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February 09, 2009

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Gee publius, what part of "big Republican corporate media" have you been missing?

publius, how dare you criticize the liberal media, the democrats staunchest ally.

Seriously, to get back on point. There are a ton of polls out there, but one I heard yesterday is that the public is in favor of a stimulus, but almost 60% feel it should mainly in tax cuts.

Obviously, as has been pointed out with evidence several times on several posts here, tax cuts do not provide a stimulus. So why is the public viewing them as doing so?

There are four main culprits on this. The first being the Republicans hammering away at the theory that tax cuts help. Of course they provide no evidence they do, but it sounds good.

The second culprit is the majority party who, on one level I think is afraid to really criticize tax cuts, particularly cuts for the middle class, because that might haunt them in the future. Additionally, they have done a really poor job of discussing how increased spending is something that will have a much greater probability of working than cuts.

The third is the general public. Nobody really enjoys paying taxes, so any though of lessenign a tax burden gets almost automatic approval. We are still a nation highly comprised of people who put their self-interests above all others.

Finally, the media, which is supposed to do more than just say what people are saying. They are supposed to provide back-ground and help to educate the public. And, in this instance, they are doing a really poor job, equivalent, IMO, with the horrible job they did in the run up to Iraq.

Of course, it should be remembered that the media, in general, is owned by people and companies who have a vested interest in Republican policies being at the forefront.

You don't understand - making tactics entertaining is easy... it's conflict, drama, a race. Making policy entertaining actually takes talent, and that's in short supply in the media today.

Of course, it should be remembered that the media, in general, is owned by people and companies who have a vested interest in Republican policies being at the forefront.

I wouldn't underestimate the effect of the weird institutional culture that exists now in the "news" production business, over and above whatever financial incentives the owners might have had to create it in the first place.

I especially wonder if or when more of those owners might realize they've created a Frankenstein. At some point it has to become clear that the "more-tax-cuts-for-the-rich" elite is just fighting for a larger share of a smaller pie (or at least a slow growing one). For some of them, a more modest share of the much larger pie that exists in the alternate world with a more robust middle-class driven economy might be looking better and better.

Wagster has very good point. A few says ago I watched a bit of CNN's coverage of the stimulus debate.

To discuss the issue they had, ta-da, Paul Beglala and Alex Castellanos, a pair of political operatives whose knowledge of macroeconomics rivals my understanding of 10th-century China. Needless to say, all that happened was an exchange of talking point, accompanied by grimaces and head-shaking.

It was utterly uninformative, but they disagreed. There was conflict, and that's all CNN wanted. This is the general level of discussion available in the media today.

"There's been far too little focus on how bad the economy is."

This is actually an interesting problem that they were discussing on MarginalRevolution last week. To the extent that one of the biggest problems is frightened expectations from those who have work but are suddenly afraid of spending because they are worried about not having work, we want to downplay how bad the economy is doing because their reaction only makes things worse. But to get out of the credit crunch we probably have to take dramatic action which makes things look bad.

But on the other hand that is just on a theoretical level, television news is just awful. They somehow manage to get the worst of both worlds--they hype scary stories AND manage to be uninformative.

Definitionally the difference between a recession and a depression is that from my point of view it is a recession if you lose your job and I still have mine, but a depression if I lose my job.

So it seems to me that we haven't had enough layoffs in broadcast TV yet. Maybe if everybody cancels their cable subscription and the folks at CNN are turned out onto the street en-masse, we might get some serious economics on the tube for a change. Too bad nobody will be watching it. How's that for a catch-22?

Meanwhile, while nobody on TV is paying any attention to the details we have a 35 billion dollar home purchase tax credit inserted into the bill which will do little if anything to reduce inventory, reduce housing prices, or stimulate new home construction. All it will do is generate turnover (i.e. thrashing) in the housing market without any beneficial spillover effects. So this is 35 billion being spent to create make-work welfare jobs for NAR members, with no longer term benefit to anyone.

CalcRisk and Kash Mansori crunch the numbers.


But on the other hand that is just on a theoretical level, television news is just awful. They somehow manage to get the worst of both worlds--they hype scary stories AND manage to be uninformative.

Totally in agreement here, but looking on the flip side of this question, when exactly was the golden era of mass media? When did we ever have intelligent, factually sound and contextually appropriate information in general circulation?

