October 15, 2012

Game planning

I realize this Robert Samuelson article is more than several days old now, but it is clear that Obama-Biden are going to keep repeating the big lie of a $5 trillion Romney “tax cut for the rich” — in fact, other than grabbing onto the tail feathers of Big Bird, claiming that Romney’s denial of their convenient fiction is itself a lie seems to be the crux of their campaign — so it’s nice to arm yourselves with the breakdown of the plan if you hope to sway any still undecided voters (God help us) between now and the election with the facts, including how the Obama/Biden campaign came up with the number and the brazen dishonesty it takes for them to continue to wield it as a sort of working class cudgel.

Note, too, that Samuelson doesn’t endorse the Romney tax plan; instead, what he’s endorsing, with his article, is the now out-of-fashion suggestion that reporters stick to the facts, having first taken the time to understand them.  And that doesn’t mean reading Obama press releases and memorizing the campaign’s daily talking points.

From WaPo, “The $5 trillion tax cut that isn’t” (all emphases mine):

[…] We all understand that campaigns involve self-serving exaggerations, simplifications and partial truths. But if politics is to retain any integrity, a line must be drawn at statements and innuendoes that are demonstrably false. That’s happened here. The Obama campaign has distorted the results of a study by the Tax Policy Center, a nonpartisan research group, and created a fictitious $5 trillion tax cut. Some news organizations have embraced the distortion. The TPC should issue a statement saying its results have been twisted, leaving no doubt. News organizations that bought into the fabrication should retract their previous reporting. […]

The Tax Policy Center report concluded that Romney can’t cut tax rates 20 percent while raising the same amount of tax revenue and not increasing taxes on the middle class. Something would have to give, the TPC said, because Romney has put too many loopholes for the rich off-limits. But even if the TPC is broadly correct — as I think it is — it does not follow that Romney plans a $5 trillion tax cut for the rich.

The $5 trillion figure never appears in the report. Rather, the report estimates the cost of Romney’s plan for 2015. Altogether in 2015, his proposed rate cuts would reduce tax revenues by $456 billion, the TPC reckons. Multiplying that by 10, and assuming some inflation and economic growth, gives a roughly $5 trillion estimate for a decade.

Here’s why this isn’t a $5 trillion cut for the rich. Start with the $456 billion in 2015. Only $360 billion of that reflects reductions in individual tax rates. The rest involves the corporate tax and isn’t analyzed by the TPC. The study assumes — perhaps implausibly — that any lost revenues from lower corporate rates would be offset by fewer corporate tax breaks. Over a decade, that’s slightly more than $1 trillion of the $5 trillion off the table.

It’s true that most individual rate reductions would go to wealthier taxpayers, because the wealthy pay most federal taxes. (In 2012, the 4 percent of taxpayers with incomes exceeding $200,000 paid nearly 45 percent of federal taxes, the TPC says.) Still, Romney’s proposed rate cuts also benefit those with incomes of $200,000 or less; that’s one dividing line between upper-middle class and wealthy. The TPC estimates that these rate cuts are worth $109 billion for 2015. Over a decade, that’s slightly more than another $1 trillion not going to the rich.

The remaining rate cuts for the wealthy equal about 60 percent of the $5 trillion over a decade, or $3 trillion. Romney contends that closing existing tax breaks would recoup lost revenues. Not so, says the TPC. There aren’t enough. Still, the TPC estimates that two-thirds of the lost revenues might be offset by fewer tax breaks. If so, this eliminates another $2 trillion over a decade available for tax cuts for the rich.

The remaining $1 trillion is still a lot of money, and Romney can be harshly criticized for making more promises than he can keep. Which ones would he break? In the first debate, he was emphatic. He wouldn’t propose any tax cut that increased the deficit or the middle class’s tax burden. One way to keep these pledges is to pare back rate cuts for the rich or attack some tax preferences put off-limits by Romney. Then, the net tax cut for the rich would be zero.

At the end there, Samuelson appears to be going for a bit of balance, so let me answer the one remaining charge, namely that Romney can still be “harshly criticized for making more promises than he can keep”:  the fact of the matter is, both Romney and Ryan have said repeatedly that the fine tuning will have to occur in negotiations with lawmakers of both parties — that the plan is for a bi-partisan compromise on many of the deductions, a process that will require ongoing negotiations.   Also, the offset for that $1 trillion loss of revenue to government can be made up in other ways — assuming the government needs the money and can’t get buy at current levels of funding — be it through additional revenue from growth and an increase in jobs, or the kinds of cuts to the bureaucracies that conservatives and classical liberals will begin demanding, should Romney win and the GOP hold the House and take the Senate.

That having been said, Samuelson’s larger point is important:  in Obama math, one takes an already partisan study, refigures it even more, then rounds it all up to arrive at a number they believe will make a strong rhetorical impact and resonate with the electorate.  Thus, $1 trillion in tax cuts over a decade that benefit those who actually pay taxes not recuperated by the government = a $5 trillion tax cut “for the rich” — the suggestion being that Romney and Ryan will take money from the benevolent and streamlined government, which is the font of all capital, and give it away to people who don’t really need it (though, sure, they worked for it; but hey, fair shares!)

