Tag: New York Times

New York Times Seeks Higher Taxes on the ‘Rich’ as Prelude to Higher Taxes on the Middle Class

In a very predictable editorial this morning, the New York Times pontificated in favor of higher taxes. Compared to Paul Krugman’s rant earlier in the week, which featured the laughable assertion that letting people keep more of the money they earn is akin to sending them a check from the government, the piece seemed rational. But that is damning with faint praise. There are several points in the editorial that deserve some unfriendly commentary.

First, let’s give the editors credit for being somewhat honest about their bad intentions. Unlike other statists, they openly admit that they want higher taxes on the middle class, stating that “more Americans — and not just the rich — are going to have to pay more taxes.” This is a noteworthy admission, though it doesn’t reveal the real strategy on the left.

Most advocates of big government understand that it will be impossible to turn America into a European-style welfare state without a value-added tax, but they don’t want to publicly associate themselves with that view until the political environment is more conducive to success. Most important, they realize that it will be very difficult to impose a VAT without seducing some gullible Republicans into giving them political cover. And one way of getting GOPers to sign up for a VAT is by convincing them that they have to choose a VAT if they don’t want a return to the confiscatory 70 percent tax rates of the 1960s and 1970s. Any moves in that direction, such as raising the top tax rate from 35 percent to 39.6 percent next January, are part of this long-term strategy to pressure Republicans (as well as naive members of the business community) into a VAT trap.

Shifting to other assertions, the editorial claims that “more revenue will be needed in years to come to keep rebuilding the economy.”  That’s obviously a novel assertion, and the editors never bother to explain how and why more tax revenue will lead to a stronger economy. Are the folks at the New York Times not aware that both economic growth and living standards are lower in European nations that have imposed higher tax burdens? Heck, even the Keynesians agree (albeit for flawed reasons) that higher taxes stunt growth.

The editorial also asserts that, “Since 2002, the federal budget has been chronically short of revenue.” I suppose if revenues are compared to the spending desires of politicians, then tax collections are - and always will be - inadequate. The same is true in Greece, France, and Sweden. It doesn’t matter whether revenues are 20 percent of GDP or 50 percent of GDP. The political class always wants more.

But let’s actually use an objective measure to determine whether revenues are “chronically short.” The Democrat-controlled Congressional Budget Office stated in its newly-released update to the Economic and Budget Outlook that federal tax revenues historically have averaged 18 percent of GDP. They are below that level now because of the economic downturn, but CBO projects that revenues will climb above that level in a few years - even if all of the 2001 and 2003 tax cuts are made permanent. Moreover, OMB’s historical data shows that revenues were actually above the long-run average in 2006 and 2007, so even the “since 2002” part of the assertion in the editorial is incorrect.

On the issue of temporary tax relief for the non-rich, the editorial is right but for the wrong reason. The editors rely on the Keynesian rationale, writing that, “low-, middle- and upper-middle-income taxpayers…tend to spend most of their income and the economy needs consumer spending” whereas “Tax cuts for the rich can safely be allowed to expire because wealthy taxpayers tend to save rather than spend their tax savings.”

I’ve debunked Keynesian analysis so often that I feel that I deserve some sort of lifetime exemption from dealing with this nonsense, but I’ll give it another try. Borrowing money from some people in the economy and giving it to some other people in the economy is not a recipe for better economic performance. Economic growth means we are increasing national income. Keynesian policy simply changes who is spending national income, guided by a myopic belief that consumer spending somehow is better than investment spending. The Keynesian approach didn’t work for Hoover and Roosevelt in the 1930s, it didn’t work for Japan in the 1990s, and it hasn’t worked for Obama.

And it doesn’t matter if the Keynesian stimulus is in the form of tax rebates. Gerald Ford’s rebate in the 1970s was a flop, and George W. Bush’s 2001 rebate also failed to boost growth. Tax cuts can lead to more national income, but only if marginal tax rates on productive behavior are reduced so that people have more incentive to work, save, and invest. This is an argument for extending the lower tax rates for all income classes, but it’s important to point out that the economic benefits will be much greater if the lower tax rates are made permanent.

