Bafflegab from the Club for Growth!

WEDNESDAY, NOVEMBER 30, 2011

Professors of the Times: The New York Times had a good idea for its new weekly section, the Sunday Review. Each week, it invites readers to take part in a dialogue about some particular topic.

It’s a darn good idea—but check out the way it’s being enacted this week!

Today, readers are invited to create a dialogue around a ridiculous, murky epistle from the Club for Growth. The letter concerns a rather mundane proposal for higher tax rates on upper-end earners.

This is the hopelessly murky letter around which we are invited to fashion a dialogue:
LETTER TO THE NEW YORK TIMES (11/30/11): President Obama and several Congressional Democrats have called for higher taxes on “the rich” as a way to help reduce the budget deficit. But we cannot ignore two negative byproducts that such a move would almost certainly entail.

First is the increased potential for tax avoidance. High-income earners, when faced with a higher tax liability, will go to great lengths to defer income, incorporate their businesses to take advantage of lower corporate tax rates, or simply stop working, among other things.

Second is the macroeconomic impact of higher taxes on the rich. Taking capital away from the very people who are most likely to create jobs will naturally result in fewer jobs.

This is no trivial matter. Even if the economic effect is ambiguous, lawmakers should “first, do no harm” when considering tax changes in a fragile economy.

Instead, the better course of action is comprehensive corporate tax reform. There is strong, bipartisan support inside and outside of Congress to lower corporate tax rates while getting rid of special-interest loopholes.

Such a proposal could be revenue neutral, but its effect on the economy would spur growth because the lower rates would increase production and innovation. And fewer loopholes would reduce the exorbitant compliance costs. Over all, such reform would create jobs, keep the United States competitive in the global economy and help lower the budget deficit.
This letter is from Andrew Roth, a VP at the Club for Growth. “This is no trivial matter,” Roth says, before pimping several trivial matters.

Might we note one basic point? Higher taxes on upper-end earners have been proposed as a way to produce additional revenue—“as a way to help reduce the budget deficit,” to quote Roth’s very words. In response, Roth advances a proposal which “could be revenue neutral.” Presumably, this means that Roth’s proposal would not produce any new revenue. Gobbledy-gook about growth to the side, this would also seem to mean that Roth’s proposal would not “help reduce the budget deficit.”

In normal lingo, that's what it means when proposals are "revenue neutral."

But so what! Roth proceeds to a contradictory claim, saying that his “revenue neutral” proposal would “help lower the budget deficit.” Does anybody understand how this works?

Here at THE HOWLER, we don’t.

What kind of dialogue are we supposed to conduct around this bafflegab? It’s hard to build a dialogue around such a murky initial offering. Of course, this is precisely the kind of murk which typifies the modern American discourse. The Times could have asked Roth to clarify his presentation.

But then, this is the Times.

We’ll also suggest that you read this op-ed piece, in which the Times enacts a familiar practice. Two professors with a new book are given the chance to present their claims and ideas.

Midway through, the professors ask an obvious but important question about our polarized Congress: “What enabled the uncompromising mind-set to dominate our politics?”

The question is quite important.

The professors try to address this question. We don’t know when we’ve seen a less illuminating answer to such a critical question.

The Times likes to publish the nation’s professors. We're often dismayed when they do.

23 comments:

  1. "...his “revenue neutral” proposal would “help lower the budget deficit.” Does anybody understand how this works?"

    Sure. Even though it doesn't change the revenue as a percentage of GDP, it has such a dramatic effect on "business confidence and consumer confidence" and it "enhances business conditions" so much that the GDP increases by leaps and bounds and taxes just pour in like some sort of milennial flood because the GDP goes through the roof. Raising taxes is bad, you see, but by reformulating taxes we can create business conditions that will not only end the recession but will create another 1960's economic boom.

    It's all bullfeathers, of course, but let's not let that stop us from enjoying our dream.

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  2. Although it sounds paradoxical, a "revenue neutral" tax change could reduce the deficit. Here's how:

    Revenue impact is generally calculated using static scoring, i.e., ignoring any possible economic impact. A "revenue neutral" tax change is projected not not increase or decrease tax revenue, assuming that this tax change would have no impact on the economy.

    However, the Club of Growth letter asserts that their recommended tax change would improve the economy. They say it "would spur growth because the lower rates would increase production and innovation." If they're right, then a so-called "revenue neutral" tax change would actually lead to more tax revenue.

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  3. If Dave in Cal needs three paragraphs to explain it, you know that it's bullfeathers.

