Friday, January 21, 2011

The GOP War On Budgeting

I think I'm finally beginning to understand GOP thinking about fiscal policy. It's not that they're at war, as Krugman thought, with logic. Or, as Jonathan Chait writes, with arithmetic. Or even with CBO, as Ezra Klein concludes. It's the concept of budgeting that they don't like.

That's my takeaway from Greg Mankiw's seemingly bizarre post yesterday, in which he mocked Democrats on health care:
I have a plan to reduce the budget deficit.  The essence of the plan is the federal government writing me a check for $1 billion.  The plan will be financed by $3 billion of tax increases.  According to my back-of-the envelope calculations, giving me that $1 billion will reduce the budget deficit by $2 billion.
For Mankiw, and for Charles Krauthammer, who has a very similar column today, this is self-evidently foolish as a deficit reduction plan. Put aside casual misdirection (both of them imply that ACA raises spending and taxes, but in fact there's also quite a bit of spending cuts in ACA -- something that Republican politicians have made a chief talking point against reform). Put aside too outright lies and myths; Krauthammer embraces 10/6, which Chait once again destroys. Put aside, too, that Mankiw's "plan" of giving $1B to him personally isn't actually conceptually different from real-life plans to give very wealthy people very large tax cuts, without the corresponding new revenues or spending cuts to balance them, that Mankiw has supported in the past.

No, just take them at face value. What's going on? What is Mankiw telling us?

It's the idea of a budget they don't like. Here's NRO's Reihan Salam, applauding Mankiw's post:
In my view, it is conceptually useful to think of the spending component and the revenue-raising component of PPACA separately. Why? Because there are much better ways to raise the same amount of revenue, e.g., by eliminating or paring back the mortgage interest deduction and the state and local tax deduction, among other thing. My sense is that thinking of revenue-raising mechanisms separately leads us to better public policy conclusions. 
I don't want to stretch what Salam said too far, but let's just say it pointed me to a way through the confusion that I've had, and that I think others have had, about conservative budget thinking, and makes sense of Mankiw -- and of GOP opposition to PAYGO, support for unfunded tax cuts, and the rest of the Republican fiscal stew.

To understand what they're saying, just throw out the entire concept of a budget.

So: to characterize conservative talk about revenues and spending, I think what I'd say is that conservatives believe that each program, and every tax, should be judged on its own merits. If a spending program is necessary, like missile defense, then it should be fully funded. If not, it should not be funded. On revenues, the justification for any sort of taxation is that citizens should have "skin in the game," and therefore everyone should pay the same, small amount. Any more taxes, and any more spending, are by this way of thinking fiscally irresponsible.

Now, you may note at this point that there's nothing in that formula to make government revenues equal government spending. As far as I can tell, that's correct; conservatives aren't interested in that question. Oh, there's plenty of lip service about "budget deficits," but the point is that they've never made sense if you read "budget deficit" as "government revenues minus government spending."  It does, however, suddenly make sense if you translate "budget deficit" to mean "unwarranted spending or taxes." Regardless, that is, of how changes in that would add up.

That's why the whole concept of a fiscally sound bill that involves new spending on health care is nonsensical to conservatives who believe that individual health care just isn't the job of the federal government, a conclusion that liberals find baffling. Yes, in the trenches, some Republicans have made specific arguments about why the CBO score is wrong. But you can tell, I think, that their hearts aren't really into it -- or at least, that would explain the poor quality of some of their arguments, such as the idea that the cost of "doc fix" somehow or another is both a cost of passing and of repealing ACA. Whatever, they seem to be saying; why are we even debating this, when it's self-evident that increasing the scope of government responsibilities to include some form of universal health care, even if it's structured by creating markets, is a mistake.

That still doesn't excuse shenanigans like 10/6, which is just factually wrong. And, of course, it doesn't mean that Republicans are correct. And it certainly doesn't excuse actual deficit hawks, people who really do want government receipts to equal government expenditures, from mistakenly believing that folks like Paul Ryan are their allies. All it means is that, when listening to liberals and conservatives debate the budget, remember that they're often talking past each other -- because, I strongly suspect, they're just using the same words to talk about two different things.


