Monday, August 20, 2012

Ferguson Explanation: War on Budgeting?

I wasn't going to wade into this one, but I just looked at a bunch of take-downs of Niall Ferguson's Obama-bashing Newsweek cover story from this week that I linked to for the Roundup over at Greg's place (oops -- missed Andrew Sullivan's, and it's good), and I noticed something that puts me in something of a dissenting opinion on one point. It's about this bit:
The president pledged that health-care reform would not add a cent to the deficit. But the CBO and the Joint Committee on Taxation now estimate that the insurance-coverage provisions of the ACA will have a net cost of close to $1.2 trillion over the 2012-22 period.
And here's Matthew O'Brien's response:
Maybe Ferguson doesn't understand the meaning of the word "deficit"? The only other explanation is that he is deliberately misleading his readers... That Ferguson looked up the CBO's estimate of the bill's cost and didn't notice that those costs are paid for is peculiar indeed. Even more peculiar is that he is apparently doubling down on this falsehood. And yes, it is a very deliberate falsehood.
Here's the thing: go back to the Ferguson quote. What does that sound like to you? That's right: it's our old friend the Republican War on Budgeting.In other words, O'Brien's guess about mendacity isn't the right path; it's his first option, that Ferguson doesn't know what a deficit is. Or, more likely, that we're dealing with a bit of information feedback loop here, and that Ferguson is recycling junk that's circulating within conservative circles where the old-fashioned idea of budgets as having to do with a comparison of government revenues and government spending has been almost forgotten. Instead, "deficit" means "stuff we don't like." So within that logic what he's saying makes perfect sense: ACA does in fact add $1.2T (or whatever) to "stuff we don't like," or at least stuff that Ferguson doesn't like. Remember, in war-on-budgeting logic, there's no offsets, no trade-offs, no pay-fors. There's just taxes, which are pretty much bad and should always be cut, at least and especially when wealthy people pay them; good stuff, which you should spend money on; and bad stuff, which you should not spend money on, and which is called "deficit" if you do.

Granted, it could be that he's just being deliberately dishonest from the get-go, and I agree that the follow-up is about as close to a "very deliberate falsehood" as you can get. And granted that guessing about motives and such is a mistake to begin with. But nevertheless: it sounds to me as if Ferguson got caught war-on-budgeting logic and said something that made no sense at all from an actual budget perspective, and then tried to scramble to back-fill it in a way that wasn't totally embarrassing.

At any rate: I obviously don't know what he was thinking, if anything, but I do notice that it's a classic war-on-budgeting mistake, and I think that fits a few other oddities in the original article.


  1. If Ferguson were a random pundit - a Republican party official - or a random man on the street - your claim might make some sense, and provide a degree of justification. But when the man is a professional economic historian, I think it is fair to assume that he should know what "deficit" means, and if he is involved in a project to radically change the meaning of the term, it is his obligation to clearly lay out his alternate definition. I think "deliberate falsehood" (or, maybe, "gross professional negilgence") are the appropriate judgements here.

  2. I agree with Don. I have a hard time believing that someone with Ferguson's background doesn't know what "deficit" means. Therefore, Ferguson's statement should be considered a deliberate falsehood.

  3. The man is a Harvard professor writing for a Newsweek audience. He's purposefully trying to deceive his readers.

  4. Agreed with Don, cgw and Aidan. Also, Ferguson is Scottish and has spent his life mostly working in Britain, where as far as I know perfectly ordinary words have not been redefined so as to best please the ghost of Ronald Reagan.

  5. Given the reception the article has received, do you think Newsweek would run a front-page retraction?

  6. The explanation is not the War on Budgeting. All due respect, liberals, but you've been played...again. Niall Ferguson, erstwhile conservative in the last bastion of liberalism, writes a fact-light piece concluding that 'Obama sucks!', and y'all can't trip over yourselves fast enough to revel in the schadenfreude arising from how moronic Ferguson is?

