I wonder if E.J. Dionne was a member of the Journolist. More likely he was their inspiration. Today he writes about the Politics of Stupidity, claiming that the rich aren't taxed enough. Journolisters are very big on that. Dionne uses statistics to prove his case, and we all know that line that figures don't but liars figure.
The simple truth is that the wealthy in the United States -- the people who have made almost all the income gains in recent years -- are undertaxed compared with everyone else.
Consider two reports from the Center on Budget and Policy Priorities. One, issued last month, highlighted findings from the Congressional Budget Office showing that "the gaps in after-tax income between the richest 1 percent of Americans and the middle and poorest fifths of the country more than tripled between 1979 and 2007," the period for which figures are available.
The gap between the rich and the poor has been the axe of favor that Democrats grind whenever they look at the demographics and decide things don't look so great for future Democratic majorities. They've been looking at those demographics a lot lately.
But how will taxing the rich help? Democrats are hoping to buy a small demographic boost via the old class warfare game. Dionne lays it out.
Our discussion of the economic stimulus is another symptom of political irrationality. It's entirely true that the $787 billion recovery package passed last year was not big enough to keep unemployment from rising to over 9 percent.
But this is not actually an argument against the stimulus. On the contrary, studies showing that the stimulus created or saved up to 3 million jobs are very hard to refute. It's much easier to pretend that all this money was wasted, although the evidence is overwhelming that we should have stimulated more.
Actually, it's not so hard to refute the studies to which Mr. Dionne refers. In fact all of the benefit touted by such government self studies is speculation. Their argument boils down to, "It would have been worse."
As it turns out, when you unpack the numbers, you find that Romer and her team didn’t actually count how many people got a job thanks to the stimulus. Instead, the number is a projection that relies on the myth that a dollar of government spending creates up to 2.5 dollars of economic growth.
That’s strange. Robert Barro of Harvard University has estimated that, even in the best-case senario, $1 of government spending will generate between $0.40 and $0.70 of economic growth, i.e., much less than the amount of growth that we would get if that dollar was invested privately. What’s more, if that dollar has previously been taxed out the economy, then the overall effect of $1 of government spending is a destruction of $1.10 of economic growth. Not exactly the rosy projections that Romer is touting today. (And Barro is not alone. Even the most optimistic projections of the economic effect of government spending never display such numbers. Never.)
Recovery.gov, which actually counts the number of jobs created (if in a very favorable light), only displays roughly 680,000 jobs, not 3 million. Why would the White House not up that number if in fact 3 million jobs had been created? Because they don’t have names and addresses to back up their gargantuan projections.
Oh well, what's the difference anyway – 680,000 or 3.5 million – it's all the same. Life is unfair, and that's why we have Democrats and liberal pundits. They're here to fix it, and Dionne has the solution. Dispense with the filibuster.
When our republic was created, the population ratio between the largest and smallest state was 13-to-1. Now, it's 68-to-1. Because of the abuse of the filibuster, 41 senators representing less than 11 percent of the nation's population can, in principle, block action supported by 59 senators representing more than 89 percent of our population. And you wonder why it's so hard to get anything done in Washington?
Senate reform is the silver bullet that will remove all inequities and therefore solve all of our problems. Here's an idea so simple even an imbecile can figure it out. Once Democrats are allowed to jam legislation through the Senate on a simple majority, they can impose a 100 percent surcharge tax all of the income over $250,000. That will virtually eliminate the gap between the rich and the poor. Naturally Democrats will allow a few exceptions to the new tax – themselves, their friends.
But then with all that revenue Democrats can give government jobs to everybody who needs one – their friends, their supporters. How hard can it be? Oh wait. Already I see a flaw. Incentives. How hard is anybody going to work when everything they make is taxed away? How much risk is an investor willing to assume when the return on it can be snatched away by a benevolent (but avaricious and insatiable) government? How much actual revenue will there be? Enough?
Hmmm. Maybe it's not so easy. But ever the optimist, Dionne thinks he has it figured out. It's everybody else who is stupid.
Comments