Brendan Nyhan

Sadly, Rudy Giuliani is following John McCain down the supply side rabbit hole.

Last week, as Matthew Yglesias notes, Giuliani told supply-side guru Larry Kudlow that tax cuts increase revenue:

KUDLOW: “I want to ask you, do you regard yourself as a free market capitalist? Do you regard yourself as a supply-sider?”

GIULIANI: “I regard myself as a supply-sider for sure. I mean, watched Ronald Reagan do it and learned it, saw it work. Taxes get reduced, more revenue come in.

And McCain drank the tax-cuts-increase-revenue Kool-Aid a few weeks earlier in an interview with National Review’s Ramesh Ponnuru (via Jon Chait):

Ponnuru: “If you could get the Democrats to agree, or at least to come to the table on entitlements or on tax simplification, are those circumstances under which you’d be willing to accept a tax increase?”

McCain: “No; no.”

Ponnuru: “No circumstances?”

McCain: “No. None. None. Tax cuts, starting with Kennedy, as we all know, increase revenues. So what’s the argument for increasing taxes? If you get the opposite effect out of tax cuts?”

Giuliani and McCain thus join Bob Dole and George H.W. Bush in the pantheon of formerly sensible Republicans who were forcibly converted to supply-side dogmatism. Will anyone ask them why so many current and former Bush administration economists keep pointing out that tax cuts don’t actually increase revenue?

In his report on President Bush’s press conference today, New York Times reporter Jim Rutenberg writes that President Bush “seemed to consciously back away from describing his opponents as ‘the Democrat Party’”:

But even as he engaged in openly partisan battle, Mr. Bush at one point seemed to consciously back away from describing his opponents as “the Democrat Party,” a formulation that they take as a slight. “It’s irresponsible for the Democrat leadership — Democratic leadership — in Congress to delay for months on end while our troops in combat are waiting for the funds,” he said.

But if you read the transcript or listen to audio of the press conference, you’ll see that Bush used the word “Democrat” instead of “Democratic” two other times earlier in his opening statement:

Democrat leaders in Congress seem more interested in fighting political battles in Washington than in providing our troops what they need to fight the battles in Iraq. If Democrat leaders in Congress are bent on making a political statement, then they need to send me this unacceptable bill as quickly as possible when they come back. I’ll veto it, and then Congress can get down to the business of funding our troops without strings and without delay.

Rutenberg even quotes the second sentence of this passage earlier in his piece, but fails to note the implications. In short, Bush corrected himself and said “Democratic” one out of three times. What an olive branch!

Via Matthew Yglesias, here’s Larry Kudlow’s latest hand-waving defense of supply-side economics:

Tax revenues have been surging from personal incomes, capital gains, and dividends. Now, the Congressional Budget Office would try to argue that these revenues are lower than would have been the case if taxes had not been cut. But who’s to say? Economic growth would’ve been slower and hence revenues without tax cuts might have been lower. All we know is what we know—namely, revenues have been steadily rising in the aftermath of lower tax rates.

“[W]ho’s to say?” As Yglesias writes, “Who, indeed, other than, perhaps, the staff economists at the Congressional Budget Office who are trained to make such calculations.” Don’t forget about all the current and former Bush administration economists and budget experts who admit that tax cuts don’t increase revenue! (Ed Lazear and Greg Mankiw, among many others)

I was struck, however, that Kudlow seemed to grasp the relevant counterfactual — the level of federal revenue we would have observed over the same time period had a tax cut not been enacted. Usually, he just touts increased revenue levels over time and (falsely) assumes that those increases prove his point (see this random example from Google, for instance).

It’s hard to know if the problem is intellectual dishonesty or fundamental ignorance. As Kudlow himself might put it, who’s to say?

The phony talking point that Democrats have proposed the “largest tax increase in American history” (see here and here) continues to spread.

Vice President Cheney repeated it yesterday at a reception for Senator Jeff Sessions:

The Democrats in the Senate recently passed their budget, which calls for more spending and higher taxes. In fact, they are trying to enact the largest tax increase in history. We’ve got a better idea — Congress should pass the President’s budget and make all of the Bush tax cuts permanent.

And former House speaker Newt Gingrich also repeated the claim, along with a slew of misleading “average” tax cut statistics, in Human Events:

But guess what? Liberals are at it again.

Just three months into their majority, Democrats are once again proposing the biggest tax increase in history.

This month, the House of Representatives will debate the Democrats’ 2008 proposed budget. If it is passed, this budget will impose the largest tax increase in history on American taxpayers — totaling nearly $400 billion over five years. Families with children, low-income families, and small businesses all would be hit with hundreds if not thousands of dollars in increased taxes.

Just what taxes will be raised? Here are some of the specifics of the liberal proposal:

* The 10% Tax Bracket Will Become 15%: More than five million families and individuals who previously owed no taxes will become subject to taxation.

* Marriage Penalty Relief Will Be Eliminated: 23 million Americans will owe an average of $466 in additional taxes in 2011.