Last but not least, the editorial asserts that, “The revenue from letting [tax cuts for the rich] expire — nearly $40 billion next year — would be better spent on job-creating measures.” Not surprisingly, there is no effort to justify this claim. They could have cited the infamous White House study claiming that the so-called stimulus would keep unemployment under 8 percent, but even people at the New York Times presumably understand that might not be very convincing since the actual unemployment rate is two percentage points higher than what the Obama Administration claimed it would be at this point.

Weakonomics

An anonymous contributor to the NY Times Freakonomics blog asks “How much does school choice matter?” And answers in much the way you might expect:

Probably less than you think, as [economist Stephen] Levitt has previously argued. Now, in an analysis of seven years of test-score data from 6,000 Los Angeles teachers, the L.A. Times and the Rand Corp. have found teacher effectiveness to be three times more influential than [choice of] school… on student performance.

The author of this posting makes no effort to differentiate between “public school choice” and actual free education markets, and in the process grossly misrepresents what is known and has been repeatedly shown: that the freest and most market-like education systems overwhelmingly outperform monopolisitic school systems such as we have in the United States.

To his credit, Stephen Levitt did make this distinction in the 2007 posting linked in the blockquote above. But even Levitt refered to the evidence on this subject as “hard to find.” Should anyone else be experiencing difficulty in finding this evidence, they are encouraged to click on the link immediately above, where they will find a peer-reviewed paper digesting the results of 65 studies on this subject.

In Afghanistan, What’s News?

In a recent interview with the New York Times, top U.S. and NATO commander in Afghanistan, General David Petraeus, argued “against any precipitous withdrawal of forces by July 2011,” and added he did not take over merely to “preside over a ‘graceful exit.’”

That an active-duty army general is committed to a pending military engagement is nothing new. Nevertheless, I have some thoughts about this interview, and the rest of the general’s weekend “media blitz,” that I think are worth sharing.

First off, that Petraeus is against a “precipitous withdrawal” reminds me of the many straw man arguments bandied about during the most explosive days in Iraq. However, back then, even the staunchest (and more serious) anti-Iraq War critics did not endorse high-tailing it out of Mesopotamia, logistics be damned. Not only was a phased exit strategy deemed strategically necessary, but also the only option that was considered politically feasible. Today, in the case of Afghanistan, to suppress al Qaeda in a cost-effective manner, America and its allies could easily scale-down its campaign to a much narrower counterterrorism mission. Of course, that is unlikely to happen anytime soon, but Petraeus’s gratuitous “precipitous withdrawal” comment implies that critics of the present policy (a massive, long-term nation-building campaign) have no coherent or well-thought out alternative. That is certainly not the case.

Second, as my colleagues and I ask continuously, the issue is not exclusively about where we intend to fight, but rather how we intend to fight. More importantly, the question we need to ask in the case of Afghanistan is not “is Afghanistan winnable?” but rather “what do we hope to accomplish?” To endorse an open-ended nation-building mission blithely ignores the uncomfortable truth that “American taxpayers have inadvertently created a network of warlords across Afghanistan” who are fueling the very corruption and warlordism that we are pressing President Karzai to curtail. It neglects the perverse reality that the United States is “essentially waging a proxy war” against its ostensible ally, Pakistan. Perhaps even worse, it dismisses the fact that we are incinerating hundreds of billions of dollars—during a time of economic peril, no less—on a corrupt and illegitimate central government in Kabul that has every incentive to perpetuate the conflict.

The July 2011 drawdown should continue as the Obama Administration pledged. Government planners in Washington should begin to husband our nation’s ever-diminishing financial resources rather squander them, and learn how to manage our own affairs, not others’.

The Social Security and Medicare ‘Trust Funds’ Are a … What’s the Word?

