Tax Cut, Sequester Hypocrisy Means Never Having to Say You're Sorry Full of Shit.

courtesy Red, White, & Bluecourtesy Red, White, & BlueWriting at Bloomberg View, Caroline Baum tosses out three recent examples of tax-cut hypocrisy:

- For over a decade, Democrats have disparaged the reduction in marginal and capital gains tax rates enacted under President George W. Bush as “tax cuts for the rich” -- at least until they were about to expire. Then President Barack Obama discovered that, lo and behold, the middle class had gotten tax cuts, too.

- Republicans want to reduce the deficit by cutting spending. They disavow the Keynesian notion that cuts in government spending have a contractionary effect on the labor market -- except when it’s defense industries that are facing cuts. Libertarians call them “Military Keynesians,” to highlight the inconsistency in their positions.

- The payroll tax cut in 2011 and 2012 posed a problem for both parties. Republicans oppose temporary tax cuts because empirical evidence suggests that they don’t have the desired effect. That’s because individuals make spending decisions based on theirexpectations of income over a lifetime. On the other hand, the GOP doesn’t like to stand in the way of any tax cut. Democrats supported the reduction in the payroll tax, which is regressive, on the grounds that it would help the ailing economy. That put them in a bind when they had to explain why tax cuts for everyone wasn’t a good idea for the same reason.

Read the whole thing.

Baum also has a column up about why she knows the sequester is going through. Read that here.

Here's what President Obama is promising will happen if the sequester goes through as he wrote it (yes, it was his idea, as a way of forcing a compromise):

"If Congress allows this meat-cleaver approach to take place, it will jeopardize our military readiness. It will eviscerate job-creating investments in education and energy and medical research," Obama warned in a speech at the White House, flanked by emergency workers. “It won’t consider whether we’re cutting some bloated program that has outlived its usefulness or a vital service that Americans depend on every single day.”

By Friday, expect him to be invoking plagues of frogs and flaming hail. As I noted earlier this week, the $85 billion figure that gets invoked is wrong; cuts in fiscal year 2013 will amount to $44 billion or about 1.2 percent of all federal spending. We've been hearing for a long time that sequestration alone would kill about 700,000 jobs.

courtesy J Pethokoukis at http://aei.orgcourtesy J Pethokoukis at http://aei.orgThat's a claim taken as gospel that is based on what can be called "ugly modeling" at best. Because virtually all government spending is counted by definition as adding to GDP, any cut thus means reductions in activity and jobs. Add to that the idea that projectionists routinely assign a multiplier of more than 1.00 to government spending, so that each dollar the feds spend magically creates more than $1 in economic activity.

The country's experience with recent stimulus spending should give pause to all of us (if it doesn't, watch this). When the stimulus manifestly failed to reduce unemployment by its own predictions, its architects and defenders in the press nonetheless pronounced it a success and claimed that it saved us from an ever bigger problem. The real problem, you see, was that the stimulus wasn't big enough. All it takes is a government failure for stimulatarians to channel their inner Andrea True.

Yet there's every reason to believe that stimulus spending has a multiplier that is well below 1.0, meaning that every dollar that's spent generated less than a dollar of activity, resulting in a net drain on economic activity. Think about it in a different context: Virtually everybody understands that when local governments shell out massive tax money on sports stadiums, the local economy doesn't see any net benefits. If you're lucky, existing entertainment dollars may be spread toward sports facilities, but nobody seriously believes any more that such spending grows the overall economic pie or stimulates anything other than owners' and players' bank accounts (in fact, simply having a major professional team in your metro area shaves about $40 per person per year). If building white elephant stadiums and museums with public dollars worked, Cleveland would be the hottest town in the country.

courtesy a simpler, dumber time in America.courtesy a simpler, dumber time in America.The recognition that stimulus spending doesn't work as advertised may not salve the hurt of the currently unemployed but it has the benefit of being more credible than the alternative. And in the context of sequestration, it suggests that if and when the $44 billion of cuts for 2013 happen, they won't crater a $16 trillion economy. Indeed, they might even help the economy by showing that the government, despite its Herculean effort to never, ever rein itself in, can be halted.

Which, of course, brings us back to Caroline Baum's insights on economic hypocrisy from Dems and Reps alike. All I can say is that it will be a great day when the Air Force has to hold a bake sale to bomb all the Solyndra factories.

For more on that, read this.

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  • $park¥||

    And with a stroke of the HTML code, Gillespie ruins a headline.

  • $park¥||

    Bastard, my comment went in first!

  • LTC(ret) John||

    Libertarians call them “Military Keynesians,” to highlight the inconsistency in their positions.

    That is giving too much credit - they are simply trying to protect a favored constituency's place at the trough.

    Call it what it is - theft or maybe graft.

  • Night Elf Mohawk||

    “It won’t consider whether we’re cutting some bloated program that has outlived its usefulness or a vital service that Americans depend on every single day.”

    Wait, I thought he already went through the budget, line by line, eliminating waste. Oh, you mean he just said he was going to do that. Never mind.

    Still, the question "President Obama, can you name one bloated program that has outlived its usefulness so we can go ahead and cut it?" would be a nice question for some intrepid reporter to ask.

