CBS Poll Reaffirms Tax Cut For Upper Class Is Wildly Unpopular

By Justin Gardner | Related entries in Democrats, Polls, Republicans, Taxes

Why are Republicans insisting that the tax cuts continue when the election appears to have been a referendum on spending?

From CBS:

The poll finds that 53 percent of Americans want the Bush-era tax cuts extended only for households earning less than $250,000 per year. That roughly matches the proposal put forth by the White House, which wants to extend the cuts only for incomes less than $250,000 for families and $200,000 for individuals.

Just 26 percent of Americans say they support extending the cuts for all Americans, even those earning above the $250,000 level, which is the GOP proposal.

So 14% don’t want any tax cuts extended. That means 74% are against tax cuts being extended to those folks.

Wow.

Here’s how the numbers shake out when you look at political affiliation…

Note how many Independents want them to expire for all. 17%, the highest of any group.

Maybe that’s why House Dems felt emboldened enough to pass the tax cuts without the extension for the wealthiest Americans. And several Republicans joined them. Tea Partiers…you’ll be interested in one House member who voted for it…

From Roll Call:

The Republicans who voted for the bill were Reps. Walter Jones Jr. (N.C.), Ron Paul (Texas) and John Duncan (Tenn.). Several Democrats who hail from wealthier districts as well as a number of Democrats who lost on Nov. 2 were among the defectors.

Ron Paul sided with the Dems? Wha???

Still, going back to the poll…EconomistMom sums up with the cartoon above and the title of her post: Can We Do the Non-Crazy Thing with the Bush Tax Cuts?

An excerpt:

I am no longer going to “let the perfect be the enemy of the good.” I am no longer going to try to talk people into seeing that the “right” thing to do with the Bush tax cuts would be to let them all expire. (The even “righter” thing would have been to never have enacted them in the first place.) I am just going to urge the policymakers to avoid doing something with the Bush tax cuts that seems totally contradictory to the fiscal policy goals–both shorter-term and longer-term–that they claim to have. In other words, let’s try to avoid doing something with the Bush tax cuts that seems totally crazy given what we say our fiscal policy goals are for both adequately supporting the (still fragile) short-term economy and better encouraging economic growth by reducing the deficit over the longer term.

And for a point of comparison on what those those tax cuts means to the deficit…

The White House plan which would not extend the cuts on high earners would cost an estimated $3 trillion over ten years. (By point of contrast, the controversial deficit commission proposal released this week would save about $4 trillion in that time.)

Personally, I’m not in favor of giving individuals who make over $85,000 and families who make over $150,000 more tax cuts. To me, and maybe I’m in the minority here, but those are upper lower class, not middle class. Seems like you could save A LOT of money there and reduce our budget deficit even further. And let’s remember…they’re still getting a tax cut on the money they earn under those numbers.

In any event, what do you think? Extend them for all? Extend them for some? Extend them for none?


This entry was posted on Thursday, December 2nd, 2010 and is filed under Democrats, Polls, Republicans, Taxes. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

57 Responses to “CBS Poll Reaffirms Tax Cut For Upper Class Is Wildly Unpopular”

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  2. Name: Mark Says:

    They are talking about deficit reduction on the backs of the same people they just robbed. There is no way I will accept any compromise on anything from this administration until he starts accomplishing giving something to the people who voted for him. I’m sick of his bipartisan bull shit. There are stories all over out there that Obama is admitting he is a Blue Dog and a DLC NEW Democrat. I sure as hell didn’t vote for that, and that sure as hell isn’t how he ran.

  3. Tully Says:

    Why are Republicans insisting that the tax cuts continue when the election appears to have been a referendum on spending?

    In a nutshell? Jobs. And growth.

    “Eat the rich!” is always a popular sentiment, but it runs up against the stubborn fact that eating the rich can cause economic indigestion. And not in a mild way. This is true regardless of whether or not one thinks the rich truly deserve cannibalization.

    We’re in a recession, and in case you haven’t noticed, employment and GDP growth are not exactly soaring (morning release shows increase to 9.8% UE on the most restrictive/optimistic measure of unemployment, and GDP growth is about half of that seen in a normal recovery). The economic impact of tax hikes at the upper margins of income on the economy as a whole can be ballparked at roughly 3 to 1, that is, for every extra dollar in federal revenue raised there will be three fewer dollars in GDP growth. Which also means fewer jobs.

    The cumulative effect of that over a decade would be well over a million jobs and at least $1.8 trillion in lost GDP, at a time when we desperately need growth and employment to go UP, not DOWN. (To pre-empt the inevitable mindless rejoinder, yes, the Clinton-era tax hikes raised revenue, but they still had a cost to growth and employment and acted as a “brake” on the economy — and I argued at the time that in an overheated economy experiencing a major growth bubble from the dot.com euphoria, the “brake” on the economy was a good thing. We are NOT in that situation right now.)

    Yes, the elections were a referendum on SPENDING. But despite misdirective conflation that’s still not the same as TAXATION/REVENUE. The problem is not so much revenue as the apparent inability of the government to live within their revenue. No matter how much revenue the government gets it seems to spend more than it has, and unless the spending is brought under control giving it more money doesn’t seem to be much of a solution.

    The administration is quite aware of all this — I’ve derived the figures I used from recent research by Obama’s hand-picked then-Chair of the Council of Economic Advisors, Christina Romer*. Congressional Republicans and Blue Dog Democrats are also cognizant of the problem. Only the “progressive” caucus seems oblivious — or perhaps indifferent.

    [*--I'm sure Ms. Romer's decision to return to "private life" as a Berkeley's Wilson professor of economics less than a month after the publication of her paper had nothing to do with the content and conclusions of that research. I also eagerly anticipate cleaning reindeer shit off my roof on December 26.]