  1. Great post, really outstanding analysis. I'm saving this one for future reference.

    The next question would be WHY Republicans would make arguments about CBO scores and the like that their hearts aren't really in. Why not just say what they really think? Looks to me like we're seeing here what happens when a party is sufficiently radicalized that its ideology has lost all mooring in public opinion. It's undoubtedly just obvious to Republicans that, politically, they can't come out and say that the government should ignore problems like millions of people being unable to get health insurance. If they said this, they would discredit themselves with an electorate that still sees the government as a mechanism for at least trying to solve problems. In fact, I think a lot of the GOP pols have so internalized that view of government themselves -- having been raised on it, and so forth -- that they're internally at war with their party's own (relatively new) quasi-libertarian belief that the right governmental response to some problems is "Tough luck, pal, sucks to be you." That's the conclusion their ideology points to, and some of their fellow travelers (Limbaugh, etc.) will essentially say as much outright, but as governors and members of Congress and presidential wannabes, they won't and can't. Instead, caught between old and new ideological assumptions about the role of government, they no longer even know what they "really" think. So we get nonthinking and incoherence: zombie lies, attacks on the CBO, and magical notions that there's some great, obvious solution ("Repeal and replace") that they've never actually prpoosed but are going to come up with any day now.

    Fascinating development, and it really explains a lot.

  2. Two thoughts:

    1) In the century or so of the Federal income tax, the top marginal rate has varied wildly. It started low, at 7%, then shot up to the 70s during WWI under Wilson. Then it started coming down again, to the mid-20s under Coolidge. Duting the depression the top rate jumped up above 90%, and it stayed there until the Johnson Administration, when it started coming down, doing so consistently to the current rate of 35%.

    It could be that the rich resist a return of that top rate to 39.6% because they hate paying taxes or budgeting. In the spirit of the Plain Blog reading between the lines, it seems more likely that the rich recognize the country's fiscal mess, and they know full well that taxation of the wealthy is a long roller coaster ride, and the last time the country had a Depression, said ride didn't end until the top marginal rate was above 90%. Does that seem like a decent motivation for the wealthy to fight the change back in the direction of Clinton-era rates (and who knows how much further)?

    2) While Republicans generally claim not to be Keynesians, at least in theory, Republican deficit spending is (arguably) generally more stimulative than Democratic deficit spending, particularly once the Great Society is established.

    When you borrow money to build a road where none was previously, thus providing greatly improved access to commerce, you are in theory greasing the skids for expanded economic activity. The same is also true in establishing the Great Society, which redistributes wealth that prevents people from starving.

    However, a large part of Obama's stimulus appears to be redistribution of wealth to states to cover off against poor management of their social programs, which may stave off further economic decay, but doesn't really jump start economic growth.

    If Republicans believe that their deficits spur growth, which is at least plausible if you buy that outsized military spending leads to growth in technology, etc, then they may have a basis for believing that their deficits will take care of themselves, in a way that distributing money to states - to kick the can of disaster down the road - most certainly will not.

  3. CSH: The Keynesianism of the Republicans extends to monetary policy. Center-right economists like John Taylor have pointed out that keeping interest rates too low for too long during the Bush years is the single greatest cause of the housing bubble. Unfortunately, this issue isn't even discussed outside of the Ron Paul fringe.

  4. You are a lot closer than some of the other liberal commentators you quote, but you are overcomplicating the issue and still slightly misunderstanding the Republican point of view. Salem's main point is the healthcare reform eliminates the "low-hanging fruit" for deficit reduction. In other words, the deficit problem is so bad that we can't minimize the effects of the easiest fixes by offsetting them with more spending (I wrote about this just yesterday This is why the more persuasive argument that one could make to conservatives is that these things are not really "low-hanging fruit" and the subsidies were necessary to assemble the political coalition.