* The Child Tax Credit Will Be Cut in Half: 31 million Americans will pay an average of $859 more in taxes in 2011.

The Liberal Tax Increase: How Much More Will You Pay?

But enough cold, impersonal statistical analysis. How much more in taxes will you and your family pay if this massive liberal tax increase is passed?

The Republicans on the Senate Budget Committee crunched the numbers and came up with some results that should frighten all of us, regardless of whether we’re Democrats, Republicans or Independents.

You Know You’re Going to Pay More Under the Liberal Tax Increase When …

… You’re a family of four earning $60,000 a year: Your income-tax bill will rise 61% in 2011, from $3,030 to $4,893.

… You’re an elderly couple earning $40,000 a year: Your taxes will go up by 156% in 2011, from $583 to $1,489.

… You’re a woman: You could be one of the 83 million American women who could see their taxes rise by an average of $2,068.

… You’re married: You could be one of the 48 million married couples who will pay an average of $2,899 more under the liberal tax increase.

… You have kids: 42 million families with children will pay an average of $2,181 more in taxes.

… You’re a small-business owner: 26 million small-business owners will get a tax bill for an average of $3,960 more than before.

Which one are you?

If you’re near Dartmouth College, I hope you’ll come out for a panel on blogs that I’ll be part of on April 19:

“Mass Communication for the Masses: The Power of Weblogs”
THURSDAY, APRIL 19, 2007
4:30 PM – 3 Rockefeller Hall

Panelists will share their thoughts on the power of blogs in creating communities, influencing local and national politics, and the role they think that blogs will play in the 2008 election. Finally, they will discuss the conflict between weblogs and mainstream media.

PANELISTS

ANN ALTHOUSE, Professor of Law, University of Wisconsin
Visit Ann’s blog at http://althouse.blogspot.com/

LAURA CLAWSON, Mellon Fellow, Sociology Department, Dartmouth College and Contributing Editor, Daily Kos
Visit Laura’s blog at http://misslaura.dailykos.com/

BRENDAN NYHAN, Co-founder, Spinsanity and co-author, All the President’s Spin
Visit Brendan’s blog at http://www.brendan-nyhan.com/

JOHN HINDERAKER ’71, Partner, Faegre & Benson, LLP
Visit John’s blog at http://www.powerlineblog.com/

ROGER SIMON ’64, Founder/CEO, Pajamas Media
Visit Roger’s blogs at http://rogerlsimon.com/ and at http://pajamasmedia.com/

JOE MALCHOW, Dartmouth ’08
Visit Joe’s blog at http://dartblog.com/

ANDREW SEAL, Dartmouth ’07
Visit Andrews’s blog at http://thelittlegreenblog.blogspot.com/

I don’t have much to say about former Bush strategist Matthew Dowd’s public break with the President except to wonder what took him so long. Take a look at the New York Times summary of Dowd’s objections:

He criticized the president as failing to call the nation to a shared sense of sacrifice at a time of war, failing to reach across the political divide to build consensus and ignoring the will of the people on Iraq. He said he believed the president had not moved aggressively enough to hold anyone accountable for the abuses at Abu Ghraib prison in Iraq, and that Mr. Bush still approached governing with a “my way or the highway” mentality reinforced by a shrinking circle of trusted aides.

These shortcomings were all obvious by mid-2004, yet Dowd was chief strategist for Bush’s re-election campaign. Talk about cognitive dissonance.

Two larger points:

(1) It’s interesting how neatly Dowd fits into the pattern of people who were temporarily jolted from their Democratic tendencies by the intersection of Clinton hatred/fatigue and 9/11 but are now returning to the fold. He was a Democratic strategist who “was disappointed by the Bill Clinton years” and “impressed by the pledge of Mr. Bush, then governor of Texas, to bring a spirit of cooperation to Washington.” Look how well that worked out.

(2) Where are all the other Bush dissidents? Considering the policy record and unpopularity of this administration, it’s remarkable that Dowd is the first high-profile dissident since Richard Clarke and Paul O’Neill. Other administrations have taken serious hits from former top officials and advisers (see, for instance, Dick Morris and George Stephanopoulos during the Clinton administration). But even disgruntled ex-Bushies like Colin Powell have laid low this time. Will that change in the next year? Maybe George Tenet’s upcoming book will be the next big break…

Has anyone asked Rudy Giuliani about this recently?

A friend of independent counsel Kenneth W. Starr, Giuliani defended Starr’s report on President Clinton but said he would oppose impeachment. He called it a “mistake” for congressional Republicans to aggressively pursue the Clinton sex scandal (Washington Post, 12/6/98).

Not sure how that’s going to play in a GOP primary…

It’s all too predictable.

The current GOP talking point on the debate over the Iraq funding bills is that the legislation “sends a memo to the enemy” telling them when the US will withdraw. Mitch McConnell made that point this morning on “Fox News Sunday” and then went further, directly implying that Democrats want to do so and thereby help Al Qaeda:

[Democrats] used this serious effort — what should have been a serious effort to fund the troops — as an opportunity to send a memo to our enemy on when we’re going to give up and to get pork for various and sordid projects back home (italics mine).