  4. Mike R Says:

    Tully you might want to read the entire paper before you draw a conclusion.
    “The Macroeconomic Effects of Tax Changes: Estimates Based on a New Measure of Fiscal Shock by Christina and David Romer”
    The Romers’ have the position that tax increases for different reasons have different effects on GDP. A quote from a review of their work on the National Bureau of Economic Research website, “When they consider the two types of exogenous tax changes separately, Romer and Romer find suggestive evidence that tax increases to reduce an inherited budget deficit have much smaller output costs than other tax increases. This is consistent with the idea that deficit-driven tax increases may have important expansionary effects through expectations and long-term interest rates, or through confidence.”

    Since the proposed tax increases, actually letting the rates return as planned by a Republican congress, are for deficit reduction. As you remember these cuts were passed by the reconciliation and the ten year expiration date was done to mask the actual cost of the cuts. Context matters.

  5. Mike A. Says:

    Mark,
    According to Politifact.com:
    The Obameter Scorecard
    Promise Kept 123
    Compromise 40
    Promise Broken 24
    Stalled 84
    In the Works 232
    Not yet rated 3

    These are promises he made during his campaign. 24% he has kept, 45% in the works. Maybe you weren’t paying attention to who you were voting for.

    Considering the number of promises he made, and considering I have never seen any modern president make and keep so many of his campaign promises, I don’t share your rant.

  6. Barsoom Says:

    @Tully:

    I’m not an economist but it seems to me that if you give a rich guy a tax break, he’ll stack next to the rest of the money in the vault. By that I mean, are the rich running so lean that they won’t create jobs unless they get a tax break? In the past, wasn’t business spending (capital investment, job creation, etc) a way to avoid the larger taxes on the income?

    And finally, if the tax breaks are good for job creation, where are all the jobs from the last couple of years of this tax break?

  7. Cliff Says:

    Wrong. 68% may be against it for all or just the >$250,000 crowd, but 7% responded with don’t know. You cannot lump them with the “against” crowd, which you’ve done to arrive at 74%. Stop fudging the numbers to improve your argument.

  8. Richard M Says:

    The 74% number is an inaccurate interpretation of the polling numbers. The inverse of ‘continue for all’ is not the equivalent to ‘against >250k continuation’. There are also multiple non exclusive options so taking inverses in general is not logically sound. The “other” category is also not taken into account at all (numbers listed do not add to 100%).

  9. bofar Says:

    @Tully,

    Your post is the “Starve the Beast” philosophy. But what you neglect to recognize is that the Republicans have historically been the creators of the biggest budget shortfalls, due to a combination of excessive defense spending and tax cuts for the upper class.

    The rhetoric that “tax cuts create jobs” is not true. There are decades of economic data that clearly demonstrate increased taxes on high earners force them to reinvest in their businesses, rather than hoard cash. It may seem paradoxical, but it’s backed by data.

    You say we are overspending. Agreed. So, let’s see a bill that cuts taxes, directly tied to defense cuts, dollar-for-dollar. For example, pull all the troops out of Afghanistan (a boondoggle, as Wikileaks has demonstrated), and we can extend those tax cuts. Seems responsible.

    Right now, we can’t afford extending any of the cuts – recession or not – without identifying specific budget cuts.

  10. Chris Says:

    Tully reality shows that the tax cuts didn’t do shit for the economy when Bush first passed them.

    I would be completely happy with none of the tax cuts being extended. If republicans really were concerned about the debt and deficit that’s what they would be supporting. But they’re not, they’re concerned with paying off their rich supporters and corporate cronies like usual.

  11. Mark Kalan Says:

    If you give the wealthy a break they will invest it overseas and hide the profits. Ask any wealthy person – their entire existence is to beat taxes – which is why they now have the best gov’t their money could buy.

    TAX BREAKS DON’T CREATE JOBS; DEMAND CREATES JOBS.

    There is no demand because the top 2% have fleeced the rest of us for the last 30 years instead of paying people what they’re worth..

  12. usara Says:

    It’s about Capital, Stupid!

    See http://www.box.net/shared/yt9uvofr0p (flash version) or http://www.box.net/shared/exv71ul4t0 (adobe acrobat version) – give them a few seconds to load.

    USARA

  13. Certain Says:

    @Barsoom,

    Stop it with that kind of talk. You are starting to make too much sense. We can’t have that around here.

  14. Willuz Says:

    The election was not a referendum on spending. It was a referendum on taxation which fuels spending just as the “tea party” name suggests.

    I repeatedly hear the rich maligned as fat cats with gold plated yachts but this is simply untrue for the vast majority of the wealthy. You don’t get wealthy by putting your money in vault or spending it all on luxury items. You get wealthy by investing the money in businesses which generate more wealth and employ many more people.

    Sure, tax the wealthy. Just don’t be surprised when it turns out your boss is one of them and has to lay you off to pay higher taxes.

  15. Sarasota Says:

    According to CBS, they polled 808 people nationwide, some with landlines and some with mobile phones. No mention as to whether these were even registered to voters.

  16. mil Says:

    Mark

    And where exactly are we seeing, “jobs” and “growth” in our current economy, now that these tax cuts have been in place for so long?

    Oh that’s right. They’re not! Because business is driven by DEMAND, not LOW TAXES.

    Since Bush’s tax cuts have been in effect, I keep seeing a lot of “For Lease” signs and no “Now Hiring” signs.

    No? Check again!

