When it comes to trickle-down economics, everyone’s got a right to their own opinion but not their own facts

Source: WashPost

Author: jared Bernstein

(Jared Bernstein, a former chief economist to Vice President Biden, is a senior fellow at the Center on Budget and Policy Priorities and author of “Crunch: Why Do I Feel So Squeezed?” among other books.)

Emphasis Mine

When evaluating economic policies, the value of fact-based argument cannot be overstated. If we’re arguing about our favorite film or restaurant, by all means, let’s hear your opinions. But if we’re evaluating the impact of Kansas Gov. Sam Brownback’s deep tax cuts on economic outcomes in the state, it’s critical to get the facts right.

That’s why parts of this radio show debate on the “To the Point” show last week were intensely frustrating. Myself, my CBPP colleagues and various journalists/editorialists have looked at the claims that Brownback’s strong pivot to trickle-down tax cuts have benefited the state and found them wanting.

So I was struck by this exchange on the show between guests Amity Shlaes and Thomas Frank.

Shlaes: [referencing BLS data] “Kansas has unusually low unemployment – its neighbors have higher unemployment. That’s a good sign – it says there’s some sun shining in Kansas.”

Frank, responding: “I’m at my desk looking at [presumably] the same BLS page … and Missouri has growth year over year ending in August of 1.6% and Kansas only 1.1%.”

The moderator then pivots to whether Brownback can garner support on cultural issues, leaving listeners in that all too familiar position of having no idea who’s right about an important fact: Is there or is there not evidence that the Kansas tax cuts boosted their employment outcomes?

A moment’s thought should lead one to reject the unemployment level cited by Shlaes as not relevant. Listeners don’t know whether that level is higher or lower than that which prevailed before the cuts were in place, and, more importantly, how the Kansan unemployment trend compares to that of neighboring states that share similar economic trends but didn’t pursue the same tax-cutting agenda. In fact, since the tax cuts went into effect, unemployment is down 0.7 percentage points (ppts) in Kansas (since the cuts went into effect in January 2013, this comparison is from December 2012 until the most recent data point, August of this year). Looking at surrounding states, that’s the same decline as Oklahoma, worse than Colorado, and a little better than Missouri and Nebraska. Combining those four states that surround Kansas, unemployment fell 1.1 ppts compared to Kansas’s 0.7. The national decline over this period was 1.8 ppts.

In other words, unemployment fell less in Kansas than in the combined neighboring states, and a lot less than in the nation.

Employment growth over this period has been 1.8 percent in Kansas, 2.9 percent in the surrounding states, the latter of which is about the same for the nation — 3.1 percent — suggesting Kansas to be a negative outlier.

And nobody, including Shlaes, denies that tax revenue is down sharply in the state as the result of the tax cuts, both in absolute terms and relative to other states, as shown in the figure below.

In regard to the state’s revenue losses, Shlaes argued that it takes time for an experiment like this to work. What went unmentioned was that states have to balance their budget deficits every year, meaning they have to cut services, most notably education, while waiting for the experiment to bear fruit. And based on the history of supply-side, trickle-down tax cuts, Kansans are likely to be waiting a long time for the bars in the above figure to realign.

That’s not the extent of the false claims that went unanswered during the show. Steve Moore from the Heritage Foundation, after noting that it was he and Art Laffer who lobbied Brownback to try this experiment, argued that state tax cuts were a good way to lure people to move to your state: “You’re seeing a pretty massive change in migration, especially the states like Texas and Tennessee and Florida and other states that have low taxes … and that’s kind of the pitch we made to Sam Brownback, and he bought into it.”

Again, my CBPP colleagues have taken a deep, substantive dive into this question, and found little relationship between tax cuts and migration. Mike Mazerov concludes, for example, that “differences in tax levels among states have little to no effect on whether and where people move, contrary to claims by some conservative economists and elected officials.” In fact, using the same data on which Moore and Laffer base their claims, Mazerov finds that “the raw data — confirmed by a series of careful academic studies — show that for the vast majority of people — including the vast majority of the rich — tax levels are a minor consideration [in relocation decisions] or completely irrelevant.”

This makes sense if you think about the Kansas case for a moment. As Frank notes in the interview, many Kansans highly value their system of public education, and as the revenue losses are felt in the schools, they’re expressing great discontent with the trickle-down experiment. Mazerov’s findings likely stem from the fact that there are many people

who don’t want to move to places with deteriorating public services.

Full disclosure: I’ve been on the “To the Point” show and it’s usually a smart and engaging discussion. And a good debate requires the representation of different viewpoints. Moreover, aside from the revenue results which really are dispositive, I’m not claiming that these differences in employment outcomes over relatively short periods are the final word.

They are, however, relevant factoids to add to the debate, and it is essential to get them right. The punchline here goes well beyond one show where a few numbers were abused. When, regarding hard facts, listeners hear one person say “A” and the other say “not A,” and the difference remains unresolved, they justly conclude, “Oh well, who knows? I might as well make my political choices based on stuff that doesn’t involve an intermediary, like: Would this be someone with whom I’d like to go out for a beer?”

What can be done? Newspapers have fact checkers. While they, too, make mistakes, on net they’ve been a real positive when it comes to these sorts of straightforward claims. Of course, neither radio hosts nor their staffs can do real time fact-checking.

So I’ve got a proposal. When there’s a disagreement about a basic fact, like the one regarding job growth between Frank and Shlaes, the moderator should flag it and tell listeners that they’ll check the sources and post the result on their Web site shortly after the show.

Furthermore, if someone is a serial offender who constantly makes up “facts” to support their case, it should be noted that they won’t be invited back. We all make mistakes, myself at the top of the list, so I’m not suggesting the banishment of anyone who cites an incorrect number on occasion. I talking about those who consistently reveal a disregard for facts.

My strong sense is that while this will require some time and resources — though less than you’d think as it’s not that often that you have such clear-cut, factual disagreements — it will pay off in a boost in credibility that will benefit these shows and maybe even grow their audience.

And I’m sure it will help our other big experiment, the one involving democracy.

 

See:http://www.washingtonpost.com/posteverything/wp/2014/10/13/when-it-comes-to-trickle-down-economics-everyones-got-a-right-to-their-own-opinion-but-not-their-own-facts/?tid=hybrid_1.0_strip_2

 

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