    Every GOP/Club for Growth proposal is predicated on making the Bush tax cuts permanent and not changing the tax rates on capital gains; i.e., on protecting the 1% at the expense of the 99%. Dave is just a COG fellow traveler, spreading disinformation as if it were mulch on a flower bed.

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  4. I agree with the criticism of the NY Times discussion on the deficit and taxes.

    But the majority of the problem is not because the press is catapulting the propaganda . . . it's that both parties are catapulting the propaganda and the media serves their interests rather than question them.

    This is a bi-partisan, ruling elite scam. Both Democrats and Republicans carefully concocted this scam. Obama himself set up the scenario this summer where the U.S. gov. was about to default.

    This was a huge scam. Almost all Democrats are complicit and therefore guilty of this scam. The media is complicit too in that it did not call the Democrats out for their betrayal and complicity. But this is a political coup that is primarily being carried out by politicians in both parties with a helpful assist from the media like the NY Times.

    The Democrats are actually the most culpable. Then the NY Times. Then the Republicans. All three entities are guilty though.

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  5. BillNRock, I fixed your statement for you

    "Every GOP/Club for Growth/[and Democrat] proposal is predicated on making the Bush tax cuts permanent and not changing the tax rates on capital gains; i.e., on protecting the 1% at the expense of the 99%. Dave is just a COG fellow traveler, spreading disinformation as if it were mulch on a flower bed. "

    Apparently you are afflicted with the Democrat Disease. You foolishly believe Obama and the Democrats are telling the truth. Don't be a sucker.

    Why wouldn't Obama and the Dems have simply let the Bush tax cuts expire if that's what they wanted? Don't give me this crap it was a political necessity.*

    It looks like the mass of infantile Democrat suckers will fall for the same scam again. Obama rolled them the first time and he's gonna roll them again with the same damn lie! Like a carrot dangled in front of a dumb ass, the Democrats will dangle the mirage of a carrot, the taxation of the rich, for their sucker base to mindlessly follow.

    David in Cal may have the wrong ideology but he's not a stupid as an active Democrat.

    *what was the quid for the quo again? Oh yea, a temporary Christmass 2010 extension and that's it, oh, and maybe a little more movement on DADT, with the honor given to Joe Lieberman to end it--ha!

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  6. * the quid for the quo was a temporary 2010 Christmas extension of unemployment insurance (since expired).

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  7. As Dick Cheney said, deficits don't count, Reagan proved it!
    As Cheney also said, cutting taxes increases revenues and jobs, Bush proved it!

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  8. To make my point even more clear . . . The Club for Growth plan is EXACTLY THE PLAN OBAMA IS PUSHING!

    I mean, if you look at what he's really proposing rather than the vague and empty promises to increase taxes which Obama is not sincere about. He clearly is using the empty threat of higher taxes to get liberals to accept his right-wing Club for Growth plan.

    Mark. My. Words.

    Obama will do a bait and switch and will soon be pushing this piece of crap proposal and the Democratic faithful, like Digby and Kos, will jump on board.

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  9. Quaker in a BasementNovember 30, 2011 at 3:16 PM

    Roth proceeds to a contradictory claim, saying that his “revenue neutral” proposal would “help lower the budget deficit.” Does anybody understand how this works?

    I do. While the public debate focuses on marginal tax rates and loopholes, the House will busy itself with spending cuts in programs that benefit the bottom half of our economic system.

    Voila--deficit reduced!

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  10. Given your repeated, harsh comments on the nation's professors, you may be surprised to learn that they, too, are dismayed when The New York Times tries to publish (some of) their views. See this comment on the most prominent blog in philosophy: http://leiterreports.typepad.com/blog/2011/11/more-embarrassment-from-the-ny-times-philosophy-blog.html
    Suffice it to say, the professors who are chosen by the media to be published are usually among the least capable members of the academy. This makes it all the more surprising that Paul Krugman was given (and still has) a column at the NYT. Let us at least be thankful for that.

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  11. Wholesale bashing of The Professors --- rife with generalizations and excluding of voluminous examples to the contrary --- always makes for good, anti-intellectual, Irish Catholic fun, me boy. It's as prejudicial and dumb as anything Chris or Rachel do.

    But it does follow the Iron Howler Law: When Bob does it, it OK.

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  12. But it's not a good idea -- or rather one that is obviously dependent both on the original letter and those chosen to reply to it. In this case, the original letter was bogus, as you say, but in every previous such dialogue I've read, if the original letter was sound, the replies to it clearly were chosen to create that radical middle, fair and balanced, all voices are being heard and of course they cancel each other out effect that is one of the chief diseases of the Times' own coverage.