Yesterday’s New York Times editorialized:

It’s the time of year when the trustees of Medicare and Social Security release their annual reports on the programs’ financial health. And that means Americans are likely to be bathed in a fog of political rhetoric that makes it hard to sort out fact from fiction.

Here’s the bottom line…

The Times then proceeded to bathe its readers in fog:

According to the reports, the date of insolvency for Medicare’s hospital fund was pushed back, from 2017 to 2029, because of cost-saving measures in health reform. As for Social Security, without any changes, it will be able to pay full benefits until 2037 and partial benefits after that, the same estimate as in last year’s report, despite temporary setbacks from the recession…

A lot of attention will be paid to the finding in the Social Security report that payouts will exceed revenues in 2010 and 2011…That doesn’t endanger benefits, because any shortfall can be covered by the trust fund.

No.  It.  Can’t.  Because there are no funds in the Social Security “trust fund.”  There are no funds in the Medicare “trust fund.”  As Fortune magazine’s senior editor-at-large Allan Sloan explains in today’s Washington Post, those “trust funds” contain nothing but “funny money.”

In a 2006 blog post titled, “Sometimes, Governments Lie,” I offered the following proposition:

If the government knows that there are no assets in the Social Security and Medicare “trust funds,” and yet projects the interest earned on those non-assets and the date on which those non-assets will be exhausted, then the government is lying.

That still seems correct to me: the whole idea of the Social Security and Medicare “trust funds” is a lie.  An institutionalized, ritualized lie that the U.S. government tells the American people. Perpetuated by both political parties, and others with an interest in hiding the reality of these programs’ unfunded liabilities from voters.  One that many journalists uncritically repeat.

Nat Hentoff on ‘Stop & Frisk’ Police Tactics

Nat Hentoff  has a terrific column in the Village Voice on the stop and frisk tactics of the New York City Police Department.  Here’s an excerpt:

Commissioner Kelly and Mayor Bloomberg, your stop-and-frisk approach trashes the Fourteenth Amendment. So while Governor Paterson merits our cheers for not being at all intimidated by you, a lot more has to be done to bring the Constitution back into New York City.

A co-sponsor of the bill, Assemblyman Jeffries, reminded all of us (The New York Times, July 16) that the signing of the bill was “the beginning point, not the end point, of a larger evaluation of the effectiveness and legitimacy” of the NYPD’s stop-and-frisk electronic dragnet.

Since there will continue to be stops, questions, frisks—and some arrests—I would be grateful, Commissioner Kelly, for your reaction to this tiny but very inflammatory story buried at the very bottom of page 14 in the July 10 Daily News, “Cuffed Brooklyn Woman Hit Back at Cops.”

The story describes that, in a lawsuit filed in Brooklyn Federal Court, two Brooklyn women, Taneisha Chapman and Markeena Williams, “claim they were wrongfully arrested by the NYPD after following the advice of a flyer (by the American Civil Liberties Union) entitled: ‘What should you do if stopped by the police?’ ”

When stopped by cops last August outside the Marcy Houses and asked to produce identification, they showed the flyer (commendably issued by the office of Assemblyman Nick Perry, Democrat, East Flatbush) that says—and James Madison would have fully approved—“It’s not a crime to refuse to answer questions. You can’t be arrested for merely refusing to identify yourself on the street.”

Daily News reporter John Marzulli wrote: “The cops were apparently in no mood for a legal debate and hauled off both women to Brooklyn Central Booking. The unspecified criminal charges were later dismissed, according to the suit.”

Read the whole thing.

For related Cato work, go here and here.

Terror Threat: The Calamity Is the Reporting

Early this year, the New York Times published a story entitled “Senators Warned of Terror Attack on U.S. by July.”

America’s top intelligence official told lawmakers on Tuesday [Feb. 2] that Al Qaeda and its affiliates had made it a high priority to attempt a large-scale attack on American soil within the next six months.

The assessment by Dennis C. Blair, the director of national intelligence, was much starker than his view last year, when he emphasized the considerable progress in the campaign to debilitate Al Qaeda and said that the global economic meltdown, rather than the prospect of a major terrorist attack, was the “primary near-term security concern of the United States.”