    The second thing you have to realize is that Conservatives don't think deficits are bad by themselves, they are bad because they mostly imply higher government spending (see: Most conservatives already think the size of government is too large, whereas a lot of center-left commentators think it is about right or at worst slightly too small (some wasted stuff could be exchanged for the little more that we need). Therefore, any deficit reduction plan that doesn't result in less government spending (a smaller government) misses the whole point of deficit reduction for them.


  5. Therefore, any deficit reduction plan that doesn't result in less government spending (a smaller government) misses the whole point of deficit reduction for them.

    AFG, this comment further supports the point that Jonathan is making in the original post here. Smaller government and deficit reduction are two different concepts, and there's no necessary relationship between them. You could reduce the U.S. federal government to the size of Micronesia's, and it could still be running a deficit -- even an unsustainable deficit -- if revenues didn't match outlays. Conversely, you could run a government big enough for the entire United Federation of Planets and keep it in the black (i.e. no deficit) as long as revenues did match outlays. So if conservatives actually mean they want the federal government to be smaller / do less, but they frame this wish as "deficit reduction," they're just misusing words -- either inadvertently or (more likely) deliberately, because they don't want to go to the people with an honest case for cutting back government services.

  6. Sorry, but Medicare Part D kind of ruins your theory I think.


  7. Can I offer a simpler, more cynical explanation? Republicans care about politics not policy. That's why the party that idolizes Ronald Reagan, went after Obama for being a celebrity. That's why the party that went after Obama for being too inexperienced, went wild for Sarah Palin. The large majority don't care about the deficit, they care about having something to pin on Obama. Those few that do care about the deficit are bad at math.

    The end.

  8. I think you are correct that "throw out the concept of a budget per se" is on the Repubs playbook. But, the following is easily falsified:

    So: to characterize conservative talk about revenues and spending, I think what I'd say is that conservatives believe that each program, and every tax, should be judged on its own merits. If a spending program is necessary, like missile defense, then it should be fully funded. If not, it should not be funded

    Take almost any major piece of Bush era legislation, from the Wars to Part D to No child. Or just consider the Wars, for which there's pretty good pro consensus among the most right wing. Not only wasn't it funded, there was no *talk* of funding it.

    The simplest explanation is probably correct: Republicans have no principles other than pro-Republican power plus pro-very rich plus kick the right people.

    That's pretty much it. And it's perfectly explanatory of a wide range of phenomena including the recent budget/CBO/healthcare gobbledegook.

    Any fiscal/economic language is just code for the above principles, which is why it doesn't make sense on its own terms.

    So, the Republican principle is the 3 Ps: permanent power + patronage + picking on people (bullying).

  9. So, the Republican principle is the 3 Ps:

    In other words, from the GOP's perspective the only two legitimate reasons for the existence of the state are a.) blowing up brown people who worship the wrong God, and b.) providing their getaway cars with a police escort en route to the Caymans.

    The rest is kayfabe. Which explains the recent CT senate race.

  10. Not to belabor the point, but given America's history of jacking up taxes on the rich when the economy is in tatters, (and then keeping them high for a long time thereafter), its amazing how tone-deaf to precedent Obama was during the Bush tax cut extension debate.

    If a significant portion of your income is subject to the highest marginal rate, congratulations. You're probably reasonably bright, as that tends to be correlated with economic success. As such, you are well aware of the state's craving for confiscatory tax policies aimed at you.

    So when Obama says he wants to roll you back to the Clinton rates, while leaving the Bush rates intact for everyone else, he might as well have asked you collectively to bend over so that he can stick his boot in your a**, with the understanding that continued budget woes mean that well will be returned to frequently, much the way FDR did.

    At a minimum, Obama should have made the good faith gesture of rolling everyone's taxes back to Clinton levels, so that it wasn't so obvious to the rich that they were about to get soaked. Short of that, he could have advocated a regressive tax - like a VAT - again so that our collective sins would not be primarily borne by the wealthy.