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  13. That philosophy blog on the New York Times is often the site of some of the most airheaded piffle you'll find online. The Times's Civil War Disunion series, featuring prominent historians on the 1861-1865 conflict, is the exact opposite. They always document their narratives, often introduce factual information rarely discussed publicly (see, for example, the excellent entry today on African-American soldiers from the American Revolution on), and do take into account a range of views on both the Union and Confederacy. Yet they build their case based on the facts. It's quite a marvelous glimmer amidst the usual New York Times detritus.

    Now, to the deficit. As Mit Man says, the fix is in. Save Bernie Sanders, the general starting principle for all discussions on the deficit have been that the Bush tax cuts remain permanent, or that they mostly remain permanent. Both the Democrats (pushing for $1.2 trillion in deficit reduction, when allowing all the Bush tax cuts to expire would bring in $3.8 trillion), and the GOP, which refuses to discuss any tax increases and babbles about "neutral revenues" and so on, have as part of their game plan to make the Bush tax cuts permanent, and slash the safety net to pay for it. Even a "liberal" Democrat like Dick Durbin is in on this.

    These people either have no clue how important Medicare and Social Security, as well as Medicaid, are to preventing our elderly and millions of children from falling into abject poverty, or they don't care. I won't ascribe malevolent motives to them since most are practicing Christians and Jews, but they really are pushing for very ugly outcomes to preserve tax cuts not for the middle and working classes, but for millionaires and billionaires. This is why they also keep pushing, as the President has, for "tax reform," which the Simpson-Bowles Committee, which could not reach consensus (that's the truth), pushed as well. Under this principle, the federal marginal rates will be streamlined, the top rate lowered, and rich people will thus pay lower taxes. That's the gambit. Lower taxes for rich people.

    This should be the question that every reporter asks every Democrat and every Republican. "Do you want to make the Bush tax cuts permanent and then enact even lower taxes for rich people? If you do so, you will explode the already swollen deficit, so how can you be for deficit reduction if your primary goal is to keep cutting taxes for rich people, which also explodes the deficit?" Then the reporter should ask, "In the mid 1990s, after President Bill Clinton RAISED taxes on upper income people, the country created 20 million new jobs. Why do you keep claiming that higher taxes on the rich would prevent the 'job creators' from creating new jobs when the fact is that doing the opposite has repeatedly worked, most recently under President Clinton?"

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  14. Anon, as a senior, I'm happy to be getting a SS check that makes me richer than the average American, notwithstanding my private pension and the money I've saved. I'm happy to be getting Medicare. It provides more coverage than just about any private health plan I could buy. Part B isn't free, but still my cost for Medicare is far below the cost of a comparable private plan, if such a plan even exists. So, I should be happy to see these programs continued uncut.

    However, there's a problem. Our government isn't collecting anywhere near enough tax revenue to pay for all its spending. You can argue that they could do so by just taxing the rich more. IMHO that wouldn't be enough. Furthermore, they aren't going to do it, because of political considerations. Even if they let the Bush tax cuts expire, a huge deficit will remain.

    All this deficit spending will eventually lead to high inflation. High inflation will be a disaster for me, because it will wipe out a lifetime of savings. The middle class is already suffering, because inflation in food and fuel has made them a lot poorer. This will get a lot worse if and when inflation picks up. High inflation will also cause a recession, since uncertainty in the future value of the dollar discourages business expansion.

    In summary, I love my benefits, but a stable currency is more important. I would support a cut in SS and Medicare as part of an overall plan to balance the budget.

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  15. Cogent as the second post above by Anonymous is IMO, I (the "Anonymous" who posted just before him/her) and that poster are two different people.

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  16. Anon,

    This is the way I see the Grand Scam going:

    1. I bet we get a flatter income tax system with the top rate maybe down to 25% or 29% or so with (you're gonna love this) the rates expanded downward so that even more people pay the lower rates of at least 5% or so.

    2. Elimination of mortgage interest and property tax deduction. Since this is limited to ~$1 Million properties it will mostly hurt the top 2%-15% or so of households, but because their top rates are reduced they may come out about even. The super rich are the ones that really make out well.

    3. Lowering of business taxes (15%?) in exchange for an end of loopholes and a one time repatriation of unpaid taxes.

    4. Maybe they lower the capital gains tax too (10%). Why not shoot the moon?

    5. Lower payroll taxes to 3%. Seems like a good thing but it will simply be used to starve Social Security and Medicare.

    I bet they kick the can down the road on Social Security (see #5 above) but keep cutting Medicare slowly and imperceptibly. That will give Obamacare a bit more time to set in so the insurance parasites can more firmly attach themselves to us and prepare themselves for the bloodletting that will come.