Knowing precisely how this fiction operates is the first step to dismantling it.  The second is to develop some clear terms and a short presentation  to explain it. I prefer always to argue that once we stop proceeding from the dangerous assertion that the government, by claim of its own inherent morality and benevolence,  owns all the money and gets to dole it out as it sees fit and responsible — that, after all, is not the premise for free market capitalism, nor is it in keeping with our founding principles, which sought to protect the individual, his rights, and his right to the fruits of his labors; but is instead the premise of socialist enterprise  —  the whole fiction collapses.  The government isn’t losing $1 trillion of its revenue. You as a tax payer are keeping your share of that $1 trillion that belongs, first, to you.

That is to say, when the government loses “revenue,” it is not our job to feed it as it demands until that revenue is replaced. Instead, we set a balance between what we are willing to pay in taxes in exchange for the services government then provides.  We own the government.  It doesn’t own us.  And any money it has comes from us (or from a printing press, which merely serves to devalue our own labor).

To do that, we begin cutting things that are outside the constitutional purview of the federal government. We slash the bureaucracies. Having done so, we can cut onerous compliance costs that make doing business in this country increasingly more expensive and less profitable — stifling economic growth and expansion.

Under Obama, the federal government, particularly in its various administrative agencies (which are now but executive branch legislative entities, completely at odds with the idea of separation of powers) has grown enormously.  Cutting funding to the various agencies means not having to make up for any “short fall” that occurs because the Romney tax plan allows us to keep more of our money.

The government doesn’t own us. We own it.  And it’s time we stopped accepting the premise that we are required to pay a certain tribute to it, while it can’t seem to manage to find a thing to cut — and cares not a whit about its own bad “investments” on our behalf.  Between the fraud and redundancy, we could likely cut trillions of dollars.  But that is beside the point, for purposes of this discussion. Instead, the idea is to bring back jobs and economic vitality, and that happens by unleashing the private sector, not by letting DC progressives micromanage a specifically-designed market place of their own construction and choosing.

As Ryan note at the end of his debate with the Teeth, the choice really is clear and it really is stark. No need to get caught up in the weeds in explaining this. Either you believe the government owns you, and therefore you owe it tribute which it will then, in its wisdom, distribute as it sees fit; or you believe you own the government, and that while you keep more of your money and the fruits of your labor and allow the bureaucracies to molest you less, the federal government can learn to make do with what we decide to give it in revenue.

And if that means, for instance, Big Bird or Planned Parenthood or solar energy companies have to compete in the marketplace with Cartoon Network or Walmart or frakking, oil drilling, coal mining, and natural gas pipelines, then so be it.  Competition creates choice and lowers costs.

We don’t need to be reshaped. We need to be left alone to drive the economy and return this country to its roots of individual liberty, a stable rule of law, and equality of opportunity.

Choose wisely.




Posted by Jeff G. @ 11:22am

Comments (10)

  1. “The government doesn’t own us. We own it. And it’s time we stopped accepting the premise that we are required to pay a certain tribute to it, while it can’t seem to manage to find a thing to cut — and cares not a whit about its own bad “investments” on our behalf.”

    Worse yet, “it” or Obama and Co. would just as soon cut the first obligation of government, the one thing they ought not: national defense. That is where Obama and Co. can’t simply mismanage national defense into complete obsolescence.

  2. ” Rep. Todd Akin (R) has now pulled ahead of incumbent Senator Claire McCaskill (D) in Missouri, 49 to 45 percent. ”



  3. Apologies: there should be a comma after “That is” since leaving it out changes the sense I intend. Thus: “That is, where (in the alternative to cutting defense) Obama and Co. can’t simply mismanage . . . etc.”

  4. Y’know, Romney could just tell Congress that the “one-time” stimulus spending is no longer part of the baseline. Wham! Ten trillion dollars!

    Why can nobody in the political machinery put together a simple, compelling counterargument like this?

  5. Why can nobody in the political machinery put together a simple, compelling counterargument like this?

    Because Jeff is an unhelpful Visigothy outlaw who doesn’t think our Lightworker-in-Chief™ is A Good Man®, and therefore he — and any who think enough like him to craft such counter-arguments — must be shunned. SHUNNED!!!

    I said good day sir!

  6. Shunning creates more Visigoths, McGehee.

    Thank goodness.

  7. I posted that comment as my mother-in-law watched, after she and I both read the post. She’d never seen any of the things I referenced in the comment but she assures me she got the gist. Must be because we talk politics sometimes.

  8. You get to post to PW with your mother-in-law looking on? That’s just so unfair. I always get stuck playing Scrabble(r) with mine.

  9. McGehee, your MIL sounds like my mom. Visigothy with a lowercase V.

    Never mess with old ladies who grew up during the Depression.

    Plus they’re usually armed.

  10. Actually I think my M-I-L qualifies as a Baby Boomer. Maybe a year older than Clinton and Dubya.

    But her folks were contemporaries of Reagan’s.