  17. Tully Says:

    Mike R: Context does indeed matter, and you’re trying to avoid it. I read the paper and did the math their way. Obviously you did not, since you had to cite secondhand and out of context via someone else’s review. The Romer’s statement was that IF deficit-driven tax increases had a weaker effect than tax increases enacted for different goals, as they had slight evidence of being possible, it was the difference between 3-1 and 2.5-1 in expected adverse impact. “Still Really Sucks But Sucks 16.7% Less!” is hardly an inspiring slogan.

    They also explicitly state in the paper itself that their confidence in drawing that secondary conclusion is empirically very weak as compared to their primary conclusion, and is based on very limited differential evidence. To quote the Romers on that precise point, ” … one should be very cautious in reading anything into such imprecise estimates .”

    I’ll stick with their more certain primary conclusions. Which produce results nearly identical to those of the best commercial US Macro models. You don’t have to like those conclusions, but they’re the best empirical estimates available. And they say it’s a really bad idea to raise taxes on anyone right now unless we really really enjoy a sucktasticly stagnant economy so much that we want it to stick around longer than it otherwise would.

    Even Obama gets that. Which is why he’s happy to go along with a three-year extension to get him past the 2012 elections. He wants to be re-elected.

    Sure, tax the wealthy. Just don’t be surprised when it turns out your boss is one of them and has to lay you off to pay higher taxes.

    Willuz gets it in one. You don’t increase employment by boosting costs.

  18. Jim S Says:

    Directly from the Romers’ paper:

    “While one should be very cautious in reading anything into such imprecise estimates, the results are suggestive that tax increases to reduce an inherited deficit may be less costly than other tax increases.”

    But of course there is one flaw with their paper that I haven’t seen anyone address, which is the fact that the overwhelming majority of their data, which covers the span between 1945 and 2007, comes from a time when capital didn’t flow nearly as freely between countries and specifically before the massive flow of American capital to nations with extremely low wages and virtually non-existent regulations concerning the environment and workplace safety became so large that I think it probably overwhelms many of the considerations they made.

  19. Tillyosu Says:

    Tully reality shows that the tax cuts didn’t do shit for the economy when Bush first passed them.

    As usual Chris, you’re wrong. After the Bush tax cuts, the “wealthy” were paying a greater share of the tax burden, tax revenues actually increased, GDP increased, unemployment decreased, private investment increased…should I go on?

    But actually, I agree with you. I think we should let the tax cuts expire for everyone. I think that the poor and the middle class should feel the sting of federal spending just like the wealthy do. Maybe then there will be some substantial pressure on Washington to cut spending.

    This poll is garbage, and I’ll tell you why. It’s no surprise that the vast majority of people have no problem confiscating and spending the money of a small minority. I could’ve told you that without a poll. But is this healthy for a democracy? I mean, is it healthy that the vast majority of voters have no real stake in federal spending? Is it healthy that the vast majority of voters get to control and appropriate the wealth of a small minority, without contributing themselves? Is it healthy that the majority can vote themselves free health care and retirement income out of the pockets of the wealthy? How long do you think the wealthy will suffer this abuse?

    No, the whole idea of a “progressive” tax system is a fundamental danger to our democracy. The solution is a single tax rate for everyone. If I make 30% of the national income, I should bear 30% of the tax burden. Likewise if you make .0000005% of the national income, then you should bear .0000005% of the tax burden. It’s fair, yes, but it has the added benefit of making policy make sense in Washington.

    You want the wars in Afghanistan and Iraq to end? Make everyone pay for them. You want a bloated defense budget reduced? Make everyone pay for it. You want out of control and inefficient entitlements examined? Make everyone pay for them.

    Justin’s poll only exposes the danger of a progressive tax system – that the burden will shift more and more toward the high end, while spending gets more and more out of control.

  20. Tillyosu Says:

    And that cute little cartoon Justin posted is flawed. That pig shouldn’t be eating out of a trough that says “Bush Tax Cuts.” Hell it shouldn’t even be eating out of a trough that says “Iraq and Afghanistan.” It should be eating out of a trough that says “Social Security” or “Medicare” or “Stimulus.” But then if it did, I’m sure it wouldn’t have been posted here.

  21. Chris Says:

    Tilly you’ve got to be fucking kidding me. Feel the sting? The top 5% in this country have acquired more wealth in the last 3o years than all of the rest of the country combined.

    They don’t feel shit, they don’t need more money. They don’t need lower taxes. You are a plebe scrambling around for table scraps.

  22. Jim S Says:

    The current class of wealthy investor in the United States does not make their money by investing in businesses that create jobs here. They invest in funds that play financial games like CDOs and invest in multi-national corporations that create the overwhelming majority of jobs they do create overseas, not in the U.S. So why should we worry about subsidizing that with our tax policies?

    And there are so many things wrong with hyperconservative Tillyosu’s post that I’m not going to take the time to point them all out. But the basic thing is that 30% of a poor person’s income means an entirely different thing to them than 30% of a wealthy person’s income means to them. For the poor or lower middle class it means the difference between affording the basics of living. Not so for millionaires and billionaires.

    And no one has voted themselves free healthcare because the majority of those who vote don’t receive any such benefit. Conservatives who say otherwise just show how woefully ignorant, if not outright stupid, they are.

  23. labman57 Says:

    But less than a month ago, McConnell made a vow to carry out “the people’s business”. He wouldn’t have lied to America … would he?

  24. labman57 Says:

    Hmmm. Let’s see now.

    There is simply no data to support the supposition that providing disproportionately huge tax cuts for the top 2% of the wealthiest people results in job creation or other significant economic growth.

    Enter the Congressional Republican think tank: since the currently provided huge tax breaks for the wealthy clearly have had no stimulating effect on job growth, let’s conclude that we need to further extend said tax cuts indefinitely in order to stimulate job growth.