Because it seems like the sewer that is mass media has always been thus. The late 18th Cen. wasn't all Thomas Paine and Common Sense - it also featured a river of gutter journalism filled with paranoid screeds about Popish plots and partisan invective which would make our talking heads TV today looks like a tea party by comparison. The 19th Cen had penny dreadfulls and yellow journalism. The early 20th Cen. had the Beaverbrook and Northcliffe press in England stirring up jingoism, and Hearst, et. al. in the US. By the mid 20th Cen. we only had McCarthyism and the San Francisco Chronicle crusading against the shocking fact that the animals in the zoo were naked! (and don't even get me started on the LA Times in that era..).

Etc, etc. And that is just the English language press. I'm sure others more familiar with the press history in other languages can come up with similarly scandalous examples from French and German history, etc.

So what is our baseline for "good press", against which we judge our present state of affairs, and when did it happen?

whatever people think of spending v tax cuts, more people approve of the Dems handling of this issue than the GOP's.

the GOP gets 58% disapproval here.

I'm not convinced the popular press was ever particularly good, I'm just mentioning that it is awful right now. ;)

So all these guys are 'flat earthers'?:

http://www.unitedliberty.org/files/cato_stimulus.pdf

I think that only works if you accept opposition to the stimulus as evidence of being a flat earther, which would mean assuming what you're trying to prove.

Let's face it. Our pundits don't have a clue about policy. They don't understand policy. They don't really care about policy. What they do understand and care about is politics, opinion polls and the whole horse-race aspect of elections.

So they don't talk about the real-world implications of policy because they don't understand it, and besides, talking about the real world effects might be perceived as "biased" by anyone who didn't agree. So they focus on the politicing and horse race because that's all they really know or care about.

"Obviously, as has been pointed out with evidence several times on several posts here, tax cuts do not provide a stimulus. So why is the public viewing them as doing so?"

"Claiming" and "pointing out" are, I suppose, related activities, but they're not quite the same thing. It should be obvious that, if additional spending unmatched by tax increases is "stiumulus", fix spending with tax cuts would be also be "stimulus"; It's the enarged deficit that constitutes the "stimulus", after all.

People prefer tax cuts to targetted spending increases, because they prefer that the additional spending be spent according to their preferences, rather than politicians'. Politicians have the opposite desire, for no better motives.

To the extent that one of the biggest problems is frightened expectations from those who have work but are suddenly afraid of spending because they are worried about not having work, we want to downplay how bad the economy is doing because their reaction only makes things worse.

The thing is, for private individuals, buying down debt and hoarding some cash is *exactly* the right thing to do. There are some exceptions -- if you have surplus cash to invest, now's the time to jump in with both feet, there are bargains to be had -- but for the vast majority of people, especially people who live on a wage or salary, this *is not* the time to spend on anything you don't need.

My wife and I are, by any normal measure, at no more than a moderate level of risk, but we are not spending a dime we don't need to. We're paying our bills, buying down debt, and saving whatever is left over. Period.

Any plan for recovery that depends on people doing otherwise is not going to work. Because people aren't going to do otherwise. They aren't going to do otherwise because they're not insane.

The private sector is not going to be able to lead the way on this, at least on the demand side.

if the republicans were advocating tax cuts which actual allowed median income homes to spend more, we might be having a different discussion, for instance the payroll tax.

However, tax cuts for the rich don't generally lead to more spending.

" "Claiming" and "pointing out" are, I suppose, related activities, but they're not quite the same thing."

Very true Brett, which is why I phrased it the way I did. It is interesting that on all the threads I have followed, there have been lots of claims that tax cuts, rebates, etc stimulate the economy, but that is all they have been.

if the republicans were advocating tax cuts which actual allowed median income homes to spend more, we might be having a different discussion, for instance the payroll tax.

Gohmert has been pushing for a payroll tax suspension for months.

He even mentioned it directly to Obama when he had the chance.

HR 7309 was introduced on Dec 9 and never even made it out of committee. (A committee controlled by non-Republicans…)

People prefer tax cuts to targetted spending increases, because they prefer that the additional spending be spent according to their preferences, rather than politicians'. Politicians have the opposite desire, for no better motives.

Nonsense.

For one thing, it's difficult to choose how to spend the money from your tax break if you're not getting one because you don't pay any taxes because you don't have a job. (Or, for a business, because you don't have any profits, because you don't have any customers - because they don't have jobs).

So I very much doubt the burgeoning ranks of people who do not currently have jobs, or who soon will not have jobs, would actually prefer tax cuts to having the government spend money on employing them directly to do something useful. (Or giving them money to spend directly via food stamps and the like, or even a sales tax holiday.)

