Posts Tagged ‘taxes’


Aspiration, ignorance and support for wealth redistribution

I’ve been sitting on this post by Kevin Drum for a week trying to figure out how to get through my response to its core idea without writing 20 pages. Drum (and Ezra Klein before him) focuses on the idea that private sector workers’ envy of public sector workers’ job security is at play in people’s responses to recessions. Now, I’m not entirely sure I buy this as a central feature, given that the general public has come to bat for the public employee unions during this recent unpleasantness in Wisconsin, but this is really a jumping off point for something sort of related.

Both Drum and Klein share a chart showing changes in private and public sector employment during the Obama Administration. The public sector looks fairly flat, though gradually declining, compared with the private sector, which cratered but has been crawling back up. Since roughly March 2010, they’ve been moving toward convergence, with the exception of the one-month census hiring spike. But when you ask the public about this, or when you listen to Republicans talk about it, they have no idea what’s actually going on. So here’s where I’m going with this (and this is where I decided to just delete a lot of explanatory material):

Do people really see themselves as someday being rich?

Kind of a logical chasm there, I know. But when we hear redistributionist policies mooted in the broad political discussion, we’re often told that the general public opposes increased taxes on the upper class because their aspirational feelings are so strong that they believe they will one day be subject to those confiscatory 39% marginal rates. A similar take is that middle class people, whether they see themselves as the future-rich or not, know that it’s just not fair to raise rich people’s taxes, even if they themselves will benefit. I imagine these are very comforting explanations if you are a rich person.

But allow me to be not-at-all the first to suggest that this is the result of rank ignorance. Some of this is well documented. Last year, a CBS News/New York Times poll found that just 12% believed their taxes had been lowered by Obama — in reality, 95% of Americans’ taxes had been lowered — and that an insane 24% believed their taxes had gone up. But OK, you could call this ignorance, but you could also call it being misinformed (by, say, certain news outlets) or a descent in agnotology. There are those with political and financial interests in convincing voters that what is false is true when it comes to taxes.

So how about this: To what extent can we suppose the typical American understands what benefits he or she receives from the public sector that are paid for with tax dollars? This goes beyond the facile argument about which states pay in more or less than they get from the federal government, with tendrils reaching out to the many spots noted by Tom the Dancing Bug — call it the “Keep the Government Out of My Medicare!” problem. Can we possibly have a meaningful debate about the trade-offs in expenditures and revenues if the public has no idea what’s happening in either of those categories?

Filed: We R in Control || 0:06, March 4 || 1 Comment »


Journalists, sources and cognitive dissonance

Two news stories today that feature totally contradictory ideas coming from the same source, with no attempt by the journalist to explain. One, a George Stephanopoulos piece on Senator Kent Conrad (D-ND) entitled, “Sen. Conrad: Extend All Tax Cuts; Time to Get ‘Serious’ About Deficit.” In the piece, Conrad is quoted as saying: “I proposed some weeks ago that we extend all the tax cuts for a period of time until we are able to fundamentally reform the tax system. Because that is what is required in part here along with spending reductions. Both are going to have to be done if we are going to get out of this deep hole.” It’s not at all clear how tax cuts and spending cuts lead to deficit reduction, and unfortunately Stephanopoulos neither presses Conrad to explain this self-contradictory statement, nor does he explain to his audience the role revenues and expenditures actually play in creating deficits.

In the other, a story from Bloomberg, we find this lede: “Investors around the world say President Barack Obama is bad for the bottom line, even though U.S. corporations are on track for the biggest earnings growth in 22 years and the stock market is headed for its best back-to- back annual gains since 2004.” Later, this: “Worldwide, 63 percent of all respondents say his policies are detrimental to the U.S. investment climate. That number increases to 68 percent among U.S. investors, even though the Standard & Poor’s 500 Index has risen more than 43 percent since Obama was inaugurated in January 2009 and corporate profits have rebounded almost to the pre-recession peak reached in 2006.” Author Mike Dorning goes into territory that Stephanopoulos avoids by directly contrasting the attitudes of poll respondents to actual investment outcomes during Obama’s time in office. Interestingly, he does little to point out contradictions in respondents’ open-ended answers about their views of Obama, perhaps because the respondents largely traffic in talking points about the “uncertainty” and “lack of clarity” in future fiscal and regulatory policy. Divergent results between US and foreign investors suggest that US investors may be responding with their personal financial interests in mind — 60% of them think all the Bush tax cuts should be extended, as opposed to just 30% of foreign investors.

This prompts a couple of questions for me. The first one is broad, and is one that my grad school colleague Ray Pingree dealt with in his dissertation: What is the effect of the press refusing to adjudicate fact-based disputes? In each of these cases, contradictions arise over fairly basic and well-accepted facts: lowering revenues (e.g., by cutting taxes) increases deficits, business profits and economic growth are up under Obama. How is the audience supposed to interpret stories that don’t allow those pieces of information to have a privileged position?

This question is much more relevant to traditional “on the one hand, on the other” coverage, which quotes each side and doesn’t adjudicate. What makes these two stories interesting is that it’s the same sources dealing with two conflicting pieces of information. Conrad says we need tax cuts and deficit reduction. Investors say Obama is bad for the economy even though their profits are through the roof. There are issues here for the audience, to be sure. Do they even process this type of story the way they might process a more typical “argument” story? Do they understand, without prompting from the reporter, that there’s any dissonance in what the source is saying? Dorning seems to think they might, and balances many of Bloomberg’s poll findings with actual economic data. Stephanopoulos doesn’t take that step, potentially leaving readers so much in the dark that they don’t even know the light exists. Let there be light, George! Let there be light!

Filed: Watching the Detectives || 13:32, November 11 || No Comments »