    Me no understand right wing logic.

    In fact, the only result that the GOP truly expects is the one that will occur — the rich will get richer at the expense of everyone else.

    Suggestions that tax cuts for the ultra-wealthy will stimulate job growth is simply their cover, their disingenuous talking point designed to try to sell their Reaganomic bill of goods to the public. Ultra-wealthy Americans made a major investment in the Republican Party during the 2010 mid-term elections. The GOP is simply carrying out the job for which they have been duly paid.

    Don’t pee on my shoe and call it trickle-down economics.

  25. Freddie Says:

    So Obama will basically cave on the tax cuts. This is what will happen. He will extend all tax cuts for 2 years and the republican­s will extend unemployme­nt insurance. Then in 2 years the people will vote for a republican senate and perhaps a president. The house is republican and there are a ton of democrat senate seats up in 2012. Once the republican­s take control of everything they will make the tax cuts permanent.I would rather nobody get a tax cut if the top 1% get them. Do people not see through all the deficit hawk pandering by the republican­s? They want to cut 700 billion in revenue which will add to the deficit. I am middle class and I will pay more tax if it means the rich pay more too. Lets not cut revenue and then slash social security and medicare to pay for the rich.

  26. Tillyosu Says:

    There is simply no data to support the supposition that providing disproportionately huge tax cuts for the top 2% of the wealthiest people results in job creation or other significant economic growth.

    Really? Do you know something that these guys don’t?

    And Jim, if I decide not to come to your house and confiscate your flat screen TV tomorrow, that doesn’t mean that I’m “subsidizing” your TV watching – it just means that I recognize that the TV doesn’t belong to me in the first place.

  27. Chris Says:

    Since my post didn’t make it through the censorship – not suprisiing – I’ll post my main point. Tilly you are a plebe scrambling around for table scraps while pledging your undying loyalty to the aristocracy who sees you as nothing more than a tool to be taken advantage of.

  28. Chris Says:

    http://www.thefiscaltimes.com/Issues/Budget-Impact/2010/11/26/Bartlett-Starve-The-Beast.aspx

  29. Tillyosu Says:

    Tilly you are a plebe scrambling around for table scraps while pledging your undying loyalty to the aristocracy who sees you as nothing more than a tool to be taken advantage of.

    That’s it? Listen Chris, if all you’ve got left are petty and ill-informed ad hominem attacks, then you’ve already lost. You would have been better off not responding at all.

    (Side note: It’s “pleb” or “plebeian,” not “plebe.” But I think we got your point.)

  30. Tillyosu Says:

    Also, Chris, I find your comment interesting in that it illustrates a typical trait on the left – a pathological inability to accept responsibility for your circumstances.

    Believe it or not, there is no shadowy “aristocracy” holding you back. There are no “corporate interests” or “bankers” conspiring to keep you down. If you’ve turned out to be a bum, then it’s your own fault. Don’t blame anyone else. And if you ever want to change your lot in life, you’re totally free to do so (that’s the beauty of living in America). And yes, it is possible. Just ask these guys.

  31. kranky kritter Says:

    I agree with Justin and with this poll. That is, I think that if the democrats wanted to go to the mat to avoid extending the tax cuts for the top bracket, it would be a win public-opinion-wise.

    The economic impact of tax hikes at the upper margins of income on the economy as a whole can be ballparked at roughly 3 to 1, that is, for every extra dollar in federal revenue raised there will be three fewer dollars in GDP growth. Which also means fewer jobs.

    I find this very hard to believe. Like Chris and others, I sort of want to believe that extra money for rich folks will stay in their pockets. But I do my best not to let what I want to be true get in the way of what really IS true based on the best available evidence.

    Where are the best places to look for a layman’s explanation of why and how tax breaks on the wealthiest have a GDP multiplier effect. I need a simple place to start, and then I need to follow up on the bouncing balls. Little help Tully? Something else besides Romer’s paper? I really need some sort of cogent compelling explanation for how every extra dollar in a rich american’s pocket leads to $3 of growth. Seriously.

    It’s just not the sort of thing I can simply accept at face value because some data shows something. I need more.

  32. Chris Says:

    Tilly you are incorrectly extrapolating meanings out of what I post. there are indeed aristocrats and corporate interests in this country that control the majority of everything that happens at the top level. You’re a fool if you think any different. Do I think it’s some giant conspiracy? No, it’s just greed and power.

    But thanks for pretending to know me. KK does that often as well, believing that I am some sort of typical liberal.

    Funny but conservatives do the exact same thing, but they just swap out the “other”: government, unions, state workers, taxes.

    The wealthy elite are not holding me down personally; but they are draining the middle class, through their buddy system policies.

  33. theWord Says:

    @Kranky-

    Evidence is a great thing. What normally happens however are assertions. I’ll bet I know what side Tully’s help will fall on.

    How about this, the assertion is that if the taxes go up on the wealthy (in some cases the obscenely wealthy) then there will be less jobs created. How about putting that to the test, create a job, get an increased write off, keep a job in the US, increased write off. Have top people’s salaries near a reasonable level (to be determined) get a tax break. I think a hero of the right said Trust but verify. Right now, their “reason” means nothing. They might as well be saying if they get it they will fart methane and solve the energy crisis.

  34. Tully Says:

    What you feel should be right has little weight, kranky. And you’re confusing fiscal multipliers with drag effects. Much as some would like to conflate continuing a rate that’s been in effect for a decade as a “tax cut,” not extending it would be a HIKE in marginal rates at the upper ends, which is where the drag effects on investment and employment are strongest.

