April 23, 2003
From the desk of Jane Galt:Spending or tax cuts?
I've heard a fair amount of noise on what is apparently the new Democratic Party line to explain why the Bush tax cuts are bad, but all the spending they want to do is good. To wit: "Well, spending is okay, because it's temporary stimulus. Tax cuts are bad because they cause permanent fiscal havoc."
This is a very, very silly argument. I was gratified to see a friend who is both a professional economics person, and a raging liberal, look across the table at the person who offered the argument, blink twice, and say "Damn, that's stupider than anything the Republicans ever thought up."
Spending and tax cuts, while they are the same thing as far as the budget is concerned, do not have the same affect on the economy. Spending is worse for a couple of reasons. First of all, as long as the tax cut is on marginal rates, it has a slight positive affect on behavior, on the order of 5-15%. Second of all, unless the tax cuts are the insanely complicated, productivity killing and economy distorting "targeted tax cuts" of the Clinton/Gore juggernaut, tax cuts are very inexpensive to administer. You reprint some tables at the IRS, and presto! You're done. Spending, on the other hand, gets done by the government, which is insanely inefficient. Some of this is because spending is done by civil servants, not all of whom do their jobs well, or at all. But there's also the fact that the government has an eighty page procedure for the simplest thing. If any significant amount of money is spent there has to be public hearings, open-bid contracts -- and whoops! Your stimulus just arrived four years too late, and half of it was wasted on printa agendas for the community board meetings.
But this is even more stupid because tax cuts are temporary. It's spending that's forever.
What's going to happen when the Democrats control at two out of three of the Senate, House, and Oval Office? Those tax cuts are going away. Don't believe me? Tax rates have fluctuated by as much as 50% between presidents in the last half-century, maybe more. Just one example: Reagan cut 'em, Bush/Clinton raised them, Bush II cut them again. Projecting deficits from these tax cuts forever and ever is stupid, because we're only one election away from seeing them reversed.
But spending. . . aaahh, would that we all lived as long as government spending.
Remember how we were getting rid of the farm programs, begun in 1914? That was six years ago. They're all still here. I can't think of a single subsidy that actually got eliminated, not even honey or mohair. You with the mohair sweater: you owe each of us seventeen dollars.
How about rural electrification? I've been to the country, and it's electrified. Yet the program is still with us, still sucking in great gallons of federal money.
I mean, name your own program. Anything that the federal government has ever done, it's still doing, and then some. Any new spending we do now will, I guarantee, be with us for years to come.
Why? For one thing, the costs and benefits of tax cuts are both widely distributed. It's thus easy to get a constituency against them as well as for them. The benefits of spending, on the other hand, are almost always more concentrated. Because they are concentrated, they create pockets of people who will vote on, say, the continuation of the rural electrification administration. The costs, on the other hand, are still diffuse. Not even the most ardent libertarian is going to vote solely on the issue of eliminating one program.
For another, spending creates people who are dependant on that spending. Their pathetic voices describing what will happen to them if you end it make much better propaganda than the poor schmuck paying taxes to provide jobs teaching Old Church Slavonic in Elk Snout, Wyoming. After all, the taxpayer already has a job. He doesn't need our help.
Democrats: just say it. "I want taxes to be higher because I think that people who are better off should pay more of their income to support other people than they currently do." Of course, that's an election loser. But so's "tax cuts are evil, but government spending makes us all better off." I mean, don't y'all remember what happened to Dukakis?
Posted by Jane Galt at April 23, 2003 8:31 AM | TrackBack | Technorati inbound links“Any new spending we do now will, I guarantee, be with us for years to come.”
That’s absolutely correct. The new program will have defenders regardless of actual future need or results. Those presently receiving benefits never want to see the good times stop rolling. They will be screaming at our elected officials not to dare shut them down.
But what about the wishes of the vast majority? The direct cost of a particular program may only be .0000000001% of one’s total annual income. Not so for the beneficiaries who often receive substantial financial returns.
Jane, a summary of your comment is that private investment/spending is more economically efficient than public expenditures. In that federal expenditures (in the aggregage) never decline. This simply reflects that there is no such thing as a temporary federal expenditure (programs never operate in a vacuum and the beneficiaries of the programs will fight for their continuation). While one could say the same thing about tax programs, historically tax policy has been more flexible.
Jane, excellent article on one of my favorite subjects.
In 1995, the House Republicans tried to consolidate 147 job training programs into 3 and keep the funding the same. This change would give the students a lot more money and the bureaucrats a lot less. I could not believe the firestorm of protest.
