Washington Post roundup
Pretty much everything that caught my eye this morning was in the Washington Post. So here are the highlights:
- A Missouri lawmaker is proposing legislation that would make it illegal for food stamp recipients to buy "cookies, chips, energy drinks, soft drinks, seafood or steak." In next-door Kansas, Governor Sam Brownback is considering whether to sign a bill that would disallow welfare recipients from getting more than $25 a day out of an ATM and from spending money on swimming, movies, gambling or tattoos. On the Post's Wonkblog three days ago, Emily Badger made a great point about these proposed laws, as well as others that would require those who get state benefits to get tested for illegal drugs. "Sometimes," she writes, "these laws are cast as protection for the poor, ensuring that aid is steered in ways that will help them the most. Other times they're framed as protection for the taxpayer." Either way, however, they are misguided. There is little evidence, Badger argues, in support of the claim that the poor are spending their money frivolously. Moreover, we seldom make similar demands of the non-poor to qualify for government aid. (Imagine, she suggests, Pell Grant recipients not being allowed to choose majors that were unlikely to lead to fruitful employment.) Finally, most Americans are getting government benefits of one form or another. But because direct payments to the poor are move visible and immediate than, say, tax deductions, middle- and upper-class Americans are able to believe that the poor are uniquely dependent upon public aid. Citing political scientist Suzanne Mettler's concept of "submerged" benefits, Badger concludes that "these proposed laws" are "simply a reflection of a basic double-standard."
- Yesterday, Badger and her Wonkblog colleague Christopher Ingraham followed up on the earlier post with a list of ten "government handouts" that are available to the rich. In addition to such egregious giveaways as tax deductions for gambling losses and yachts, and the absurdly low estate and capital gains rates, it includes such pillars of middle-class life as the mortgage interest deduction and the tax benefits of retirement plans. The list is a great reminder that pretty much all of us, and not just the poor, are sucking at the government teat. (And, I would add, that's OK. That's one of the things that government is for: to help us accomplish things together that we could not otherwise achieve on our own.)
- Yesterday the paper's economic policy reporter Jim Tankersley contributed a nice writeup of Arthur Laffer. The conservative economist is one of the founders of supply-side economics and figures prominently in chapter six of A Commercial Republic. The article makes two different, and slightly contradictory, points. On the one hand, Tankersley portrays Laffer as still a very influential figure among Republican politicians. He writes:
As the 2016 GOP primary season takes off, Laffer is more in demand than ever before, with Republican candidates embracing tax-cut-for-the-rich policies even as they bemoan economic inequality. Candidates have been meeting with him in recent weeks, and on Friday in Nashville, he says, his schedule includes Rick Perry at 10 a.m., Ben Carson at noon, Jeb Bush at 1:15 p.m. and Bobby Jindal at 5. Dinner is scheduled with Ted Cruz. He has already met at least once with Wisconsin Gov. Scott Walker.
On the other hand, though, the piece portrays Laffer's supply-side philosophy as declining in influence with the GOP. Of course, after having completely defined the conservative approach for two generations, any sort of "decline" would be relative. But Tankersley makes it clear that even Republican politicians are becoming a bit more sensitive to voters' concerns of equal opportunity and economic inequality and that Laffer's "ideas have grown out of fashion with the mainstream economic community." Supply-side was an interesting response to the stagflation crisis of the 1970s that has transformed itself into a rigid ideology in which tax cuts are always the answer, no matter what the question. The extent to which Laffer's influence declines is the extent to which we can hope for some constructive economic debate and policy to emerge in our national politics.
- Speaking of Laffer, the Fact Checker feature of the Post looked in to Rand Paul's claim about Ronald Reagan's supply-side policies. “The last president we had was Ronald Reagan that said we’re going to dramatically cut tax rates," Paul stated on April 7. "And guess what? More revenue came in, but tens of millions of jobs were created.” The idea that tax cuts can increase government revenue and stimulate the economy is one of the core propositions of supply-side economics: in claiming that Reagan's tax cuts raised government revenue, Paul is merely echoing conservative conventional wisdom regarding the successful application of this principle. Because Republicans love to make this point, it has been endlessly debated for the last couple of decades. The Fact Checker writer, Glenn Kessler, begins his answer by pointing out that so many factors are in play to influence economic growth that it is impossible to single one out as being a specific cause. There is no objective answer as to whether the Reagan tax cuts actually caused economic prosperity, so Kessler confines his analysis to those parts of the quote that can be confirmed. He points out that, when ranked by "jobs created per year," Reagan trails both Bill Clinton and Jimmy Carter. (Under Reagan, approximately 16 million jobs were created, so Paul's claim of "tens of millions of jobs" is deemed to be at least somewhat hyperbolic.) Regarding government revenue, Kessler notes that the claim is technically true because tax receipts increased during Reagan's time in office. But he argues that measured according to the more relevant metric of percentage share of GDP, government receipts actually declined during the Reagan years. Furthermore, Reagan also raised taxes several times in that period, so a comparison of total receipts at the beginning and end of his administration does not isolate the effect of the tax cuts. In fact, a Treasury Department study found that the 1981 tax cuts lowered government revenues by $208 billion (in constant 2012 dollars). Overall, Kessler rates the claim at "three Pinocchios" (out of four), which means that it contains "significant factual error and/or obvious contradictions."