    All in all, like anon says, the fix is in. Even though this is a "deficit" crisis, supposedly, these measures will probably be revenue neutral but will be justified with the same neoliberal pixie dust the two parties are always selling--giving rich people more money will piss ponies on the rest of us, or something.

    Again, Obama and the other whores in his party and the other main party are criminals. Criminals. The fix is in.

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  17. David in Cal said: "In summary, I love my benefits, but a stable currency is more important. I would support a cut in SS and Medicare as part of an overall plan to balance the budget."

    This is the most amazing thing I have ever read. David in Cal acknowledges that the programs are vital and worthwhile. He loves them.

    DinC would keep his beenfits except that a bunch of rich people who don't need these benefits are likely to use their power to prevent the enactment of tax increases that would help pay for these benefits and in doing so are forcing DinC to choose between the benefits and a stable currency.

    Yet DinC isn't even angry at the rich assholes who have taken longstanding, worthwhile and popular benefits hostage. He doesn't think we should elect politicians who would push back. He doesn't think we should riot in the streets or Occupy Wall Street.

    He thinks we should give in to the hostage takers demands! We should pay the ransom! Negotiate with the terrorists!

    Because hey, its better to be alive, right? Better to be a slave than dead?

    Well, I got news for you DinC. This isn't the end. We can accept cuts in these social programs now, but the next crisis is coming and then we will see what gets cut next. Perhaps we will stop building roads and delivering mail to remote parts of the country. Then we can eliminate compulsory education. We can eliminate the due process clause and the 4th and 5th amendments and save huge amounts of money spent on the administration of justice and on and on. It will never end until there is a small rich overclass and permanent slave underclass without the means to fight against its oppression.

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  18. Dave, I didn't mean to say that SS is vital and worthwhile. I like SS, because people are giving me money. But, that money comes from working people. They should dislike SS just as much as I like it, because it takes money from them.

    Furthermore, the average SS recipient is wealthier than the average worker paying into the system. So, broadly speaking, SS is a program where poorer people give money to richer people. IMHO the reason liberals support such an unfair program is that they focus on those receiving benefits and tend to ignore those paying for the benefits.

    Looking forward, we retirees have a very powerful lobby in AARP, while the workers have no corresponding lobby. So, chances are we wealthy seniors will continue to live high on the hog at the expense of not-so-wealthy working people.

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  19. the club for growth has been advancing these lies since grover norquist was a zygote, so what else is new? the concurrent, contradictory "reduce the budget deficit", "revenue neutral" claim is mere icing on this always fraudulent cake. anyone who's taken econ 101 recognizes this letter for the hot, steamin' pile o' fiscal bullfeathers that it is. unfortunately, pres. obama did not take econ 101. had he done so, there's no way timothy geithner would currently be occupying the seat of the secretary of the treasury. no one at the nyt's has either, but they don't hold elective office.

    as usual, dave in cal is wrong, on just about everything coming out of his keyboard. i'll just focus on one of his more egregiously wrong statements:

    "Our government isn't collecting anywhere near enough tax revenue to pay for all its spending. You can argue that they could do so by just taxing the rich more.IMHO that wouldn't be enough."

    dave in cal's humble opinion, plus a buck, will get you a small coffee at mcd's. according to the CBO, simply allowing the bush tax cuts to expire would, by itself, pretty much eliminate the deficit. end the occupations of afghanistan & iraq, and we're in surplus mode, even at 9% unemployment.

    it must be nice to have a brain uncluttered by actual facts.

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  20. Actually, cpinva, the CBO said the 10-year deficit will shrink to $3.5 trillion, "if Congress does not extend popular tax-cuts and spending programs" See: http://dailycaller.com/2011/08/24/cbo-report-higher-taxes-lower-spending-projected-to-reduce-deficit/#ixzz1fM4qjFoc

    I presume the 'poopular tax cuts' means the Bush tax cuts, although I'm not sure whether it includes Obama's reduction in SS and Medicare assessments, and I'm not sure what spending programs the CBO was referring to. In any event, a $3.5T 10-year deficit may look small compared with the current 1-year deficit of $1.3T, but it's not small. Even $350 billion a year is quite a large deficit, especially because the debt of $15 T is already so high.

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  21. Dave in Cal said "'poopular tax cuts'"


    Hey, now there's a fitting description!

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  22. David-in-CA said:

    "SS is a program where poorer people give money to richer people"

    ...and some people still listen to him???

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