    IOW, we are not talking about how putting an “extra dollar in a rich american’s pocket leads to $3 of growth.” We’re talking about how taking an extra dollar OUT of those pockets leads to new job LOSSES and LESS future growth.

    I’m not gonna do your homework for you, but Barro & Redlick’s recent paper is helpful [Macroeconomic Effects from Government Purchases and Taxes] as is Alesina and Ardagna’s [Large changes in fiscal policy: taxes versus spending]. Be prepared for much discussion on endogeneity and the separation of substitution effects from wealth effects. Remember, our short-term goal is jobs and growth. The short take from the abstract of Alesina and Ardagna covers the basics we’re concerned with here for policy-decision purposes:

    Fiscal stimuli based upon tax cuts are more likely to increase growth than those based upon spending increases. As for fiscal adjustments, those based upon spending cuts and no tax increases are more likely to reduce deficits and debt over GDP ratios than those based upon tax increases. In addition, adjustments on the spending side rather than on the tax side are less likely to create recessions.

    In short, the best empirical research indicates that given where we are right now giving the government more money does not provide any assurance that the primary problem of excessive spending will be addressed, and in the short term the impact of tax hikes on employment and growth would be strongly negative. An extension of the current rates is strongly indicated as the wisest course.

    Get a real recovery going, with strong job growth and GDP growth, and it’s a different story. Then we have more “slack” and other considerations come into play — such as throttling down an over-heating economy before damaging bubbles get too large. And note I said “extension,” not permanentization. Those pushing for a permanent lockdown on rates are grandstanding against the unknown future, however sincerely they want it. They want to re-set the “battle space” to zero for future changes rather than require an ongoing review of tax policies.

  35. Tully Says:

    I’ll bet I know what side Tully’s help will fall on.

    Yep. The best and most current empirical economic research out of those bastions of academic conservatism, Berkeley and Harvard. :-D

  36. kranky kritter Says:

    Yeah Word, I know what side Tully’s help will fall on, That’s why I asked him, because over the last 5 or 10 years he has demonstrated pretty good judgement to me and a much greater than usual commitment to open-minded empirical inquiry. No one’s perfect, but the credibility that I grant him is something that he has earned with me.

    What you feel should be right has little weight, kranky.

    Well, as it relates to whatever empirical data has demonstrated, my feeling don’t have ANY weight. I’m just pointing out that I’m the kind of guy that needs a lot more convincing when a claim doesn’t seem to ring true to my intuition. At least I am aware enough of that to be willing to suspend my disbelief until I’ve made a stab at educating myself.

    Politics-wise, folks’ feelings only matter when it comes to public opinion and how their feelings affect their votes. Should the democrats decide to go to the mat to avoid extending top bracket tax cuts, public sentiment will matter then. As you would hasten to add, the truth will still matter. If the top bracket expiration brings lower growth and fewer jobs, we’ll all suffer, whether we ever connect the causal dots or not. So it shall ever be.

    I hope to take a stab at this tomorrow, but I have a feeling it’s going to be a bit over my head. Generally I end up having to settle for getting the gist of a few main points as I continue to connect dots one by one over time, via osmosis.

    But thanks for pretending to know me. KK does that often as well, believing that I am some sort of typical liberal.

    I have far too good a memory to be remotely insulted by that. I know from long experience whose side you always end up on, and I know it twists your panties that I’m willing to call you on it every time. Typical liberal? Who cares. By your known and repeated words you appear virulently and reflexively anti-Republican, which for most intents is the same as anti-conservative. If you want to show where that’s off the mark, go ahead. I’ve been listening and waiting all along. And you’ve a great big goose-egg in one column. which makes you a pretty pure loyalist.

    All of my classifications are conditional and open to adjustment based on new data. You think you deserve reclassification, that’s up to you.

  37. theWord Says:

    Kranky-
    When you know the conclusion before the evidence is in it shows that there is no credibility. Open-minded is not something I have seen any indication of but your mileage may vary. He could be right but if you know his conclusion before hand it’s doubtful he’s open-minded.

  38. Tully Says:

    Should the democrats decide to go to the mat to avoid extending top bracket tax cuts, public sentiment will matter then.

    True dat, Kranky. IMHO, the (very) short-term political effect of a top-end non-extension would be good for the Dems, and in the longer term it would have been utterly disastrous for what should be obvious reasons.

    But it doesn’t matter because they were never fated to get their dream combo plate with a side of eat-the-rich in the first place, as today’s events are now proving. They had most of two years to demand and get the dream combo plate, but they were too busy with other priorities. Which is why I wasn’t really going to argue the point, as the shape of the outcome was obvious weeks ago. They were waving the bloody shirt and grandstanding for the base all along.

    In the White House, the Great Pivot continues. Someone got the memo, and the admin is showing nice footwork in making lemonade out of lemons. The only real surprise to me is that Obama gets to take credit for the payroll tax “holiday.” But if it only takes 2% off the empoyee’s side he’s welcome to it, because it won’t do squat for job creation unless the employer’s side goes down as well. Those of us non-rich who have to pay self-employment tax will be especially annoyed.

    Even as we play at our keyboards, at DNC HQ they’re drawing up their charts of who in the Dem party has to vote which way for the final package to be close enough to be a convincing good-try-but-a-loss without overly damaging too many of their surviving incumbents with their district base. Fortunately they have a large pool of sacrificial outgoing Congresscritters to draw on.

  39. Chris Says:

    Kranky I am absolutely anti-republican, and gladly. But I do have conservative values, none of which are shown in the modern republican party.

  40. Tillyosu Says:

    But I do have conservative values, none of which are shown in the modern republican party.