    For those of you who interpret resistance of the wealthy to being singled out for tax increases as 'hatred for the poor', that may very well be, but sometimes folks resist a boot being stuck in their a** because, well, they don't like having a boot stuck in their a**.

  11. CSH,

    Raising all marginal rates raises taxes on the wealthy *more* than just raising the top rate (assuming the raise on the top rate is the same in both cases). Thus, rolling back the top rate (alone) is a *smaller* increase on the wealthy than rolling back everything.

    The rest of your comment is similarly incoherent. Or more precisely, it's an expression of the "picking on people" P.

    Of course, I forgot the fourth P which your comment ably expresses: Persecution Complex!

  12. Thus, rolling back the top rate (alone) is a *smaller* increase on the wealthy than rolling back everything

    Undeniably true. Why then didn't the wealthy see Obama's plan to raise only the top marginal rate as a preferable compromise to rolling back all of Bush's cuts?

    One of the downsides of a representative democracy with vigorous debate is that we all want the country to reflect our vision of it, with all other players acting in a way that meets our interests. For me personally, not being one of the top earners, I wish the high earners would go along with higher 'top marginal' rates, up until the point where Laffer Curve effects kick in, which I would guess is quite a ways up from here.

    When the wealthy fight higher taxes directed at them, I get frustrated, and I assume they are deranged, and then I turn on Fox News and infer that they must be deranged. Problem is, if I were a high earner, knowing that the Roosevelt precedent means I could incrementally lose more than half my pre-tax income at the highest rate (going from 35% to 90%+), I would fight like heck against such changes, and before I signed on, I would want to see a very serious commitment to cost reduction, including attacking sacred cows (e.g. forcing the 'young elderly' to work a little for social security).

    One of the things I generally like about this community is the effort to understand politics from the perspective of the various players, rather than just assuming folks will behave the way we want them to. Doesn't happen enough outside this place, frankly.

  13. So far, everyone assumes that the left has a legitimate stance, while the right is a bunch of illogical whackos. Which isn't very good for logic or argument. Either you can provide logic for your POV, or you can make call the other side can even do both. Unfortunately, most of the above run to the latter and ignore the former.

    I'm a born lefty, voted for Clinton, voted for the Green party...but you guys just don't get it. There are a group of people, a large group of people, in the US that think that the federal government is a terrible steward of their money. It's not that they believe that government in itself is bad (or that it should blow up people that worship a different God, which you'd know if you took a look at the Islamic groups we support in the GCC countries I visit)...but they believe that government is too big at the federal level to work well. They think that state and local governments are better at solving problems. They're mad that government workers have better benefits than they do for arguably similar work.

    After a year of talking to them...I think they're right on many points. Are a few rascist? Sure. Are some of them hypocritical? Probably. However, no more than us. We've come to assume that people in flyover-land are misogynist, rascist, mean people. At the end of the day? No better than them.

    Government should work for people. That means, efficient, well run, easy to access and solve problems people actually a price that revenues can sustain while encouraging business to employ people and hire new ones. I run a small business that can't afford the new laws, whereas I could afford to give people money through health savings accounts to buy their own tax free before this year. It's what started me talking to people about the health care law, and it's what has convinced me that we're moving the wrong direction. I can buy my people health care, but we'd all be out of a job four months later. I just don't have the movement in my revenue opportunities upwards enough to handle the additional premiums in making sure that all my employees have access to chiropractors and maternity care. It sucks, but it's true.

  14. CSH,

    I'd be willing to bet that they did prefer a smaller rise to a larger one, they just preferred no rise at all.

    I'm also willing to bet that the framing of it as a tax "on the wealthy" helps the Persecution Complex aspects of it all.

    Some of the superrich did say they should pay more taxes, of course.

    Some people who would be affected by an increase in the top rate were straightforwardly deranged, or, at least silly ("I'll reduce my income so I won't pay the top rate so I'll have more income!", "Uh, you need to learn about marginal tax rates.").

