the die sucker love to tonight.
I could spend all day ranting about this and I guess I have given that it’s my third post of disgust in about 10 days but I wanted mostly to frame that current meme in terms of a MoJo post on 6 Big Economic Myths. It’s got so many nifty graphs that my legs actually tingled! It also outlines some of the worst economic lies that we’ve been fed since the Reagan years and the ones that have been specifically invented now to keep congress rigging the economic system to benefit the most wealthy and powerful. If you can stomach watching that debate tonight, keep these myths in mind. Also, go read the article for the full effect. There’s no need for me to reproduce it here for you.
Myth #1: The Stimulus Failed
Short explanation: It wasn’t Max’s Miracle Pill but the economy would’ve been worse without out.
Myth #2: The deficit is our biggest problem right now
Short explanation: The unresolved leftovers from the financial crisis are the problem and are creating deficits, joblessness, and all kinds of problems. That’s the overarching problem! Undoing everything the Dubya administration did is the solution!
Myth#3: Lower taxes are the best way to grow an economy
Short explanation: No way no how. No empirical data supports this at all.
Myth#4: Regulatory uncertainty is clogging the economy
Short explanation: Deregulation did this to us. Good Regulation of financial markets leads to reduce information asymmetry and leads to better outcomes. Also, the number one concern of businesses is lack of customers if you believe them when you ask them.
Myth #5: Obama is debasing the dollar
Short explanation: Devaluation of the dollar is a good way to beef up exports and stop the outflow of jobs to other countries.
Myth #6: If you unshackle the rich, they’ll rev up the economy
Short explanation: No way. No how. If anything they take their money and create speculative bubbles in markets. They also use their money to invest in other countries and vacation there. Evidence is contrary to that.
The one thing that Republicans and their libertarian buddies never run out of are out and out lies. I am a pragmatist. I follow the scientific method and the data. An ideologue creates a narrative around what they want to believe and then wraps it up in whatever it takes to make it sound appealing and plausible. You can call it a meme or a canard. You can call them opinions or ideologies. I just call them damned lies.
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I can’t decide on a logical explanation for the stupidity coming from the GOP/Libertarian side.
1. Poor education — no logical reasoning ability, lack of classes in statistics.
2. They are merely saying what they think their base wants to hear.
3. Their brand of Christian Religion rots the brain.
4. They will say anything to get air time.
5. Stupid, stupider and stupidest are trying to out do each other.
What’s really weird is most of the original libertarians were atheist. I don’t get how they’ve been co-opted by religionists but the call went out in the 1980s for the moral majority legions to go take over whatever they could. Ayn Rand thought religion to be the realm of the stupid and said so frequently.
Jesus was supposedly a peaceful, compassionnate, forgiving person who was kind to poor people and children. And they co-opted him. Ayn Rand is nothing compared to Jesus.
The Tea Party Movement (Which libertarians were a part) is what has been co-opted by the religionists. Libertarianism is not focused on either religion or it’s absence.
Ayn Rand is only representative of Ayn Rand, and adhered to her own label (Objectivist), and never embraced libertarianism per se, nor do libertarians necessarily embrace her, and her views…. though there is some common ground. She is definitely a factor in modern libertarian thinking, but only one of many.
Well, that’s really good evidence that you know almost no actual libertarians.
Myth #1: I have never read/heard a satisfactory explanation of how we can know.
Myth #2: Those historical and astronomical numbers bring up the question of Wiemar Germany. We haven’t seen rampant inflation that’s associated with that phenomenon. A 14 trillion national debt is mighty scary though.
Myth #3: If lower taxes worked, they surely would have worked… or is that like Myth #1, and they worked but no one can really know that they worked? It’s just another way to stimulus, right?
Myth #4: China is full of regulations and taxes. Perhaps not the kinds of regulations that protect workers, but the kind that can pull the rug from investors at any time.
Myth #5: It seems our dollar has lost some of it’s power to buy the staples of life, but we can still by technology from China on the cheap. What’s up with that?
Myth #6: How much more can we unshackle the rich? I think we need to unshackle everyone else. Find ways to take the penalties off the self-employed, Allow people to create their own futures instead of relying on people with wealth… except perhaps as customers. And do we have to pay workers what the Chinese pay workers in order to be competitive? I have a sense that someone is always going to have to wear those shackles. ‘sad
These problems are too complex for us to arrive at easy to understand, and easy to fix answers. It is my sense that we are experiencing more cyclic existence here, and that we will need time to swing back. We have had a very long up cycle, so here’s a long down cycle.