    Oh I’d love to hear what those are…

  41. kranky kritter Says:

    Kranky- When you know the conclusion before the evidence is in it shows that there is no credibility. Open-minded is not something I have seen any indication of but your mileage may vary. He could be right but if you know his conclusion before hand it’s doubtful he’s open-minded.

    Tully hasn’t just studied economics, he’s taught economics. I know his views to be strongly data driven. When someone studies data for a decade or two and then reaches a conclusion or two. I’m OK with that.

    Me personally, I don’t have the foggiest notion about what all the various different cascading effects of raising the tax rate on the top bracket might be. [And I strongly suspect I am not alone in that boat here, I'm just the only one who will cheerfully admit it].So that means I need to be especially open-minded about what smart knowledgeable people think. I am the one who needs to be careful about bringing my preconceptions to the table.

    By contrast, I am in general pretty receptive to the idea that people who do serious careful study within a discipline eventually come to a series of conclusions. After all, that’s the point of studying.

    As long as those conclusions are conditional and open to correction should addition data suggest it’s wise, it works for me.

    My sense is that Tully is among that small class of people who is actually capable of enjoying it when additional data requires a revision to a hypothesis. But he knows exactly what that sort of data would have to look like. And if you come to him with data that you say requires adjustment, but that data doesn’t fit his empirical standard, he’ll probably cut you off at the knees. Personally, I wouldn’t have it any other way.

  42. blackout Says:

    “How long do you think the wealthy will suffer this abuse?” Holy crap did this make my day. Farcical.

    “My sense is that Tully is among that small class of people who is actually capable of enjoying it when additional data requires a revision to a hypothesis.”

    I agree. When he’s not indulging in over-simplified, pro-corp boiler plate he’s very nuanced and insightful.

  43. Chris Says:

    I would enjoy seeing some data that shows any positive impact from the implementation of the deficit funded tax cuts to today.

  44. Tully Says:

    GDP grew at an annual rate of just 1.7 percent in the six quarters before the 2003 tax cuts. In the six quarters following the tax cuts, the growth rate was 4.1 percent. The economy lost 267,000 jobs in the six quarters before the 2003 tax cuts. In the next six quarters, it added 307,000 jobs, followed by 5 million jobs in the next seven quarters. Non-residential fixed investment declined for 13 consecutive quarters before the 2003 tax cuts. After them, it expanded for 13 consecutive quarters.

    Enjoy.

    If you want to give back your portion of the tax cuts, you can send it to:

    Gifts to the United States
    U.S. Department of the Treasury
    Credit Accounting Branch
    3700 East-West Highway, Room 622D
    Hyattsville, MD 20782

    They take checks and money orders.

  45. Chris Says:

    http://www.google.com/publicdata?ds=wb-wdi&met=ny_gdp_mktp_kd_zg&idim=country:USA&dl=en&hl=en&q=gdp+growth

    According to this chart tully, gdp was already trending up before the tax cuts.

    http://2.bp.blogspot.com/_oKWxWOEilyQ/S3wwlW0KjwI/AAAAAAAAB9A/TH4aNO4d2DI/s1600-h/09-04-03_jobs.png

    I don’t think you can say with certainty that the tax cuts for the ultra wealthy prompted these short term improvements. Well you can say it, but I don’t think it’s honest.

  46. kranky kritter Says:

    Of course you can’t say it with certainty. Generally when it comes to parsing vast reams of complex data while trying to pin down a moving target, you don’t get certainty. Instead, what you get is lots of studies over time, which, if done in good faith, suggest a pattern.

    People who understand research accept this. But what about partisans whose only interest is in studies that support their preconceptions? They always say stuff like “you can’t say that with certainty.” They rely on lack of certainty to complain that more study is always needed, and then when one outlier study supports their side, they sound the trumpets. I really hate that.

    That’s the problem with political partisans. They are deeply uninterested in undertaking a lengthy good faith effort to separate wheat from chaff in data.

    Chris, you’ve accused Tully of being dishonest. But do you base this on any particular background or expertise in studying the effect of tax rates on GDP?

    Or is it the case that you’ve leapt to accuse Tully of bad faith because you don’t like the conclusions he’s highlighted? That’s what I think you’ve done, since your links in counterargument are so weak. Give me a break. “Already trending up?” That’s not even relevant. Are you even smart enough to grasp the distinction between growth and rate of growth? Tully already acknowledged that the economy was growing prior to the cuts. What he did was to simply cite that the growth rate demonstrably increased. If you can’t acknowledge that as significant, you have a problem with math literacy.

    Tully didn’t make any truth claim. All he did was to give you exactly the data you asked for, suggesting a benefit to lower rates. The correlation is quite noticeable. But since you lack any ability or relevant background context to suggest that perhaps the GDP growth had nothing top do with the tax cuts, all you can do is say that Tully can’t be certain?

    Really? Is that the best you can do? That’s SO weak.

  47. Tully Says:

    Generally when it comes to parsing vast reams of complex data while trying to pin down a moving target, you don’t get certainty

    Yep. You sort through a huge number of variables trying to isolate the macro effects of changes in them and establish a quant range for same. Knowing that an effect is likely to occur in a particular direction helps. For example, pretty damned obviously raising the cost of labor will tend to lower employment, while decreasing the cost of labor will tend to boost employment. Raising the cost of investment (hiking business taxes) tends to retard investment, and vice versa, though far-left statist “progressives” seem to believe it works the other way around.

    Even Obama acknowledged that tax hikes kill jobs and growth when making his speech. And the farther up the income chain the tax hikes are, the greater that effect. It’s not a secret or anything — at lower income ranges tax hikes more directly affect consumption, the farther up the income ladder you go the more directly they affect investment instead. The “progressives” don’t care. For them, either they simply don’t believe the principle is for real, or eat-the-rich as a priority supercedes the overall health of the economy.

