Monday, August 23, 2010

Paul Krugman couldn't find his way out of a sack

It's Fisking time, boys and girls ! 

I'll be needing a few tools....

Scalpel - thanks.
Laptop - got it.
Righteous Indignation - I've got plenty.
Various Free Market, Libertarian and Christian websites - check.
Copy of Thomas Sowell's Basic Economics (3rd edition) - got it.
Chainsaw - yep.
Metzenbaum scissors - check.

Let the Fisking begin ! 

Paul Krugman, the most drop-kickable of all Statist apologists, has typed up this little beauty for The New York Times:

NOW THAT'S RICH
We need to pinch pennies these days. Don’t you know we have a budget deficit? For months that has been the word from Republicans and conservative Democrats, who have rejected every suggestion that we do more to avoid deep cuts in public services and help the ailing economy.

My time is limited, and I don't have enough time or space to do anything but ask this simple question....  What in the hell does providing "public services" have to do with helping the economy?  Barack Obama has poured more swill and slop into the "public services" trough than any other president who has ever lived.  It has done nothing to help the economy, but it has saved a lot of Obama supporters government jobs.  All of this was done at the expense of the private sector.

But these same politicians are eager to cut checks averaging $3 million each to the richest 120,000 people in the country.

These politicians don't want to cut checks, Paul.  They want to let people keep the money they earned.  The money doesn't belong to the government until the government decides to graciously give some back.  They money belongs to the people who earned it.

What — you haven’t heard about this proposal? Actually, you have: I’m talking about demands that we make all of the Bush tax cuts, not just those for the middle class, permanent.

That's a nice attempt at class warfare.  But consider this:  47 percent of us pay NO income tax.  If taxes (and spending) are ever going to be cut significantly, the cuts will come from the taxes paid by someone other than the lower classes.  (Subject for further review: how many of our super-rich came from the middle and lower classes.  Another subject for further review:  who woke up one day and decided that America has classes?  One more subject:  Should people try hard to change their economic status?  What would be in it for them?)

Some background: Back in 2001, when the first set of Bush tax cuts was rammed through Congress, the legislation was written with a peculiar provision — namely, that the whole thing would expire, with tax rates reverting to 2000 levels, on the last day of 2010.

Paul says that like it is a bad thing.  Also, note the use of the word "rammed".  In Paul's world, Cash For Clunkers, ObamaCare ® and TARP were "passed".  Tax cuts are "rammed". 

Why the cutoff date? In part, it was used to disguise the fiscal irresponsibility of the tax cuts: lopping off that last year reduced the headline cost of the cuts, because such costs are normally calculated over a 10-year period.

Let's define Fiscal Irresponsibility.....How about "failure to reduce spending to reflect income"? 

It also allowed the Bush administration to pass the tax cuts using reconciliation — yes, the same procedure that Republicans denounced when it was used to enact health reform — while sidestepping rules designed to prevent the use of that procedure to increase long-run budget deficits.

Ditto.  Bush spent money like a recovering alcoholic cowboy.  So did Daddy Bush.  So did Reagan.  But they were mere hints of what was yet to come, a series of John The Baptists preparing the way for The Teleprompter Jesus....

Obviously, the idea was to go back at a later date and make those tax cuts permanent. But things didn’t go according to plan. And now the witching hour is upon us.

That's because The Crips And The Bloods The Republicans and Democrats will never, ever voluntarily cut spending.  That's why we need to elect some Libertarians and get back to a two-party system. 

So what’s the choice now? The Obama administration wants to preserve those parts of the original tax cuts that mainly benefit the middle class — which is an expensive proposition in its own right —

Once again Paul reveals his belief that letting people keep their own money is expensive.  MAKING PEOPLE PAY RIDICULOUSLY HIGH TAXES IS EXPENSIVE ! ! !

....but to let those provisions benefiting only people with very high incomes expire on schedule. Republicans, with support from some conservative Democrats, want to keep the whole thing.

Abso-freakin'-lutely.  Keep the whole thing.  Starve the beast.  Federal employees have compensation and pensions anywhere from 50% to 100% better than those found in the private sector.  And from what I've seen, they have about half as much responsibility.  What is so criminal about not wanting to be robbed to support the Lifestyles Of The Rich And Famous?

And there’s a real chance that Republicans will get what they want. That’s a demonstration, if anyone needed one, that our political culture has become not just dysfunctional but deeply corrupt.

The mind recoils.  Paul Krugman won a Nobel in economics.  Next thing you know, they'll be giving Nobels to someone in the last three Democrat administrations, like Obama, Gore, or Carter.  Oh.  Never mind. 