I have long observed that the American people demand and expect open-ended prosperity without downturns and set backs. Each year MUST perform better than the last. This is especially true in the corporate world, but we all generally expect raises. Life isn’t like that, so we suffer the downturn anyway, and we suffer the reactions to the downturn even more. Suffering upon suffering.
Click to access The_Job_Impact_of_the_American_Recovery_and_Reinvestment_Plan.pdf
That’s an example of what economists have found doing empirical research and talks a little about the models and methodology to determine that. It’s really easy to actually capture the effects of tax increases/decreases, government spending, and all these things after the fact. The macroeconomic journals are full of evidence that it worked although not quite as predicted. Predictions and forecasts in economics are like predicting and forecasting the weather. However, after the fact you can see what’s happened. You need to check the academic journals and leave the think tanks that rely on political ideology alone.
Wiemar Germany printed tons of paper money when there was no functional real economy. The United States is not Greece. It is not Germany after the wars. It isn’t even the US after the wars. You can’t look at nominal figures and gulp because they are big. You have to look at ratios and numbers adjusted for inflation. The deficit will take care of itself when the economy is growing again and if the country gets back to a more normal tax structure.
Again, I rely on what I told you in question 1. I have no idea what you’re reading but if you read the peer-reviewed research and it’s been going on since the Reagan years, that’s a big ol’ falsehood. The data clearly shows that to be false. Tax cuts are known to be less effective forms of stimulus because their multipliers are lower. Government spending goes out on the first round at 100%. Taxes go through consumers who use them not just to spend but to save, pay taxes, and buy imports. Tax multipliers are even worse than they used to be because a lot of savings/investing goes over seas as well as spending dollars for imports. You get a lot less bang for the buck with tax cuts and next to nothing with tax rebates. Any savings used to pay down debt–like a lot is now–is not stimulatory in the least.
Any basic economics books explains this really well and any advanced book with empirics has numerous studies that tank stupid things like that Laffer curve. These things aren’t even controversial in the field at all and have nothing to do with political persuasion.
What’s China got to do with anything? Financial markets are not akin to markets for number five red wheat. It’s not a market for a good or a service and pricing is influenced by many frictions. Regulation is absolutely necessary for them because of the incredible amount of insider information and cheating that can occur. Plus, gambling with other people’s money. I’m not sure what your point is here other than ideological.
China subsidizes its businesses and manipulates its currency to bugger our economic growth basically. They’ve distorted incentives in some markets much like the Japanese did for awhile with the auto industry. It’s hard to compete with a country with a massive industrial plan that includes transferring tax payer wealth over to a business. However, we do this too to a lesser degree. By lowering the dollar’s value, it’s attempt to offset that without directly subsidizing businesses. The basic staples are less likely to be part of a country’s industrial plan that made to drive economic growth based on an export of something. Usually, that’s been cars, electrical stuff, and things like that. Also why we can’t compete on the Green industry. Unless the tax payer subsidizes the businesses like China does, our products will never be cheap enough to compete. Also, China’s not really full of regulations. That’s part of the problem. Take pollution. They let it happen and no one cleans it up. It creates terrible problems. Every where else we make folks clean up there messes which costs money. No clean up costs. Cheaper product. People go to Walmart and buy the cheapest product. Distorted market incentives rule again.
Well, classical economics explains that workers should be paid according to the marginal productivity. Oddly enough, our growth industries are things like financial stuff where there is no real productivity, only gambling and mark up. However, again, distortions exist in markets. Government creates some. Having nonstandard products creates some. Needing a lot of technology or machinery creates some. It’s a mixed bag. Again, a lot of countries are using export driven growth strategies in key industries that mean no one else can compete in a market. As long as you’ve got huge powerful monopolies, oligopolies, or government subsidized industries, it’s gonna happen.
Great explanations, Dak!
Yes, great explanation and great post.
What gets me is that the media is totally sold on the right wing memes and lies.
If the media keeps repeating the lie often enough . . . . . . . .
Yeah, what happened to the “Liberal” press?
It never existed. At one time there were smarter people in the news media, but they weren’t really liberals.
It seems they did more real reporting back then too…
To add another thing to look for in the debate, for any who can stomach it…
Inside the Cain Tax Plan Bruce Bartlett
Those are the good parts of his plan. Dog save us from Pizza Pushers with tax reform plans. This one is horrific.
He’s a nutter. There appear to be former Hillary supporters that like him for some reason. Nothing he says has any basis in reality so I can’t figure out what the appeal is …
In my opinion only, I think some Hillaryites have just let their disgust for Obama push them over the edge. I can understand hating Obama but that has it’s rational limits. Past that point you get into tin foil hat territory and everything, which is not sufficiently right wing, becomes some sort of Marxist plot to re-elect Obama. When they start pimping for right wing nutcases, I step away cause that’s over my line.