    Contra fides negantem non est disputandum. You can always tell a True Believer, you just can’t tell them much.

    The deal finally struck as it stands contains little in the way of growth stimulus, but a pretty fair amount of the fiscal stimulus so beloved in Washington. What it doesn’t contain is what the eat-the-rich state-uber-alles crowd really really wanted, punitive tax hikes on “the rich” which lead to active growth inhibition. All-in-all, I think Obama got more than he should have expected, and the GOP got less. With few exceptions, both sides were in favor of the middle-class-and-under income tax extensions, which is the bulk of the cost. After that’s factored out, Obama got more in dollar terms than he gave up by about a 3-2 margin.

    Listening to the lefties in Congress you’d never know they’ve had four years of majorities in both houses and two years with the White House as well in which to have gotten what they wanted. Instead, they had other priorities.

  48. Tully Says:

    In the meantime, the Dem Libs in the House appear to be trying their best to die on this hill by preventing the tax bill from reaching the floor at all. I can’t think of a more instructive display of tantrum-pitching guaranteed to drive more public support behind the GOP and the deal.

    Should the lib Dems “succeed” in these efforts, they will win the annual “Shooting Self In Ass with Double-Barrell Elephant Gun Award” for the year, hands down. First off, the incoming House majority will simply turn around and pass this deal or one even MORE favoriable to the GOP agenda. It’s win/win for the GOP. In the meantime, for a few weeks grandstanding on principle, the unemployed will be cut off at the holidays BY THE DEMS. The great middle will know that THE DEMS voted to raise their taxes by thousands of dollars a household, with the hit extending clear to the very bottom of the income ladder. The True Believer hard-core left aren’t going to abandon the party if it just takes the hit and moves on, but damn near everyone else is going to be less inclined to vote Dem in the future. And the GOP gets to be the savior of the Little Guy and take credit for goodies, sucking much of the credit off of Obama. Lose/lose for the Dems.

    One of the marks of fanatics is the wilingness, indeed, the insistence) that they die on each and every hill on sheer principle, even when the battle is clearly lost. More pragmatic pols want to win the war, and know when to Move On rather than piss away their troops and ammo stockpiles on a hopeless cause for no good purpose.

  49. Chris Says:

    KK pointing out 2 measurements in a point in time isn’t even remotely enough evidence to show that those tax cuts had a beneficial effect for the economy or job growth to me. If economics of this sort were so easy then there wouldn’t be much debate about it, would there? The fact is no one can prove that they helped, so instead you look at the motivation behind such cuts, which in the last 30 years, seem to always obviously benefit a certain type of person – wealthy.

    Then you look at all the people voting for those cuts — also wealthy. Then you look at those people bankrolling the people voting for those cuts — also very wealthy.

    See a trend here? It’s perfectly reasonable to be skeptical of things that have no method of success.

  50. WHQ Says:

    Even Obama acknowledged that tax hikes kill jobs and growth when making his speech. And the farther up the income chain the tax hikes are, the greater that effect. It’s not a secret or anything — at lower income ranges tax hikes more directly affect consumption, the farther up the income ladder you go the more directly they affect investment instead.

    I have a nit to pick here, Tully. Your first sentence and your last sentence, no problem. It’s that middle one that I’m not sure about. It sounds like a suggestion that regressive taxes are optimal, since tax-rate hikes at higher incomes will kill more jobs and growth than hikes at lower incomes.

    This would also imply that reductions at the high end would do more than reductions at the low end to produce more jobs and growth.

    Doesn’t this all depend on what the rates are to start with and what the general economic conditions are? (And speaking strictly on the economics here, not other potentially superceding value judgements.)

  51. Tully Says:

    The trend I see, Chris, is that you’re profoundly ignorant of the elementary basics of the subject and use that ignorance to shield yourself from any real-world knowledge that conflicts with your faith-based worldview. It being such a long-running trend on your part, I expect no change in it.

    It sounds like a suggestion that regressive taxes are optimal, since tax-rate hikes at higher incomes will kill more jobs and growth than hikes at lower incomes.

    Question: Optimal for what?* First, “regressive” is not correct. I’m talking about broad and flat tax bases, not piling higher rates on lower incomes than on higher ones, which is what “regressive” would be. I’m talking about a flatter structure, not an inverted one. Now, if you mean is a broad and flat tax base optimal for stabilization of government revenue streams as compared to a sharply “progressive” tax base, you betcha! Pretty simple math, actually, obvious and well-demonstrated throughout history.

    And the second part of the sentence is true. At the lower end of income the bulk of spending is consumption. Basic needs, a fairly fixed cost. At the higher end spending becomes less consumption and leans more towards investment. And it is investment that drives growth. And even at the upper end, hikes will reduce consumption more than at the lower ends, as they’re in the margin far over-and-above the MANDATORY basic fixed cost consumption of general existence. At the very bottom end, any cash lost to hikes tend to be compensated for by government spending to supply that basic fixed cost (food stamps, rental assistance, EITC, etc.) so base mandatory consumption is far less affected by low-end hikes than is optional consumption and investment at the high end.

    IOW, the more “progressive” the tax system, the higher the marginal response of revenue to changes in conditions, the higher the revenue stream volatility. And barring concerted effort, spending always ratchets up.

    Of course, government never ever likes to reduce spending … so what we get is spending rising during good times, and progressives demanding higher marginal rates on the top end, which produces higher revenue, and when government gets more money it spends more money. But when times get bad the loss to tax revenue is magnified in scale far beyond the downturn in the overall economy … and everyone starts demanding more government spending and/or borrowing to cover the gaps.