What’s at stake here? According to the nonpartisan Tax Policy Center, making all of the Bush tax cuts permanent, as opposed to following the Obama proposal, would cost the federal government $680 billion in revenue over the next 10 years.

That logic assumes that the super-wealthy will continue to produce income if they know that Obama is going to get more of the (potential) profit. 
But $680 billion....That's the amount of the previous stimulus package, right?  Well, if we don't give 'em the money, they can't redistribute it to their friends, right? 

For the sake of comparison, it took months of hard negotiations to get Congressional approval for a mere $26 billion in desperately needed aid to state and local governments.

Let's not ask why the states needed $26 billion dollars.  We don't want to go there.  Surely California was spending its money responsibly, and isn't on the hook for ridiculous public employee pensions....

And where would this $680 billion go? Nearly all of it would go to the richest 1 percent of Americans, people with incomes of more than $500,000 a year.

Paul, you ignorant slut.  The money wouldn't GO to the richest 1 percent.  It would STAY with them.  They are the ones who are producing the alleged $680 billion.  They would get to spend it in the way that they think best, instead of forking it over to be spent the way George Bush, Mitch McConnell, Nancy Pelosi, or Harry Reid thinks best. 
Also, Paul, I'm betting that you are well paid.  I'm also betting that you have a tax expert go through your taxes, looking for every possible deduction.  I'm just betting that you talk the talk, but don't walk the walk.  

But that’s the least of it: the policy center’s estimates say that the majority of the tax cuts would go to the richest one-tenth of 1 percent. Take a group of 1,000 randomly selected Americans, and pick the one with the highest income; he’s going to get the majority of that group’s tax break. And the average tax break for those lucky few — the poorest members of the group have annual incomes of more than $2 million, and the average member makes more than $7 million a year — would be $3 million over the course of the next decade.

You can also take the same group of 1,000 randomly selected Americans, and pick out 470 of them.  These 470 are paying no income tax. 
You can probably pick out another 330 of them who are government employees or suppliers, and who live off of taxes paid by the top 100. 
What does all this mean? 
It means we have too many people living off of money taken by force.  If you announce that more money is going to be taken for redistribution to Statists, the infamous top 5% is going to start hiding its money.  Wait and see. 

How can this kind of giveaway be justified at a time when politicians claim to care about budget deficits?

Well, because of Texas A&M University, I'm having a budget deficit.  Therefore, I spend less. 

Well, history is repeating itself. The original campaign for the Bush tax cuts relied on deception and dishonesty. In fact, my first suspicions that we were being misled into invading Iraq were based on the resemblance between the campaign for war and the campaign for tax cuts the previous year. And sure enough, that same trademark deception and dishonesty is being deployed on behalf of tax cuts for the wealthiest Americans.

It is now impossible to cut taxes for anyone except the wealthiest 50% of Americans, dumb ass. 
Speaking of dishonesty, our government is now claiming that we're pulling the combat troops out of Iraq, but we are still going to have 50,000 troops over there, and I think they have guns.  Whassup with that? 

So, for example, we’re told that it’s all about helping small business; but only a tiny fraction of small-business owners would receive any tax break at all. And how many small-business owners do you know making several million a year?

Perhaps it is an aspirational thing.  I don't make several million a year, but I would like to.  I will try harder if I can keep the several million a year, instead of giving more of it to our costly adventures in Iraq, Afghanistan, and California. 

Or we’re told that it’s about helping the economy recover. But it’s hard to think of a less cost-effective way to help the economy than giving money to people who already have plenty, and aren’t likely to spend a windfall.

GIVING THE MONEY?  GIVING THE MONEY?  THE GOVERNMENT ISN'T GOING TO GIVE PEOPLE THAT MONEY ! ! !   THE GOVERNMENT WANTS TO TAKE THE MONEY, AND BLOW IT ON STUPID CRAP ! ! ! 
Paul, please go to "Clues 'R' Us", and get one. 

No, this has nothing to do with sound economic policy. Instead, as I said, it’s about a dysfunctional and corrupt political culture, in which Congress won’t take action to revive the economy, pleads poverty when it comes to protecting the jobs of schoolteachers and firefighters, but declares cost no object when it comes to sparing the already wealthy even the slightest financial inconvenience.

According to The Washington Post, we're spending $25,000 per kid in many public schools.  How much more do you want to blow per classroom, under the heading of  "saving teaching jobs"?  Is there any amount that would be enough? 
So far, the Obama administration is standing firm against this outrage. Let’s hope that it prevails in its fight. Otherwise, it will be hard not to lose all faith in America’s future.