  • Virginian||

    I always bring up the Indian Arts and Crafts Board. Is the Rural Electrification Administration still operating? Because I think we can declare mission accomplished on that one.

  • Silent Cal||

    The Rural Electrification Administration had some scope growth in the 2000s and is now the Rural Utility Service. As I understand it, its primary job is providing third Internet connections to schools with only two.

  • Virginian||

    This is your fault you know. You should have run for President again. Then no Hoover, no FDR, and no goddamn global depression that led to WWII.

    We could have been paying for tickets to Mars with gold backed dollars if you hadn't wanted to retire. Thanks a lot Cal.

  • Sudden||

    Coolidge not running for re-election may actually be the most damage any president has ever done to this great country.

  • wareagle||

    Every program provides a vital service that Americans depend on each and every day.

    /leftard

  • Romulus Augustus||

    Stossel says Our Glorious Leader is not opposed to cutting Chrstopher Columbus Fellowships but Sen. Cochran (R-Ms) is, so they (whatever the hell they are) continue.

  • Ken Shultz||

    The biggest example of hypocrisy on this is Barack Obama, who insists that the sequester cuts are irresponsible and should be opposed on that basis. He says, out of one side of his mouth, that a responsible alternative spending cut program should be put in place instead...

    ...but out of the other side of his mouth? He's had four years to propose "responsible" spending cuts--whatever that means to him--and he's proposed absolutely nothing!

    In other words, he says he wants responsible spending cuts, but there doesn't seem to be any form of spending cuts that he would ever call "responsible". If there are some form of spending cuts that Obama thinks are "responsible", then why hasn't he called for them at some point over the last four years?

  • Capt Ace Rimmer||

    Democrats don't want spending cuts. It's not hypocrisy it's just a smokescreen.

  • T o n y||

  • fish||

    Oh yeah...now I remember those accounting gimmicks that exist to make PelosiCare more palatable.

    P h o n y I'm beginning to realize that TEAM BLUE is winning.....in the short term....you've convinced a formerly productive and independent people that it's better to let government do their thinking for them. But it's just embarrassing that you would drop fraudulent numbers on the board.

  • DrAwkward||

    "The President signed into law health savings in the Affordable Care Act that paid for the improving health coverage and reduced the deficit by over $100 billion over a decade."

    HAHAHAHAHAAaaawoo!

  • Ken Shultz||

    LOL

  • Ken Shultz||

    The line after that (from Tony's link) reads, "These policies contributed to slowing baseline growth in Medicare and Medicaid to that of GDP on a per capita basis. And, once its policies are fully phased in, the health care law slows the growth in national health spending."

    LO f'n L

  • Tony||

    What about the $2 trillion in cuts from the BCA and other savings? Are you a liar or are you just suctioned onto long-discredited conventional wisdom about Democrats and spending?

  • fish||

    Who is this and what have you done with S o c k p u p p e t? And Gillespies hand....we want to know what happened to that too!

  • ThomasD||

    Your definition of 'long' and 'discredited' are sadly mistaken.

    And quite possibly causally related.

  • Ken Shultz||

    Does Tony think Obama slashed the budget by $2 trillion?

    LOL f'n L!

  • ||

    AHAHAHAHAHAHAHAHAHAHAHAHAHAHA

  • some guy||

    UNDER PRESIDENT OBAMA'S WATCH SPENDING GREW AT THE SLOWEST PACE SINCE EISENHOWER:

    That's laughable. It's only true if you ignore the part where Obama took what was billed as a one-time economic rescue budget and accepted it as the new baseline.

  • Killazontherun||

    The part of the budget considered discretionary spending is shrinking in relative percentage terms. In other words, there is only so much room left for more free shit on top of the already promised free shit. This, of course, can, and is being used, for rhetorical advantage by the Obama partisans.

  • The Late P Brooks||

    It won’t consider whether we’re cutting some bloated program that has outlived its usefulness

    I'm reasonably certain that's because no such program exists.

    AMERICA NEEDZ MOAR MOHAIRS!

  • Voros McCracken||

    From Baum's article:

    "What’s striking, and depressing, about Woodward’s recap of events is the leaders’ singular focus on their own self-interest above that of the nation. It’s all about who gets what, who wins, who loses and who gets blamed."

    What bothers me the most about all of this is the idea that it ever could be any other way, regardless of whom we elect. People act in their own self-interest, always. To do else is pure insanity. Now "self-interest" is a vast swath of ideas, including sacrificing one's own life.

    And there's nothing inherently bad or wrong about it, either. Taking care of your family is self-interest. Donating money you've made to the less fortunate is self-interest. The problem isn't self-interest, the problem is power, and allowing the government to prioritize the self-interests of those in power over that of everyone else. And everyone else can do little to nothing about it other than seek power for themselves.

  • DarrenM||

    What bothers me the most about all of this is the idea that it ever could be any other way, regardless of whom we elect.

    Which was the whole point of restricting government power to begin with. It's frustrating that seemingly intelligent people are so eager to entrust power to complete strangers whose primary interest in life is to acquire that power.

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