    Not that being a Harvard guy with pop culture cred insulates one from moronity (the late, not-so-great Steven Jay Gould comes to mind), but do you think maybe Prof. Ferguson meant to do that? Consider the last three paragraphs on page 3. The last paragraph says that Obama, worse than his predecessor, is a ruthless extender of US military force, which will damage the US' standing in a rising rest-of-the-world. The second-to-last paragraph is a useless, unattributed throwaway quote. Third-from-the-bottom is the money quote, the dog whistle: Obama is a passive bystander to foreign events, unable to impose the force of American will, the idea of which gets the dittoheads frothing.

    I'm willing to bet that Ferguson is bright enough to recognize how risible it is to separate such wildly contradictory paragraphs by a small, unattributed, throwaway quote. From there I'll bet he didn't care. And then step back for a second.

    Everyone dislikes Romney. People thought they might like Ryan, but that's only cause they saw his not-bad middle-aged physique in his swimsuit. Scratch beneath the surface of his Medicare "plan", and he starts to appear really unlikeable; the Obama campaign is obliging with the scratching. Looks pretty bad for the Repubs...and then along comes Ferguson, with his dog-whistle-o-rama.

    It was awfully kind of influential intellectuals like Krugman to take Ferguson's invitation (bait) and pucker up and offer a few blows of the dog whistle. Team Romney should really write those like Krugman a thank-you note, but Romney seems like the ungracious type, so I bet he doesn't.

    1. Wait, what happens when they take the bait? How does this evil plan get Romney elected?

    2. Well, every time you engage Ferguson's article, you facilitate another blow on the dog whistle. Attention for such a piece translates into extended focus on the hit job aspects of it.

      I'm sure that liberals believe their opposition to Ferguson is taking his arguments down or diminishing their impact. For those liberals' target audience, that no doubt occurs.

      But none of those folks hear the dog whistle.

    3. "Attention for such a piece translates into extended focus on the hit job aspects of it."

      It was the front cover of Newsweek! You think Prof Bernstein's blog is giving it more coverage?!

    4. That's a good point purusha. I think I would have covered it more from a self-aware standpoint, something like "So this is what it comes to Romney? You need Ferguson to stoke the dying embers of whatever tepid passions you excited in the base?"

      But you can't exactly ignore it, as you note.

  7. On further consideration, it occurs to me that Ferguson's "mendacity" is anything but lazy. Actually, he is fairly cleverly combining plausible arguments with base-rousing dog whistles; getting the best of both worlds by sighing and rolling his eyes when confronted with contradictions between the two.

    For example, following the comment above: the point about Obama antagonizing the world via the reckless extension of US military force is quite a compelling argument against our (Nobel-Peace-Prize-winning) President. The part about Obama being a wuss is the dog whistle. Best of both worlds.

    Similarly, the deficit-exploding potential of the ACA is also a great argument against Obama. I recently noted the difference in the dumping forecast of the CBO and the McKinsey survey, which could encompass as much as 50% of the employee-sponsored health market. Suppose around 60 million US households are currently covered by their employers. The difference between what their employers currently pay ($12 K/year) and the dumping penalty ($2 K) is $10 grand of cost needed to make 30 million (or 50% of 60 million) households whole. $10 K*30 M = $300 B per year of additional deficit, assuming we can't ask those 30 million households to cover themselves.

    $300 B/year is not morally outrageous; actually, its in the ballpark of Bush's unfunded Med D. Still, its a lot of money, and thus the deficit-exploding potential of the ACA is, again, a good argument. The part about the CBO saying the ACA will cost a lot? Once more, the dog whistle.

    Seems to me you can deconstruct Ferguson's entire article along those lines: reasonably good arguments interspersed with dog whistles. If that all comes across as offensive to you, perhaps that has something to do with the auditory range you're able to perceive.

    1. I really have no clue what point you're trying to make, and I don't think "dog whistle" means what you think it means. In fact I'm not really even sure what you think "dog whistle" means because you don't really seem to be using it in any consistent way.