1)  People spend their own money more wisely than 3rd parties spend it. 
2)  Taxes must be taken by force. 
3)  High taxes act as a disincentive to wealth creation.
4)  Make-work jobs, those created by government, eventually run out of money. 
5)  Paul Krugman couldn't find his way out of a sack.

11 comments:

CenTexTim said...

Great piece. Too bad no one at the NYT thinks/writes like that.

Ran across this on the web a while back. The article's okay, but I loved the title.

Paul Krugman: Idiot, or Morally Bankrupt Liar

Anonymous said...

47% of Americans earned below $50,000 for a family of four, that's why they paid no taxes.

America has clearly defined social classes, step out of your cocoon:
http://en.wikipedia.org/wiki/Social_class_in_the_United_States

Yes, bills passed with a 60-40 majority are considered passed, while those passed with a 51-49 majority are considered rammed.

If you want to talk fiscal irresponsibility you are at least 9 years too late:

http://www.peoplesworld.org/reagan-s-budget-director-calls-gop-tax-cuts-delusional/

It's true government workers get great pensions - however, the direct pay is pretty low compared to private sector jobs, and most government jobs require advanced degrees. As a private sector employee having looked at government employment, for someone with my qualifications and level of education, I would receive about 60-80% of my current pay working for the government, and far less if you consider my stock options as part of my pay.

http://jobs.aol.com/articles/2009/01/26/government-salaries-vs-private-sector-salaries/
http://calpensions.com/2010/05/04/government-pay-lower-than-private-sector/

To your final points-


1) People spend their own money more wisely than 3rd parties spend it.

People don't spend their money in a down economy. That is the heart of the issue.


2) Taxes must be taken by force.


Yes. They must. That's why they're taxes, and not gifts.

3) High taxes act as a disincentive to wealth creation.

That's called the Laffer curve and we are far away from being on the right side of the curve. Time and time again, it has been show the United States is far below the threshold for taxation impacting output. Do some research.

http://www.qando.net/details.aspx?entry=7083
http://editiondesign.com/catalyst/pubs/article5a.html
http://voices.washingtonpost.com/ezra-klein/2010/08/where_does_the_laffer_curve_be.html
http://personalmoneystore.com/moneyblog/2010/04/08/laffer-curve-explaning-taxation-theoretically/


4) Make-work jobs, those created by government, eventually run out of money.

If they produce an uptick in private sector jobs be increasing demand then they have served their purpose.


5) Paul Krugman couldn't find his way out of a sack.

Your point is entirely unproven. You obviously don't like the man, but you have not provided a solid argument outside of

Anonymous said...

47% of Americans earned below $50,000 for a family of four, that's why they paid no taxes.

America has clearly defined social classes, step out of your cocoon:
http://en.wikipedia.org/wiki/Social_class_in_the_United_States

Yes, bills passed with a 60-40 majority are considered passed, while those passed with a 51-49 majority are considered rammed.

If you want to talk fiscal irresponsibility you are at least 9 years too late:

http://www.peoplesworld.org/reagan-s-budget-director-calls-gop-tax-cuts-delusional/

It's true government workers get great pensions - however, the direct pay is pretty low compared to private sector jobs, and most government jobs require advanced degrees. As a private sector employee having looked at government employment, for someone with my qualifications and level of education, I would receive about 60-80% of my current pay working for the government, and far less if you consider my stock options as part of my pay.

http://jobs.aol.com/articles/2009/01/26/government-salaries-vs-private-sector-salaries/
http://calpensions.com/2010/05/04/government-pay-lower-than-private-sector/

To your final points-


1) People spend their own money more wisely than 3rd parties spend it.

People don't spend their money in a down economy. That is the heart of the issue.


2) Taxes must be taken by force.


Yes. They must. That's why they're taxes, and not gifts.

3) High taxes act as a disincentive to wealth creation.

That's called the Laffer curve and we are far away from being on the right side of the curve. Time and time again, it has been show the United States is far below the threshold for taxation impacting output. Do some research.

http://www.qando.net/details.aspx?entry=7083
http://editiondesign.com/catalyst/pubs/article5a.html
http://voices.washingtonpost.com/ezra-klein/2010/08/where_does_the_laffer_curve_be.html
http://personalmoneystore.com/moneyblog/2010/04/08/laffer-curve-explaning-taxation-theoretically/


4) Make-work jobs, those created by government, eventually run out of money.