First the government unions went crazy. Then it turned out that each program was a gravy train for some organization that lobbied Congress with big bucks. Plus each program seemed to be the pet project of a Congressman or Senator. After all this, the Republicans gave up on their job training reform. So even today only a small portion of job training expenditures reach the students.
After that, I decided there is no force on earth that can end a government program once it is voted in.
Jane,
You should have pointed out that federal spending has increased during Bush II's regime. Spending on rural electrification, although (especially to a city dweller) wasteful, is a drop in the federal bucket. Farm subsidies, although inefficient (in addition to oil & gas subsidies and other forms of corporate welfare), is an institutional problem (most red states are recipients). You are omitting one category of spending that is permanent--interest on the public debt--$160 billion in 2002. Tax cuts that run deficits increase our interest payments--the one truly inflexible form of spending.
So you are posing a false dichotomy between tax cuts and spending. Tax cuts do have permanent spending effects. And nobody benefits from interest payments.
There are so many statements of fact in your post that I can’t corroborate that it makes it difficult to know how to respond.
You claim that tax cuts have a 5%-15% positive impact on behavior. Is that so? Most studies I have seen show negligible impact across the economy and only significant impact on certain subgroups (women married to high income earners). Since the immense majority of people cannot really set how much they work (“Hey boss the marginal rate went up so I’m going to start working 35 hour weeks from now on” is difficult in the real life) it’s not clear where that figure came from.
You also claim that government spending is insanely inefficient. Again, where did you get that? What government spending is so insanely inefficient, whatever that means? Hopefully this isn’t anecdote based.
But the biggest problem with your post seems to be that it’s a red herring. Who in the Democratic Party has said that Well, spending is okay, because it's temporary stimulus. Tax cuts are bad because they cause permanent fiscal havoc. I must have missed that.
What many have said is that the economy could use a temporary increase in the budget deficit. Most Democrats agree with a mix of tax cuts and spending increases. Do you forget that the 2001 tax rebate was NOT proposed by the Bush administration but rather by the Senate Democrats?
What Democrats oppose is permanent tax cuts (with the understanding that that is a bit of an oxymoron) which will negatively impact our fiscal future when, in their view, what is needed is temporary stimulus.
Neither side in the budget debate is free of sin. But at least the Democrats are more honest. They realize that Americans want a certain level of spending and are not willing to go much below that (witness the inability of the House to pass the recently proposed spending cuts). So they say, hey we have to pay for it. Republicans on the other hand want major tax cuts but are unwilling to balance the budget by passing the necessary spending cuts. In fact, under the Bush administration spending has actually gone up.
I prefer tax and spend to borrow and spend. You?
BTW, in a previous thread you said that you couldn’t take the Dems seriously because they claimed that the Bush administration said things you thought they didn’t (that tax cuts paid for themselves). After that was shown to be incorrect in the first comment I don’t recall if you ever went back to your original point and said “Well, now that I realize that the Bushies DID say what the Dems claim they did I will take the Dems more seriously”?
Do you?
Jane,
Hows about I tweak your clarion call for Democrats: "I want taxes to be higher because I think that people who are better off should pay more of their income to support the steel industry and American agricultural products."
Now we have something that should be even more satisfying to you fiscally responsible Republicans who just hate all that Democratic wastage going on.
Cheers,
That dog won't hunt, Rofe; the Dems supported both measures. Cheers.
Some of these passages could be a little clearer; the passage
"First of all, as long as the tax cut is on marginal rates, it has a slight positive affect on behavior, on the order of 5-15%."
would benefit from some clarification that the current tax-cut package is *not* concentrated on marginal rates, because it is related to the dividend taxation package. This is generally, and correctly, regarded as structurally a Good Thing, but since the collection of dividends is not an activity, it is slightly misleading to assume that the stimulative effect will be the same as a cut in the marginal rate of income tax.
and the passage:
" Second of all, unless the tax cuts are the insanely complicated, productivity killing and economy distorting "targeted tax cuts" of the Clinton/Gore juggernaut, tax cuts are very inexpensive to administer. You reprint some tables at the IRS, and presto! You're done."
would benefit from some consideration of how "insanely complicated" dividend taxation regimes are in those countries (like the UK pre-1998) which introduced tax-deductibility of dividends.
So much wisdom in one post... a gem.
