Tuesday, August 05, 2003
Old news and Dean talking points: New York Times columnist Paul Krugman is far more of a cowboy than the man he regularly maligns, President George W. Bush. Demonstrating the Old West ideal of giving the accused a "fair trial followed by a public hanging," Krugman pronounces Bush guilty and therefore needs not bother with proving anything.
Krugman's latest screed works (or should I say re-re-re-works) on the theme that the Bush Administration lies.
Yes, there's nothing new under the sun.
Here's the story: Treasury has an elaborate computer model designed to evaluate who benefits and who loses from any proposed change in tax laws. For example, the model can be used to estimate how much families in the middle of the income distribution will gain from a tax cut, or the share of that tax cut that goes to the top 1 percent of families. In the 1990's the results of such analyses were routinely made public.
But since George W. Bush came into power, the department has suppressed most of that information, releasing only partial, misleading tables. The purpose of this suppression, of course, is to conceal the extent to which Mr. Bush's tax cuts concentrate their bounty on families with very high incomes.
What? The majority of the Bush Tax Cuts have been going to the rich? They kept this information secret, so it was impossible for the Democrats to criticize Bush. The Democrats have been kept in the dark!
I'll must admit that I was surprised how the Democrats meekly went along with the Bush tax cut plan. Nary a whisper was heard from the "loyal opposition."
What? You mean to tell me they yelled and screamed and played the "class-warfare" card. I must have been vacationing in France with Krugman at the time.
In a stinging recent article in Tax Notes, the veteran tax analyst Martin Sullivan writes of the debate over the 2001 cut that "Treasury's analysis was so embarrassingly poor and so biased, we thought we had seen the last of its kind." But worse was to come.
For his June 22 interview with Howard Dean, Tim Russert asked the Treasury Department to prepare examples showing how repealing the Bush tax cuts would affect ordinary families. Presumably Mr. Russert thought Treasury would provide a representative selection — that is, like many in the media, he doesn't yet understand the extent to which Treasury has become an arm of the White House political machine.
In any case, the examples Treasury provided to Mr. Russert and others in the media were wildly unrepresentative. To give you a sense: the Treasury's example of a "lower income" elderly household was one receiving $2,000 a year in dividend income. In fact, only about one elderly household in four receives any dividend income, and only one in eight receives as much as $2,000. Not surprisingly, the "Russert families" gained far more from the Bush tax cuts than a representative sample. As Mr. Sullivan put it, "If this continues, the Treasury's Office of Tax Policy may have to change its name to the Office of Tax Propaganda."
I wonder if tax analyst Sullivan would agree with the construction fo Krugman's argument. Note that Sullivan's criticism of the Treasury Dept. is not specific to Krugman's case study.
I blogged about the Dean interview when it occured (when did Krugman write this column anyway? June?).
It's interesting that Krugman chose the retired couple "Russert family" as opposed to the married-with-kids "Russert family." Krugman says that only 20 percent of the elderly get $2,000 in dividend income and that Russert's numbers therefore, were widely skewed.
What were the real numbers Russert used?
A married couple over 65 making $40,000 and claiming their Social Security, under Bush would pay $675 in taxes. You’re suggesting close to $1,400, a 107 percent tax increase.
Krugman says of this $40,000, that $2,000 is dividend income, exempt from taxes under the Bush plan. Krugman isn't telling us the whole story, because there's no way exempting that $2,000 alone can lower this couple's tax burden from $1,400 to $675. A couple making $40k is probably in the 28% tax bracket -- a (really) rough calculation shows that this couple's still paying $165 a year less even without the dividend tax cut.
Instead of just taking on Bush's dividend tax cut on the merits, Krugman resorts to this sort of diversion.
And what about that married-with-kids "Russert family?"
A married couple with two children making $40,000 a year, under the Bush plan, would pay $45 in taxes. Repealing them, under the Dean plan, if you will, would pay $1,978, a tax increase of over 4,000 percent.
4,000 percent? Why didn't Krugman burst this bubble? Well, because the majority of this couple's tax burden is relieved by the reduction in the marriage penalty and the per-child tax credit -- popular cuts that would elicit little sympathy with Krugman's argument if he attacked them.
I suspect that the Treasury Dept. gave a Russert a series of scenarios to show how a variety of people are affected by the Bush Tax Cut. Krugman then screams "foul" when they choose to show there are real people (even if it's only Krugman's 20 percent) who would be affected by their wholesale repeal.
Who's being dishonest now?