If they produce an uptick in private sector jobs be increasing demand then they have served their purpose.


5) Paul Krugman couldn't find his way out of a sack.

Your point is entirely unproven. You obviously don't like the man, but you have not provided a solid argument outside of

Anonymous said...

47% of Americans earned below $50,000 for a family of four, that's why they paid no taxes.

America has clearly defined social classes, step out of your cocoon:
http://en.wikipedia.org/wiki/Social_class_in_the_United_States

Yes, bills passed with a 60-40 majority are considered passed, while those passed with a 51-49 majority are considered rammed.

If you want to talk fiscal irresponsibility you are at least 9 years too late:

http://www.peoplesworld.org/reagan-s-budget-director-calls-gop-tax-cuts-delusional/

It's true government workers get great pensions - however, the direct pay is pretty low compared to private sector jobs, and most government jobs require advanced degrees. As a private sector employee having looked at government employment, for someone with my qualifications and level of education, I would receive about 60-80% of my current pay working for the government, and far less if you consider my stock options as part of my pay.

http://jobs.aol.com/articles/2009/01/26/government-salaries-vs-private-sector-salaries/
http://calpensions.com/2010/05/04/government-pay-lower-than-private-sector/

Anonymous said...

1) People spend their own money more wisely than 3rd parties spend it.

People don't spend their money in a down economy. That is the heart of the issue.


2) Taxes must be taken by force.


Yes. They must. That's why they're taxes, and not gifts.

3) High taxes act as a disincentive to wealth creation.

That's called the Laffer curve and we are far away from being on the right side of the curve. Time and time again, it has been show the United States is far below the threshold for taxation impacting output. Do some research.

http://www.qando.net/details.aspx?entry=7083
http://editiondesign.com/catalyst/pubs/article5a.html
http://voices.washingtonpost.com/ezra-klein/2010/08/where_does_the_laffer_curve_be.html
http://personalmoneystore.com/moneyblog/2010/04/08/laffer-curve-explaning-taxation-theoretically/


4) Make-work jobs, those created by government, eventually run out of money.

If they produce an uptick in private sector jobs be increasing demand then they have served their purpose.


5) Paul Krugman couldn't find his way out of a sack.

Your point is entirely unproven. You obviously don't like the man, but you have not provided a solid argument outside of

Anonymous said...

Your point is entirely unproven. You obviously don't like the man, but you have not provided a solid argument outside of showing that you can't do competent research.

Nick Rowe said...

Great Job, WS. Couldn't do better myself!


People don't spend their money in a down economy. That is the heart of the issue.

No, the heart of the issue is that government provided too many subsidies for malinvestment, and now we're paying for it. The solution is not "hair of the dog."

And the Paradox of Thrift is bogus. GDP is not an adequate measure of social welfare. People are not entitled to the jobs/ customers they previously had. People making good financial decisions for themselves is never a bad thing for the economy.

Debt should only be used to smooth consumption/ investment over many years for large-ticket items and for temporary liquidity problems.

Debt is never a wise solution to economic downturns.

Yes. They must. That's why they're taxes, and not gifts.

Politicians certainly treat them like gifts because they are having a party with them.

Krugman certainly thinks they are gifts because when you talk about letting people keep their income, he considers it a "cost" to government.

Taxes are supposed to pay for the provision of public goods and services, not to support redistribution programs and provision of private goods.

You apparently don't know the difference between public and private goods.

That's called the Laffer curve and we are far away from being on the right side of the curve.

It does not matter what side of the Laffer Curve we're on. Government's job is to provide public goods and services accordng to the Constitution, and the level of taxation should be minimal to support that. The objective of [our] government is not to maximize tax revenue and spend every dime.

Time and time again, it has been show the United States is far below the threshold for taxation impacting output. Do some research.

Do some research yourself. ANY amount of taxes (other than lump sum taxes) distorts economic decisions. The Laffer Curve is a model of maximum tax revenue, not a model of the economic distortions of taxation.

If they produce an uptick in private sector jobs be increasing demand then they have served their purpose.

They have not served their purpose. The multiplier for the government "stimulus" has been less than one, indicating that there has been substantial crowding out. That means every job gained from the stimulus was offset by another private sector job starved out of existence by government.

Immediate and permanent tax cuts with government austerity measures are the keys to gaining traction in the economy.

Your point is entirely unproven.

He proved his point rather well, actually. He demonstrated that:

- Krugman considers personal income to belong to government by default.

- Krugman is less interested in losses to social welfare than he is redistribution to people and causes he favors.