As a tax practitioner, I can only applaud your attention to the horrors (ok, maybe just futility) of "targeted" tax cuts. The economic stimulus they provide is primarily to tax practitioners, who try to find ways to claim "targeted" tax benefits for things the taxpayer is already doing anyway. The other big fans are organized tax benefit lobbies -- see Jane's discussion of spending lobbies for details.
You're right, D2 -- dividend tax cuts are different. Not as different as I think you're making out -- I think we should see a boost from companies that are no longer tempted to hold onto large piles of earnings. But different in that they don't increase the labor input on the margin, and I don't see how they increase the capital input, so all the effect will be on removing capital gains distortions.
But most of the people arguing about the current tax package under consideration are lumping it in with the previous round of tax cuts, which was largely focused on marginal rates. Since that tax cut was much larger, I think overall the focus is on whether it's better to spend money or give it back in tax cuts.
I did not address the deficit argument because it's outside of the scope of this. Democrats are currently trying to position themselves for the 2004 election, in which they are almost certainly going to propose a lot of new spending. They can't argue that deficits are bad, because then they'll have to promise tax increases for every new spending proposal, on top of the tax increases they're implicitly promising when they argue that Bush's tax cut should be repealed. They are thus hunting for an argument that will allow them to promise new spending without taxing the bejeesus out of everyone, and this "tax cuts bad spending good" meme seems to be making the rounds on audition.
Excuse me, Jane, but that dog may hunt after all. He may be three-legged, he may be blind in one eye, he may be long of tooth. But he smells something, and he knows it smells bad.
Let's see. Democrats supported both measures. By your yardstick, that's exactly what we'd expect, isn't it ? Doesn't seem to be much yardage to be gained by pointing it out.
On the other hand, we'd expect your oh-so-fiscally responsible Republicans to shoot down both measures. Dead, dead, non-starter dead.
But wait, didn't the Republicans propose both these measures ? Didn't the Republicans run them through Congress ? Didn't the administration, with admirable contortionism, crow about the wondrous effects of both ?
Applying the logic of your post, what would be more surprising here, the Democrats' position or the Republicans' ?
There's plenty of embarrassment to hand out when it comes to spend, spend, spend. Once upon a time, the Republicans seemed to have quite a hold on the claim to fiscal responsibility. But I can't help but think that they've really diluted that claim recently.
Cheers,
Whoops. I can see that my comments have interrupted the thread here. I'm out of my depth when it comes to tax details; I'll just shut up, read and learn.
Sorry,
Let me get this straight: The Bush plan of tax cuts plus massive spending increase is better than a massive spending increase without the tax cuts?
It's not a choice between Republican tax cuts and Democrat spending. It's a choice between Republican tax cuts plus spending, and Democrat just-plain-spending. We don't have a realistic Party of Smaller Government, Jane, and there's no point in fantasizing that the Republicans are or want to be it. We're going to get massive agriculture subsidies, a fuck-all huge military, and pork, pork, pork under either party; the difference is that the Repubs don't want to pay the bills. That's not stimulus, that's drinking yourself into a coma.
Maybe I'm just too young to see the virtues of handing off huge steaming piles of debt to future generations, but I find myself blind to virtues of the Republican plan. It's not that I like to pay lots of taxes, but I'm sane and respnsible enough to know that spending ain't going down no matter who wins what, and that public debt, like suicide, is a permanent solution to a temporary problem.
--G
Guys -- this is not about arguing whether the Democrats or Republicans are better about X, Y, Z. It's a tiresome argument, and no one's mind is going to be changed. I'd like to focus on the particular stupid argument here, rather than going off into "Yeah? Well your Daddy's a big fat doody-head!" I've been more than willing in the past to criticize conservative tropes on taxes that I thought were incorrect, such as the idea that supply side tax cuts make back all the revenue through the magic of marginal thinking. I've said repeatedly that I didn't think that Bush's tax cuts would have the effects they've claimed, I've criticized their spending (although I'm still agnostic on the steel tariffs until I see how it greases the wheels at Doha). There's no point in getting into an argument about who makes silly economic claims, because that's what politicians do for a living.
"We're going (to get)...a fuck-all huge military"
I sure hope so! This is perhaps the most important duty the government performs for its citizens. More importantly, only the state can adequately carry out this responsibility. Do we have to worry about waste? Yup, we most certainly do. I totally agree with President Eisenhower's warning concerning the military/industrial complex. Am I therefore contradicting myself? Not in the least. Democracies are messy institutions and we are often forced to make lemonade with the lemons presented to us.