At Tuesday’s hearing, Senator Dianne Feinstein, Democrat of California and chairwoman of the Senate Intelligence Committee, asked Mr. Blair to assess the possibility of an attempted attack in the United States in the next three to six months.

He replied, “The priority is certain, I would say” — a response that was reaffirmed by the top officials of the C.I.A. and the F.B.I.

One can draw any number of conclusions from the fact that it is August, and no attack has materialized. I’m inclined to focus on the role of the Times and reporter Mark Mazzetti in misconstruing what officials said, while writing a technically accurate account of events.

Read again the blockquoted paragraphs: Officials told lawmakers that al Qaeda and its affiliates had made it a high priority to follow up on the failed attack of December 25th. Asked to assess the probability of attack, DNI Dennis Blair said: “The priority is certain”—whatever that means.

Intentions or priorities are quite distinct from capability, which is an essential prerequisite of committing any attack. Were intelligence officials obscuring this difference? Why didn’t any Senator challenge Blair’s evasive answer? Mark Mazzetti and the Times didn’t tell us.

Instead, the Times reported it as though it were a warning of terror attacks within six months. Mazzetti—a professional writer of English—didn’t investigate the flag Blair sent up with his contorted language.

In our book Terrorizing Ourselves, an excellent group of contributors analyze many different dimensions of the terrorism problem. In this case, I think we have an example of how different segments of our own society—intelligence officials, senators, a major newspaper, and a national security reporter at that newspaper—combined to maintain public fears in the aftermath of the Dec. 25th failed attack.

New York Times vs. the Constitution

Last Monday, the New York Times ran an editorial, “The Republicans and the Constitution,” lamenting how Elena Kagan’s nomination ”has become a flashpoint for a much larger debate about the fundamental role of American government.”  (I, of course, was hoping that this was the direction the debate would go.)  The Old Gray Lady was particularly aghast that Congress’s expansive use of the Commerce Clause was being maligned.  Don’t those retrograde obstructionists know that as long as the government passes laws the progressive elite – especially the New York Times editorial board – deigns beneficial, no silly constitutional arguments can possibly be germane?

As you could expect, I found quite a bit to quibble with here, so I wrote a letter to the editor.  My letter wasn’t published, but you can still read it here:

Your editorial  stumbles onto an inconvenient truth: The debate over Elena Kagan’s nomination is indeed one about the “fundamental role of American government.”  That’s a good thing!  The opposition to Kagan is not based on petty partisanship or the politics of personal destruction but instead on principled concerns about whether the nominee sees any constitutional limits on federal power.

You rightly focus on the Commerce Clause aspect of this issue because so many federal excesses have been perpetrated in that provision’s name.  But if Congress can, under the guise of regulating activities that “substantially affect interstate commerce,” tell farmers what to grow in their backyards—as the Supreme Court said in the 1942 Wickard v. Filburn case—is it really so “silly” for Senator Coburn to ask a judicial nominee whether, in the name of lowering healthcare costs, Congress can require that we all eat nutritious foods?

You’re also correct that the Court recently approved Congress’s ability to confine sex offenders—but it did so, narrowly, under the Necessary and Proper Clause, after Solicitor General Kagan abandoned the Commerce Clause argument that had been wholly rejected in the lower courts.

And so, as you say, a vote against Kagan is indeed about more than her or President Obama—but that doesn’t mean it’s a vote against various statutes that you like.  There are good reasons for arguing that some of these laws weren’t good ideas, but that’s beside the point.  The point is that there’s a difference between law and policy and that raising the issue of constitutionality is not an “ideological fuss” or “excuse” but goes to the core of this nation’s first principles. 

The Constitution creates a government of delegated and enumerated—and therefore limited—powers, and so much of the discontent in the country is about the basic question of where the government gets the power to do whatever it wants.  Let the debate continue!

Here are some related thoughts from Cato adjunct scholar Tim Sandefur, reacting to the same editorial.