Statistics or Politics?

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Don't know about you, but I've always found the biz-econ columnist James Surowiecki to be a pretty straight shooter. So when he accuses the Bush Administration of politicizing economics statistics to a degree unprecedented in recent history, I worry. Excerpt:

Statistical expediency and fiscal obfuscation have become hallmarks of this White House. In the past three years, the Bush Administration has had the Bureau of Labor Statistics stop reporting mass layoffs. It shortened the traditional span of budget projections from ten years to five, which allowed it to hide the long-term costs of its tax cuts. It commissioned a report on the aging of the baby boomers, then quashed it because it projected deficits as far as the eye could see. The Administration declined to offer cost estimates or to budget money for the wars in Afghanistan and Iraq. A recent report from the White House's Council of Economic Advisers included an unaccountably optimistic job-growth forecast, evidently guided by the Administration's desire to claim that it will have created jobs. And a few weeks ago the Treasury Department put civil servants to work?at Tom DeLay's request?evaluating a tax proposal identical to John Kerry's, then issued a press release saying that the proposal would raise taxes on "hardworking individuals."

Whole thing here.

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  1. Any time a biz-econ columnist calls a tax cut a cost, I worry a bit about whether he is a “straight shooter” or not.
    -Karl

  2. If the money coming in doesn’t match the money going out, less money coming in becomes a “cost”. So a tax cut is a “cost”. It’s not a nice way of putting it, but it’s more honest than whatever term the Bush Administration would come up with.

    I’d rather have that “straight shooter” balance my checkbook than anyone in the White House.

  3. What is this, 1998, 1991, 1986? Every few years another “straight shooting” economist calls the present administration the biggest liars yet.

    Before a fall asleep, let’s note that all the fudging in the world can only make a small difference, and the basic stats have been able to tell us pretty much what’s been going on these past few years.

  4. Jon – I’m not necessarily dis-agreeing about who I’d rather have balance my checkbook. Nor am I making any comment about the validity of his accusations; In fact, I’m pretty sure I would agree with his assesment other than the fact i really doubt Bush et al. are any worse about this than most other administrations. However, calling a tax cut a cost will certainly make me read him with a more jaundiced eye. Less incoming revenue (even though that is generally not the result of cuts in taxes) is most assuredly not a cost. Even in my personal budget, I don’t refer to a reduction in my income as a cost – I don’t keep the income column constant and add a negative number on the outlay side of the budget. And it’s even less appropriate with respect to taxation. Perhaps economists have a different, more rigorous definition of cost, but wrt to discussing policy I prefer a more common usage.
    -Karl

  5. Karl, I was gonna say the exact same thing, but you beat me to it. “Cost of the tax cuts”, WTF?? I quit reading Mr. Surowiecki’s part of the post right there, as I have a very quick idiot-detector – saves me a lot of time…

  6. If the money coming in doesn’t match the money going out, less money coming in becomes a “cost”. So a tax cut is a “cost”. It’s not a nice way of putting it, but it’s more honest than whatever term the Bush Administration would come up with.

    A tax cut is a “cost” from the government’s perspective, yes. From the point of view of the American electorate, however, it is a savings. So I’ve always been a little suspicious of people who refer to the “cost” of tax cuts; it seems as though they just naturally assume that the government owns all of your wealth, and “gives” some of it to you by letting you keep it.

  7. Of course, but unless a budget item is removed from the record, the loss of any part of the means to pay for it is a cost. For them. To us, it’s usually something that will be made up in our local taxes. Cutting taxes is easy, cutting government isn’t.

  8. Look, we can call a tax cut anything we want. We can call it a “cost”, or “restoration of money to its rightful owner” or “give-away to Bush’s cronies” or “still too modest of a step” or “best thing since sliced bread” or whatever we want.

    Bottom line, however, if he’s implying that budget forecasts don’t factor in tax cuts, well, that worries me. I don’t care what they’re called, I just want to know whether this administration factors tax cuts into budget projections. If they do, then this guy is complaining about semantics. If they don’t, um, that’s not good…

    So, which is this guy saying?

  9. “Tax cuts are a cost in the now but history shows they promote a greater degree of growth in the future than a tax hike does. Obviously there are costs that must be paid now, but raising taxes, to cover them is not the answer. Take the loss and pay it back in the future.”

    This is what I mean about the utility of the 10 year projection. 10 people see it, they determine 10 different responses, and the baseline is 80% different next year anyway. Dismal, I think is the right word.

    joe: Ahh. That is what you said, isn’t it? For some reason, I can’t help attaching all sorts of Keynesian baggage to your posts! 🙂

  10. Without projecting what the outcome of your decisions will be then it is useless to even make any decisions. Short term and long term projections are both necessary to determine proper path to follow.

  11. The FBI should identify each and every “hardworking American,” then cut her taxes to zero.
    Then the FBI should identify each child we will not leave behind, and every child part of the cause, “Do it for the Children,” and tax them ruthlessly to more than make up the difference.

    Force politicians to choose between hardworking Americans and children.

    Naturally, if forced, politicians would choose voters, which they, duh, already have, which leaves children way behind. Social Security is evidence of the crime–or evidence of reality, whatever.

  12. Personally, I’ve always thought that the 10-year government forecasts were stupid. How many times have we actually had a consistent 10-year forecast? They always go from ‘a huge surplus’ to ‘a huge deficit’ depending on what the current situation is. But in 10 years, we’re SURE to have a different president, most likely a totally different administration, and a totally different set of tax giveaways, be they cuts to marginal rates or targeted credits to certain interest groups. The things always change, and that ignores the effects of the overall economy, both the upturns and downturns. So it always seemed the 10-year forecast was just blowing smoke up our asses anyway. I don’t mind shortening that time frame.

  13. Gotta agree with Dan here. Most news outlets seem to be on the side of the state rather than the individual. This story was the absolute worst example I have ever seen of it:

    http://www.suntimes.com/output/news/cst-nws-amuse19.html

  14. Highway, the 10 year projections are useful tool for understanding the implications of decisions, even though they aren’t prescient. They tell you what will happen if nothing changes. This allows to have a baseline that you can tweak to account for those changes.

  15. “They tell you what will happen if nothing changes.”

    I don’t know how useful this is, considering the number of variables and the big problem that they are interdependent. Tax rates, growth, and revenue are stuck together in complicated ways.

    It is a mistake to think of tweaking this or that to fix the economy, because the economy is non linear.

  16. A 10 year forcast is useful to give a baseline for what the actions taken today might yield in the future. Of course there are going to be other influences along the way but that doesn’t mean that the actions you are taking are useless. Tax cuts are a cost in the now but history shows they promote a greater degree of growth in the future than a tax hike does. Obviously there are costs that must be paid now, but raising taxes, to cover them is not the answer. Take the loss and pay it back in the future.

  17. Not tweaking to fix the economy, JL. Tweaking to fix the projection.

  18. The CBO and OMB reports weren’t calculating the possible stimulus effect that the tax cuts might have. Obviously, the administration would rather there be a more optimistic approach.

  19. He was for it before he was against it.

  20. Jason, aren’t we all Keyensians now? 😉

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