      A dog whistle is coded language that is designed to be understood exclusively by a specific demographic. You have not supplied any evidence of the existence of this coded language; rather, you have just brought out a bunch of examples of inconsistencies, logical failures, and a misinterpretation and/or misrepresentation of report by a governmental budgetary forecaster. No dog whistle in there.

      Also, your math and logic are pretty scarce on the health insurance "dumping" and how it relates to the federal budget deficit. Your logic requires the following premises:
      a) Employers that currently provide insurance with a $0 penalty for not providing insurance will suddenly stop providing insurance with a $2000 penalty for not providing insurance. Even putting aside that a similar policy already exists in Massachusetts and this hasn't happened, I don't see how you arrived at that conclusion in the first place.
      b) Every single employer can dump insurance for every single employee in the United States without raising anyone's taxable income (because if they did raise taxable income, it would significantly increase government revenues and your math doesn't work out). This is implausible. Employers don't offer insurance out of charity; they offer insurance as part of a compensation package in order to attract employees.
      c) The federal government will offer insurance of equal cost and cover most of the premium, even though this isn't provided for in the ACA. Basically, you are assuming a change in current law from the ACA that will make insurance subsidies more generous. Which, incidentally, means that it wouldn't be the ACA exploding the deficit but some nameless imaginary future law that you invented and nobody in any position of power has proposed.

      So basically, you're wrong. But I guess it was all a dog whistle?

    2. Josh - thanks for the comment. Two quick thoughts:

      First, the most obvious dog whistle is in that weird foreign policy section at the bottom of page 3. I put on my Couves hat and assume that Ferguson really intends the criticisms about the imperial Obama presidency, criticisms fairly leveled against a Nobel Peace Prize winner. Assuming Ferguson meant that, he clearly - a man of his intellect - did not also mean that Obama was a mere wuss standing by, passively observing history, as he argued two paragraphs earlier.

      That meme, the liberal-as-passive-powerless-agent, is "coded language that is designed to be understood exclusively by a specific demographic", which in this case represents reliable conservatives depressed at how much Romney (and now Ryan) suck.

      Finally, the ACA: here is a link to the McKinsey survey in question. Note this is not McKinsey telling Enron that Enron is so smart they can make money trading weather futures; McKinsey was simply asking employers what they planned to do once the exchanges were fully operational.

      Will widespread dumping occur as per the responses to the McKinsey report? We don't know. I would suggest that the McKinsey data is pretty dispositive that widespread dumping is a very real possibility. But we'll have to wait and see.

  8. Josh, the point about employer dumping (as CSH says, he's made it before) is that if it costs you $10k to offer an employee insurance and only $2k not to, then dumping saves you $8k. My own view is that this is an interesting and potentially problematic feature of ACA that I don't think is ultimately the problem that CSH foresees, but anyway, that's a whole 'nother big discussion.

    On the point at hand, how's this for a Unified Theory of Ferguson: He is indeed smart enough to know what "deficit" means technically (as everyone here says), but he's used to talking to other righties (as JB suggests) and is familiar with their talking points as well as "dog whistles" (CSH). For those audiences, he doesn't need to be careful to avoid contradictions or use words with their traditional meanings; as long as a given statement is anti-Obama, it's assumed to be (a) correct and (b) consistent with any other statement that is anti-Obama.

    But Ferguson lost track of who he's writing for when he puts all this on the cover of Newsweek. He forgot that it will be read and critiqued more widely there than it would be if it self-identified as rightist propaganda by appearing in the Weekly Standard or on Newsmax. So he's been genuinely surprised to see so many people actually point out the sloppiness and the contradictions, to insist on the correct meaning of "deficit," etc. That's why he's been at pains to respond and not just to smirk and say, "They took the bait. Mission accomplished." The responses support my theory, because they involve parsing and chop-logic and look to outsiders like "doubling down," none of which actually helps him. But he's doing it anyway because he's a Harvard professor who values his reputation outside the right-wing fever swamps.


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