Second, those who DO have income to receive tax breaks on are very likely to sock away a large portion of the windfall rather than spending it - after all, we're in a recession! Who knows when one might need a little nest egg? (But they won't save it in a productive investment - when the economy is operating below capacity there aren't many. They'll just sock it away in the equivalent of a mattress. Best case it finds it's way back into T-bills at ~0% interest, so the government can turn around and spend it on something useful. Hey, wait a second...)

For those reasons, and many others, tax cuts are (in general) less effective stimulus than spending. (I.e., they have a smaller multiplier, perhaps you've heard that word before? All this has been pointed out here and throughout the interhive uncountably many times. Probably a dozen or so times to you alone.)

Bottom line: whatever the 'motives' of the politicians and the 'people' [do you really mean relatively well-off taxpayers?] are, we don't really need to guess about them. It's irrelevant.

Spending is just better policy.

Not so. It's not the deficit per se that's the stimulus, but the added spending. The increased deficit is a consequence of the spending, true, but that doesn't mean that deficit increases are automatically stimulative.

Tax cuts do not work, at least not nearly to the same degree, depending on the tax cut you're talking about. Cuts in capital gains and corporate taxes, for example, provide little stimulus.

My previous comment was in response to Brett's statement that

It's the enarged deficit that constitutes the "stimulus", after all.

Is there some way I could have checked my comment before posting it? Hmm. Maybe I should look into that.

People prefer tax cuts to targetted spending increases, because they prefer that the additional spending be spent according to their preferences, rather than politicians'. Politicians have the opposite desire, for no better motives.

I made this comment once before, but it dispearred into the Ether. Anyway, I'd prefer that the stimulus (or whatever the hell you want to call it) be spent on infrastructure improvements and the prevention of starvation, homelessness and untreated illness. I can't really spend my own tax cuts on those things, so I'm not sure why I should object to the government doing so. I'm sure there are valid criticisms on the stimulus bill given my preferences, but "More tax cuts!" isn't one of them.

The media is just bizarre. They talk up the value of bipartisanship and then cover all politics as conflict of parties but not ideas, in which bipartisanship equals compromise even though the result may be the worst of both parties rather than the best (because the media doesnt want to have to talk about whether ideas are good or bad). Additionally, this type of coverage rewards the side provoking the conflict with more coverage. However, the idea that this will help the GOP return to the majority is an illusion of both the GOP and the media. The GOP benefits only if the ecnomony still collapses, which is not going to happen now. The public actually seems pretty realistic about the economy and the GOP and is not expecting a miracle and the Dems only need pick up one more Senate seat on 2010 for the magic 60(assuming Franken eventually wins in MN). I think that Obama and the 3 GOP senators left from the northeast(not including Gregg) know what they are doing. The final stimulus package will inevitably move back some towards the House bill, which is probably why the NE4 (NorthEast3 and NElson) wanted those cuts in the Senate bill-for negotiating purposes- knowing that some would be restored in conference. A reasonble conference result would be a stimulus of $800B plus the AMT fix leaving the total cost at about $864B, which is enough less than the $900B number that seems to bother the NE4 so much (and perhaps Snowe not really so much). This would put at least $40 to $50B of the spending back, and maybe more, if the auto and home purchase tax credits are pared back as well. Although I personally agree with the Krugman view that the economy can use more stimulus, I just think that that $900B is a ceiling on what is politically possible. I think Obama understood that and has played his cards pretty well knowing that there had to be at least 2 GOP votes (keeping every DEM) to get the 3/5 Senate vote required for emergency spending that increases the deficit. After all, according to today's Gallup, although 67% approve of how Obama has handled the stimulus, only 51% think it is critically important. Thus, he has convinced a substantial number of people who do not think this is critically important to trust in his handling of the issue. He would not have accomplished that if he had gone strong partisan from the beginning or tried for too much stimulus. It is hard to act in a crisis that only 51% think is a crisis. The well has been somewhat poisoned as well by the TARP goings on - a sort of GOP twofer - something has to be done so get the authority to do it, but then do it as badly as possible to keep people from liking what the govt does. Thus, Paul Krugman has his deserved Nobel and Barack Obama knows what a president can and cannot accomplish. Further, there will be more cooperation needed in the Senate from the NE4 in the future and giving up $50B now may pay more dividends later the appropriations process.

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