- Krugman does not acknowledge that the problem with government budget deficits is NOT failing to raise enough taxes but rather spending too much.

- Krugman thinks $69 billion per year for ten years is a horrible loss in government revenue, but he'll gladly spend twenty times as much in one year to achieve.... nothing.

- Krugman defines "corruption" by being in the minority of power and opinion.

- Krugman thinks assistance to state and local governments who squandered every dime of revenue during the good years (and committed accounting fraud) deserved to have federal money flowing their way.

You've made your biases very clear, Anonymous.

The Whited Sepulchre said...

To the last Anonymous commenter:

I only have one question....

Do you claim any tax deductions?

The Whited Sepulchre said...

To the next to last anonymous commenter:

Sir, Thanks for your comments.
However, IMAO.... 1) Taking their money and spending it for them on projects that YOU favor, especially if they are wasteful, doesn't encourage economic growth. See Christina Roehmer's research on the Great Depression or..unhhh...reality in the year 2010. Get ready for a Double-Dip recession.
2) Please remember that if you are taking something by force, you damn well better have a good reason, and that failure to have a good reason creates massive levels of cynicism about government. Turtle tunnels, bridges to nowhere, crony bailouts, and $578 million dollar public schools don't rise to that level.
http://www.foxnews.com/us/2010/08/22/amid-ongoing-budget-woes-la-unveils-nations-expensive-school-m-price-tag/

3) Dude.... NOBODY in the top tax bracket pays the top tax rate. They hide it. They invest it elsewhere. They hire some of the most creative accounting and legal minds on the planet to avoid letting Uncle Sam get his hands on it. This keeps money out of its most productive use, and puts it into uses that Congress has been bribed into declaring a legal loophole/tax shelter. Ted Kennedy, John Kerry, George Soros, and Warren Buffett have all done this. That's why they are rich.
4) How's that working out for you??? Also, you're into Bastiat's "Broken Window" territory here. I'd rather have my own "increased demands" met than Mitch McConnell's or Nancy Pelosi's.
5) My primary point is that Krugman thinks all wealth belongs to the government until the government decides how much to let you have. Krugman has proven that himself.
My secondary point is that Krugman's economic philosophy has absolutely NO predictive value. Put a minor league Austrian economist in the same Intrade market with Paul Krugman, and have them bet on economic issues. Krugman would lose his shirt.
Krugman's Keynesianism is nothing but a fig leaf that tries and fails to disguise gifts to the Democrat donor base. If I failed to prove that, well, the fault is all mine.

The Whited Sepulchre said...

To the next to last anonymous commenter:

Sir, Thanks for your comments.
However, IMAO.... 1) Taking their money and spending it for them on projects that YOU favor, especially if they are wasteful, doesn't encourage economic growth. See Christina Roehmer's research on the Great Depression or..unhhh...reality in the year 2010. Get ready for a Double-Dip recession.
2) Please remember that if you are taking something by force, you damn well better have a good reason, and that failure to have a good reason creates massive levels of cynicism about government. Turtle tunnels, bridges to nowhere, crony bailouts, and $578 million dollar public schools don't rise to that level.
http://www.foxnews.com/us/2010/08/22/amid-ongoing-budget-woes-la-unveils-nations-expensive-school-m-price-tag/

3) Dude.... NOBODY in the top tax bracket pays the top tax rate. They hide it. They invest it elsewhere. They hire some of the most creative accounting and legal minds on the planet to avoid letting Uncle Sam get his hands on it. This keeps money out of its most productive use, and puts it into uses that Congress has been bribed into declaring a legal loophole/tax shelter. Ted Kennedy, John Kerry, George Soros, and Warren Buffett have all done this. That's why they are rich.
4) How's that working out for you??? Also, you're into Bastiat's "Broken Window" territory here. I'd rather have my own "increased demands" met than Mitch McConnell's or Nancy Pelosi's.
5) My primary point is that Krugman thinks all wealth belongs to the government until the government decides how much to let you have. Krugman has proven that himself.
My secondary point is that Krugman's economic philosophy has absolutely NO predictive value. Put a minor league Austrian economist in the same Intrade market with Paul Krugman, and have them bet on economic issues. Krugman would lose his shirt.
Krugman's Keynesianism is nothing but a fig leaf that tries and fails to disguise gifts to the Democrat donor base. If I failed to prove that, well, the fault is all mine.

Tim Lebsack said...

WS - I'm curious if this blogs lurking Anonymous is the same as Trey Garrison's lurking Anonymous? Coercion is everywhere.