Democrats used the bill as “an opportunity to send a memo to our enemy”! You won’t find a clearer suggestion of disloyalty.

Whenever I criticize post-9/11 attacks on dissent for suggesting that war critics are disloyal, someone argues that Republicans are only talking about the effect of such dissent, not its motivation. But as the McConnell quote illustrates, these attacks carry a consistently anti-democratic subtext.

The emerging debate over the possible expiration of President Bush’s tax cuts means that the White House is trotting out its misleading arsenal of “average” tax cut statistics. The goal: To mislead the public about the benefits of the tax cuts by using unrepresentative averages that are skewed upward by the disproportionate benefits received by upper income Americans. We wrote about this tactic extensively on Spinsanity and in All the President’s Spin.

President Bush pushed some of these phony statistics in his radio address today:

Let me explain what it will mean for your annual tax bill if the Democrats get their way… If you’re a family of four making $60,000 a year, the Democrats would raise your taxes by more than $1,800… If you are a small business owner working to meet a payroll, the Democrats would raise your taxes by almost $4,000.

Note how Bush even drops the word “average” from the statistics, implying every small business owner (for example) will see their taxes increase by “almost $4,000.”

At least John Boehner included the word “average” when he pushed these numbers in a Wall Street Journal op-ed:

Clinton’s tax hike pales before this one.

While Democratic friends may view them as just lines on a page, these impending tax hikes are real dollars and cents. Their budget would raise the tax bill for every working American — 115 million taxpayers will see their taxes go up by an average of $1,795. And if you’re married, have children, or own a small business, you’re in for extra punishment.

For example, 48 million married couples will face an average tax increase of $2,899. Seventeen million elderly individuals will pay an average tax increase of $2,270; 26 million small business owners will be hit by an average tax increase $3,960.

Finally, Robert Novak pushed some of the same statistics in his Washington Post column:

The bill set to reach the House floor today (resembling the Senate version) would raise taxes an average of $1,795 on 115 million taxpayers in 2011. Some 26 million small-business owners would pay an average of $3,960 more.

Will the media report that these numbers are completely unrepresentative?

Yesterday, I complained about the misleading GOP talking point that the Democratic budget proposes “the largest tax increase in American history,” as Rep. Paul Ryan put it.

As I pointed out, President Bush and the Republicans wrote the expiration of the tax cuts into law. They created the “largest tax increase in American history,” not Democrats. Refusing to bail the GOP out of a fiscal hole does not mean that Democrats are the ones raising taxes.

However, the talking point is everywhere. Today, President Bush became the latest Republican to repeat it by using the line in his radio address:

Democrats in the House and the Senate also recently passed their annual budget resolutions. Their budgets would raise your taxes and raise government spending in Washington…

Overall, the Democrats would raise taxes by a total of nearly $400 billion over the next five years. To put this in perspective, this would be the largest tax increase in our Nation’s history, even larger than the tax increase the Democrats passed the last time they controlled Congress.

There should be no doubt that this is a coordinated strategy. Back on March 16, Senator Chuck Grassley was already pushing it in response to committee passage of the Senate Democrats’ budget.

Three days later, a “key GOP aide” told Paul Bedard of US News & World Report that “Republicans will be in sync on the budget issue by calling it the largest tax increase in American history.”

Since then, we’ve heard the line from a string of top Republicans and their media apparatchiks, including House Minority Leader John Boehner in a Wall Street Journal op-ed (subscription required; via
Sam Rosenfeld), Robert Novak in his Washington Post column (via
mcq at Q&O), White House budget director Rob Portman in a statement (PDF), House Republican Whip Roy Blunt in a press release, Senator Chuck Kyl in a Washington Times op-ed, and Senator/presidential candidate Sam Brownback in an article in The Hill.

What’s especially annoying is that the media seems like it’s going to pass on the talking point without explaining why it’s misleading. Consider how it was treated in the current Associated Press article on Bush’s radio address:

The House plan promises a big surplus in five years by allowing tax cuts passed in the president’s first term to expire. It awards spending increases next year to both the Pentagon and domestic programs, but it defers difficult decisions about unsustainable growth in federal benefit programs such as Medicare.

The Senate blueprint is similar but would not generate surpluses since it assumes lawmakers will renew the most popular of the tax cuts due to expire at the end of 2010.

Bush equates letting the cuts expire to a tax increase. He said Saturday the blow would amount to nearly $400 billion over five years _ what he said would be “the largest tax increase in our nation’s history.”

“Whether you have a family, work for a living, own a business or are simply struggling to get by on a low income, the Democrats want to raise your taxes,” the president said. “With their budgets, the Democrats have revealed their true intentions.”

This is going to become a terrible semantic debate in which Republicans browbeat the media into not reporting that they created the expiration. And what’s so frustrating is that it’s easy to explain. The GOP wrote the law making the tax cuts expire. They want to make them permanent. The Democratic budget does not do so (at least not without offsetting revenue). Was that hard?