    This would also imply that reductions at the high end would do more than reductions at the low end to produce more jobs and growth.

    Yep. See upstream. When you cut taxes at the lower end, you mostly produce more consumption, which has to filter through the economy to produce any new investment for future growth. When you cut taxes at the higher end, the money released is far more likely to go directly to new investment for future growth. The Keynesians have so abused the multiplier concept that I generally don’t like to use it much, but in Keynesian terms upper-end cuts have a higher multiplier effect on future GDP growth than low-end ones.

    Doesn’t this all depend on what the rates are to start with and what the general economic conditions are?

    To some extent, you betcha. That’s a two-part question. Part 1: the amount of current rates dictates how much the increase is in real percentage terms. EX: A bump from 10% to 11% is only a 10% increase, but only a 1.1% decrease in after-tax income. A bump from 35% to 42% (the actual amount many small businesses reporting on sub-S would have faced without the extension) is a 20% bump in taxes paid, AND a 10.8% decrease in after-tax income, almost 10 times as much as the first example. Run in reverse for tax cuts.

    Part 2: It’s a lot easier (and smarter!) to raise taxes in a sharply growing economy than in a flat economy or a shrinking one. In some instances (see upstream) it’s even eminently justifiable in preventing overheating and/or in paying down deficits or building reserves. The time to choke back on growth is when you’ve got too much growth. The time to implement job-choking policies is when you have too tight a labor market. These are not currently our problems. It’s DUMB to raise taxes in a fragile economy.

    [*--and if you mean "optimal for government revenue maximization," the Laffer Curve applies, and it is VERY important to notice that what is best for filling government coffers in the short term is not at all synonomous with what is best for the economy as a whole. Oh my no. But that tends to be the Holy Grail for statists. Also note that the optimal point of the Laffer Curve is a perpetually moving target. Knowing it exists is not the same as knowing where it is right now, or where t will be in the future.]

  52. WHQ Says:

    And the second part of the sentence is true.

    I wasn’t contesting the spending-versus-investment part, Tully. (That was the third sentence of the three quoted and obviously true.) Thanks for the reply. More fodder for pondering.

    One follow-up question – My understanding is that what we have now is a demand problem and that firms, banks included, are sitting on lots of cash because of it. Doesn’t this figure into where to cut/raise taxes (or spend government dollars, I suppose)?

  53. Tully Says:

    Consumer demand is slack because no one has any faith in the “recovery” and everyone’s hoarding their cash. The uncertainty is massive. Trying to stimulate demand upward at this point is pushing on a rope — until employment kicks back in demand will stay slack. Which leaves business confidence driving investment (which translates to growth and jobs) and after being slammed by the ruling party for endless months, that’s just not there right now either. As David Brooks recently put it:

    We’re in a horrible economic climate. The entire business community thinks the government is out to destroy them. Do we think raising taxes on small business people is going to improve their willingness to invest and take risks?

    OTOH, cutting off UE benefits and raising taxes right now would slam consumer demand down even harder, and as Obama hisself said, court that double-dip. Why you don’t hear me crying about the spending side of the tax deal — those on the lower end of the income scale get the vast bulk of those rewards, and they’re the MOST likely to spend it ASAP. How “stimulative” that is I’ll let others argue, but given the assumption that there was no UE extension without a tax extension deal, the choices for the tax deal were [1] let everything kick back in and UE expire, MAJOR hit to the economy; [2] do a half-ass deal that at very best maintained the status quo, and PRAY, or; [3] cut a deal that did the least damage and provided the most stimulus to consumer demand. So I’m sure not crying that Obama and the GOP went with #3.

    As for those cheering for #1 on “principle,” well, it certainly clarifies their priorities now, doesn’t it?

  54. kranky kritter Says:

    The fact is no one can prove that they helped, so instead you look at the motivation behind such cuts…

    What a stunning distillation of pure know-nothingism, Chris.

    Thank-you for admitting that this is your essential credo. As long as a claim can’t be proved beyond a shadow of a doubt, you feel free to base you policy views on whatever you feel your declared enemy’s motivation is.

    How convenient. You don’t understand economics. But you don’t have to, you can just dismiss them, and fall back on emotions and feelings about your perceived enemy.

    That’s textbook know-nothingism, and you declared it yourself. You have no interest whatsoever in understanding economics beyond discounting it. You feel you’ve fought the entire body of thought behind economics to a stalemate. It’s incapable of providing any insight on the matter, and so you’re free to complain about Republican motivation. Which is all you ever want to do anyway.

    It’s lazy and closed-minded of you. No exploration, no attempts to digest possible insights from outside of what you already believe, every argument leading to your retrenchment in personal certainty that republicans are evil. You take long, lovely enjoyable baths in threads about how bad Sara Palin is, as if that matters. You seek out information that reinforces your views that most conservatives are stupid, ignorant, vengeful, small-minded. Can’t you even see your own patterns?

  55. WHQ Says:

    Consumer demand is slack because no one has any faith in the “recovery” and everyone’s hoarding their cash.

    No one? Everyone? You haven’t met my wife.

  56. Tully Says:

    LOL, WHQ. No, but I have met mine. I retract the global generalization(s) and concede the widespread existence of significant individual exceptions on the micro level that do not alter the expressed directionality of the macro trend.

  57. Jay Banks Says:

    The empty gap is an inflexible market. The Market is a markedly significant factor of both business confidence and consumer´s confidence­ and it is decisive to keep confidence high at a time when other key elements (e.g. housing costs and the job market) are not yet recovering.

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