    Your projection of your own belief is plausible, given our society, but your example is pure Picking on People. Social Security is not the deficit buster. Poorer people tend to have jobs which are a far higher burden, esp. as they age (consider being a 62 year old janitor vs. a 62 year old stockbroker). Etc.

    As for understanding the perspective, I agree it's important. But it's important to understand both the propaganda (and self-propaganda) *and* the reality. I don't think that the rich in the US are remotely persecuted by taxes, or have been for just about any period in its history. I wouldn't be surprised if a large percentage of rich people genuinely believed that they were. There's a fair number of US Christians who believe that they are suffering religious persecution as well.

    For the current article, I don't think that Republicans think that "Things which are worth doing should be fully funded", at least if that means taxes or other burdens on richer people. There's just no evidence for that and plenty of evidence against it.

    It's not baffling to any liberal I can think of to want the government to not do things you think it shouldn't do. (It's not a plausible reading of Chait that he's baffled by *that*!) The thing, e.g., Chait finds baffling is the idea that a bill that reduces the deficit (i.e., makes it smaller) doesn't count as reducing the deficit.

    And really, Jonathan, this analysis is not illuminating, it's weird. Even if your theory were plausible, it wouldn't imply that liberals and conservatives "just using the same words to talk about two different things". It would imply that conservatives "have decided to make up a random meaning for the words 'budget deficit', pretend that its the standard meaning, then shake their head sadly at people using the words standardly for not understanding basic economic concepts."

  15. For the current article, I don't think that Republicans think that "Things which are worth doing should be fully funded", at least if that means taxes or other burdens on richer people. There's just no evidence for that and plenty of evidence against it.

    Bijan, I read the original post differently. You seem to take "fully funded" as meaning paid for or properly budgeted for. As JB argues, though, that's precisely not what conservatives want, because it would mean higher taxes and so on. Rather, "fully funded" just means they want government money spent on their favored projects: missile defense, Middle Eastern wars, etc. And clearly, they do want full funding for such things -- just not full budgeting or full accounting for them. That's the sense in which they reject the whole concept of budgets.

    I also don't see how it's wrong to describe this situation as liberals and conservatives using the same words for different things. Liberals are using the phrase "budget deficit" to refer to budget deficits, while conservatives are using it to mean "government programs we don't like." Again, I didn't read the original post as suggesting that these two meanings are both legitimate, just that they are in fact different. (I might be a little less kind about whether the two sides are "talking past each other" -- I'd call it one side talking sensibly and seriously, and the other side tossing word salads to obscure its real beliefs and confuse the public.)

  16. Bijan, interesting conversation, my primary quibble is that you seem too dismissive of high earners' concern with the effect of tax rate trends. Perhaps an example will illustrate the point.

    Suppose you earned $450,000/year, a large chunk of which is taxed at the highest federal rate, 35%. Suppose further you lived in a place like California or DC, a high 'state' tax rate jurisdiction (~9%), so with local/other taxes your disposable income was (still a cool) $250,000/year. That's a heck of a lot of money.

    You're a student of history, so you know that tax rates are like investments, in that "the trend is your friend, until it ends". The last time (~1930s) the highest marginal rate began increasing, it didn't stop until it had gone from the 20s to 90+%. Applying that precedent to your own income in the highest bracket (the last $200,000 of your $450,000), you could realistically see your rate go up by 50% or more, which means your disposable income would drop by $100,000 (since $100,000 = 50% X $200,000).

    Your disposable income used to be $250,000, but now that the tax regime has shifted in an "FDRish, respond-to-Depression" way, your disposable income is now $150,000. Which is still a lot of money.

    Here's a prediction: there's not a single household so situated that wouldn't fight that change vigorously; further, its the kind of battle that's easier fought earlier than later.

    If that be a persecution complex, I suppose we will have to agree to disagree...

  17. CBO is a nonpartisan calculator: garbage in, garbage out. Add in doc fix and other pie in the sky assumptions, and the whole lib house of cards collapses.

    For anecdotal evidence for skepticism, just look at ANY government program's initial cost projects against the greatly enlarged actual costs.