I think that yields to him much more power that he actually holds now. Unless something totally insane happens, and it could with the GOP base, Romney is going to be their nominee and will probably beat Obama in 2012. Considering the crowd currently running, that’s probably as good as we can get.
My Orwellian novel goes like this: Mitt Gets Prez and takes on a real nutter as VP. Other nutters can’t take Mitt for various reason. Mitt gets assassinated we get stuck with two nutterz and a nutter congress. At that point I get put into a gulag with a whole lot of other people and we start living Hand Maid’s Tale as the Religious police take to the streets.
Geez Dak, that is a good one, can’t wait to see the movie. Will it be a Michael Bay production?
Minxy: I’m just hoping the Swedes or the Norwegians will rapture me to a fjord some where.
Luckily, I’m too old to bear chldren. But they’ll probably either shoot me as a useless eater.
Anybody in the top 1%, including the media, is for the Republican hogwash because it’s good for them personally. Me me me me me. No long-term thinking allowed.
I am becoming so nihilistic and pessimistic that part of me wants the Republican poor to succeed in backing this anti-poor claptrap so that I can see the horror on their faces when they get no more federal assistance. Seriously. That’s what’s coming – no food stamps, no disability, no unemployment, no affordable housing, no emergency rooms, and on and on. The Red States get far more in federal aid than they send to DC in taxes.
Of course, I can’t really wish for that, being as how I fancy myself a humanist. But I’m getting to the same place I was in when part of me wanted Obama to win already so the blogger boyz (and Digby and other really stupid and weak wanna-be-in-the-boys-club females) would have to eat crow. But, see, I can’t get no satisfaction. Even though the fact that they were all wrong is as clear as the noses on their faces, they still can’t admit the truth. I guess they never bother to look in the mirror.
This is all so unbearable, not to mention unnecessary, if anyone were interested in the truth and charting a course of action that has been proven to work. Heavens, do they not realize that the country is coming to an end? Do we have to wait until every last one of us is out of work?
White House braces for defeat of jobs bill
http://thehill.com/homenews/administration/186737-white-house-braces-for-defeat-of-obama-jobs-package
Brad DeLong on Erick Erickson
http://delong.typepad.com/sdj/2011/10/hoisted-from-comments-the-three-jobs-of-erick-son-of-erick.html
#1: This appears to be a projection, or it ignores what actually happened. For instance it postulates that without the stimulus, unemployment WOULD have risen to 9%. Really??? This looks like a peer reviewed disconnect from reality.
http://www.tradingeconomics.com/united-states/unemployment-rate.
http://money.cnn.com/2010/01/22/news/economy/state_unemployment/index.htm
Don’t look at the projections like that. It’s like forecasting a hurricane. You may not know that the eyes going to hit a particular site at the exact date and time with precise airspeeds, but you know all the factors are going to drive at there withing a certain margin of error. The same physics dynamics that projects trajectories of rockets to the moon or hurricanes hitting cities is the same dynamics at play in economics. You don’t always not all the variables before the event but when you study it post event you know them, so you can rerun the model with the actual outcome and use sensitivity analysis to see the differences when you’ve got the data in hand.
Here’s a fairly nontechnical description of the Zandi/ Blinder findings:
Click to access End-of-Great-Recession.pdf
Click to access Blinder.pdf
I’m trying to avoid giving you papers with differential equations in them. These were meant for reading by nontechnical audience.
Here’s some links to more technical ones provided by Ezra Klein:
http://www.washingtonpost.com/blogs/ezra-klein/post/did-the-stimulus-work-a-review-of-the-nine-best-studies-on-the-subject/2011/08/16/gIQAThbibJ_blog.html
Thanks for staying with me on this.
I do remember people saying that the recession had ended, but it still felt like the recession. There are a lot of confusing things like that. A jobless recovery, a spike in the cost of living without inflation, and a couple of trillion of new spending in 2 years without the flush of capital.
You speak of peer review and technical expertise, but with Timothy Geitner as the paradigm of all that, the one holding the ear of The Emperor, what does it all mean?
Actually geithner is not an economist. I don’t think he is an example of any of that which is part of the problem. If you have read anything like confidence men it suggests the real economists like christie Romer were ignored. Now he is listening to lawyers like sperling. This recovery had been slow because every one is doing recessionary policy. States and their balanced budget amendments are a good example. Obama has mishandled things from the get go when it comes to the economy. Plus this is no ordinary cycle downturn we just came out of … Like a postwar recession. This was a financial crisis brought on by excessive speculation like the great depression or the panic of 1870 or the Asian currency crisis of 1977. Those take decades to clear out.