  18. The "doc fix" meme has been extensively debunked all over the internet, including on this very blog. So that that and the exceedingly vauge "outher pie in the sky assumptions" are all that you're resting on, it doesn't speak well for your conclusion.

  19. Silverfiddle,

    Thanks for stopping by, hope you stick around.

    You are correct about CBO as a calculator, but it's not quite GIGO; CBO has rules for how to do inputs.

    It's quite true that ACA changed to make it fit two administration fiscal goals (keep it under $1T for the first ten years, make it budget neutral or better), but that was done by actually changing what the bill did so that it would meet those goals.

    With respect to the $T thing, I think it's fair to say that they gamed the system (they phased it in slowly in order to stay under that number). But with regard to budget neutrality, that does not appear to be true -- they really did make changes, with more revenues and more spending cuts, to make it generate a budget surplus.

    As for your other point, it is simply not true that initial estimates are always lower than eventual costs. Jonathan Cohn has done several posts about's just not the case.

  20. CSH,

    Yeah, I have to say that I don't see any reasonably applicable trends. If you have to go back to post depression high level marginal tax rate trends to justify resisting the sunsetting of a tax cut that returns to you a historically and world wide fairly low rate when you have all sorts of mechanisms for avoiding the actual tax burden and one major party dedicating to championing lowering your tax rates, almost to the exclusion of all else, then yes, I think you have a persecution complex.

    It's similar (if way more plausible) to saying, "OMG, the Roman Empire persecuted Christians, so we should fear it too."

    The more recent rises in tax rates were Bush's and Clinton's which helped balance the budget and paralleled a growing economy and, in the end, stayed very low.

    Unless we have a radical social breakdown, where do you see a majority Hourse, 60 votes in the Senate, and a presidential signing for tax rates over 50%, much less within 20 points of 90%?

    If this is a real fear then it is a delusional one.

  21. You seem to take "fully funded" as meaning paid for or properly budgeted for. As JB argues, though, that's precisely not what conservatives want, because it would mean higher taxes and so on. Rather, "fully funded" just means they want government money spent on their favored projects: missile defense, Middle Eastern wars, etc.

    Hi Jeff,

    Well as "fully funded" are Jonathan's words, yeah. They aren't in scare or direct quotes and so should be interpreted as meaning what it's reasonable to think Jonathan meant by them. Which, I take it, is their standard meaning, i.e., paid for. That doesn't seem to be a Republican view.

    And really, if we have to posit with a whole new magic secret code then I grow even more skeptical of there being any analytical content in Jonathan's theory. Sometimes hackary is just hackary.

    I think it's wrong to say that conservatives and liberals are just using the same words to mean different things. That makes it sound like there are more or less accidental semantic differences between two communities. But they were using the words in the normal sense very recently. And Mankiw doesn't know what "budget" means?

    I'm willing to believe that there are stupid and ignorant politicians and commentators, but to attribute to Mankiw the sincere belief that 1) "budget" doesn't mean budget and that 2) anyone who thinks that it does mean budget is evidently wrong. He knows what the right use of the words and concepts is, he simply hacking. That's really the simplest explanation.

    They can be hacking in order to pursue a starve the beast strategy, but it's hackery nevertheless.

  22. I'm glad I found this blog! Keep up the great work!!

    Common Cents

  23. Bijan Parsia,

    No, Jeff got my meaning there -- I meant "give them all the money they need," not "give them the money they need and pay for it." That is, I meant that conservatives seem to mean that.

    I should mention that in proper, technical budget-speak "fully funded" means something else again -- it means appropriating (annual discretionary) funds up to the level at which a program is authorized to spend (by the legislation which established or currently governs it).

  24. Jonathan,


    Going back, I agree that Republicans have systematically argued for spending whatever on whatever they want and as low taxes as possible. This is the current, and standard, analysis that Republicans/conservatives, by and large, are not serious about the deficit, but just use it as a stick to beat Democrats with.

    But when I get to:

    Oh, there's plenty of lip service about "budget deficits," but the point is that they've never made sense if you read "budget deficit" as "government revenues minus government spending." It does, however, suddenly make sense if you translate "budget deficit" to mean "unwarranted spending or taxes." Regardless, that is, of how changes in that would add up.

    That's why the whole concept of a fiscally sound bill that involves new spending on health care is nonsensical to conservatives who believe that individual health care just isn't the job of the federal government, a conclusion that liberals find baffling.

    As Steve points out, Medicare part D kills this. Republicans are against anything that Democrats pass, period. If it's Democratic, it's fiscally irresponsible. And this is pure rhetoric.

    As a reading of Mankiw, it seems wrong:

    Now, you may be tempted to say that giving me that $1 billion will not really reduce the budget deficit. Rather, you might say, it is the tax increases, which have nothing to do with my handout, that are reducing the budget deficit.

    Which is just:

    CurrentBudgetWith>$2BillionDeficit + $1Billion = bigger deficit

    (CurrentBudgetWith>$2BillionDeficit + $1Billion) - $3 Billion = smaller deficit, but less so if you removed $3 billion from "CurrentBudgetWith>$2BillionDeficit"

    I.e., the $1Billion increases the deficit (by itself). The $3 Billion reduces it including the new increase. Neither achieves balance.

    This is a silly point, overall, but requires no magic. It's a fungibility point. If you passed the $1 billion increase this year, then a $3 billion tax rise the next, you'd have reduced the deficit, but most would claim that the first bill increased the deficit.

    So, if anything, the key thing is "fiscal reform" meaning "strictly reducing the deficit".

  25. BTW CSH, while I think it is a persecution complex, I don't necessarily think it's a matter of individual rectitude. You can be quite well off and "feel poor". Similarly, no one likes to have their taxes increased (or their rent, etc.) Narratives get entrenched, etc.

    However, none of that makes it a reasonable reading of the tax trends.

  26. Jonathan Chait has linked to this post today, with an additional comment very much like one of mine above: He, too, suggests that it's too kind (he calls it "relativistic") to treat the two meanings of "budget deficit" here as a case of people talking past each other, as opposed to a case of some people talking sense and some people being liars and/or idiots. I think, though, that the thrust of JB's critique of the latter group is clear regardless.

    And speaking of that, Bijan, if your point about Greg Mankiw is that he's not so much an idiot as a liar (aka hack), OK, far be it from me to say you're wrong.

  27. Jeff,

    Well, being a hack doesn't require being a liar. In this case, going back to Mankiw's post I don't see that he's lying per se. The analogy that makes sense is more a variant of Krugman's: Say I have $500 in credit card debt and I pay off $400 then add $100. My net position is a reduction, but there's $100 of "missing" reduction.

    So, ACA "increases" the deficit (spends) then reduces it by more than it spent for a net reduction. The scold's line is that to count as "fiscal reform" it must do nothing but reduce.

    The last line is probably a lie in some sense, but the rest is coherent, just hackish to an extreme.

    Mankiw's analogy extra special stinks because (as someone else pointed out...I forget where, maybe Ezra?) the ACA involved a grand bargin to get the reduction. So even if you don't value the spending, it's possible to acknowledge that if the spending enabled the savings, it was justifiable.

  28. Bijan, I would think there's an example somewhere -- and I'm surprised that Chait or Ezra or someone hasn't already found it -- of a Republican legislative package from recent years that simultaneously spent and cut, and that Republicans touted at the time as saving the government money. If nothing else, the appropriations bills are so big and multifaceted that one or more of them must qualify.

    On the other hand, maybe it's just an empty exercise at this point to note that the GOP and its apologists are constantly violating their own previous principles and changing their own story as they go along. It's not exactly a new observation, after all.

  29. Jeff, I agree. The real explanation is that "If Republicans do it, whatever it is, it's right, principled, required, restraint, and needed in order to overcome Democrat perfidy" and "If DemoncRATS do it, it's bad, unprecedented, etc. etc." There's nothing else necessary.


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