Needed to make up for that airline post, eh ;) Couple of questions/clarifications?
1. "...unless the tax cuts are the insanely complicated, productivity killing and economy distorting "targeted tax cuts" of the Clinton/Gore juggernaut"
Could you give us some data about productivity in the Clinton/Gore years so we can truly understand how much productivity was killed?
2. "First of all, as long as the tax cut is on marginal rates, it has a slight positive affect on behavior, on the order of 5-15%"
What does it mean to positively affect behavior by 5-15%?
a) 5-15% of what (hours worked, productivity?)?
b) Is this 5-15% number for this particular tax cut or tax cuts in general? Do you know what study I can find this number in?
3. How does the fact that we are still paying interest on deficits we ran in the 80s square with your theory that somehow deficits caused by tax cuts are much easier to reverse than deficits caused by spending increases
BTW, I agree about the greater political economy problems of spending. To ascribe this as a Democratic vice, given the farm bill and steel tariff put in by this administration is to ignore alot of recent history.
Good analysis!
On a slightly related note, I always assert that an administration's fiscal policies have limited impact on the economy in the short term. So, for instance, I tend to credit Reagan with the boom of the nineties, along with a delayed productivity factor from computer technology finally kicking in. I tend to credit Clinton with the downturn, apart from whatever the artificialness of the dotcom boom and accounting fraud had to do with it.
Does this make sense?
I didn't say the debt was easier to reverse. I was saying that the trope that tax cuts are permanent but we can always kill new spending is not only untrue, but actually the opposite of the truth. Which is empirically borne out.
I wasn't saying that Clinton killed productivity. I was saying that his tax cuts are among the worst kind to enact. Any honest economist, Democrat or Republican, would agree. "Targeted tax cuts" are actually worse than just spending money on people, because they're not only distortionary, they don't go on the books as spending, so they're very hard to reverse. That's why politicians are fond of them. If you are going to have income tax cuts, you should have tax cuts in the marginal rates, or increases in the EITC. I don't think any economist would disagree. They might disagree about having the tax cuts, but that's a different argument.
There is a slight "rebound" effect, on the order of 5% of the value of the tax cut (larger in some brackets & demographics) that makes tax cuts not cost as much in revenue as a straight-line model would offer. I used a very broad range because the effect is hard to pin down, but the economists I've talked to are pretty sure it's there, and that it's on the order of 5-15%. But I don't have a study for it, and you're welcome to offer your own to refute it, GT. If you have one. Which I doubt. I've never met an economist who would deny that there was some rebound effect, except at very low levels of marginal taxation.
As for your questioning whether government spends money less efficiently: I'm flabbergasted. Not even the public servants I know argue that government is more efficient or cost-effective than the private sector. They will argue that it is necessary, but it's well known and abundantly studied that productivity in the public sector is stagnant, while productivity in the private sector is growing, just for starters. Then there's the markup on government services, which seems to be on the order of 10-30% depending on where and what service. The point is so silly I don't even know where to start. If you prefer to think that government provides services cost effectively, you're welcome to, but I can't be bothered to argue the matter.
I don't think it's fair to blame Clinton for the bust. Mostly, presidents don't have that much impact on the economy, for which we may humbly thank God every day.
To the extent that he reversed the horrible trends of the seventies, got inflation under control (well. . . Volcker did that), deregulated a lot of industries, and simplified the tax code, I think it's fair to credit him with some of the boom. But a lot of it was American companies getting off their butts and innovating. You could also credit him for not bailing out every idiot company. But don't give the government too much credit for the economy any way you cut it. The best thing the government can do is allow decentralized decision making to work its magic.
I was saying that the trope that tax cuts are permanent but we can always kill new spending is not only untrue, but actually the opposite of the truth.
Still seems like a red herring.
Do you have ANY quote from a Democrat saying this?
Any at all?
I'm interested in how this fuck-all huge military is going to manifest itself. Given the current size of our military, fuck-all huge is probably going to require a draft.
On the other hand, my 401k is probably going to enjoy it rather a lot. But I'm not all that confident Grant's prognostications will come to pass; defense stocks generally rise in anticipation of additional funding, and most haven't. LMT and Boeing are nearly mirrors of each other, and Raytheon has been fairly flat for the last eight months or so. After declining 25%. No defense stock is anywhere near a historical high, so I think the fuck-all huge military notion is not going to include much in the way of new toys.
A few points: If my memory and Brad DeLong's search engine are both working, you can search his site for the words "Laffer effect" and find a reference to the 5-15% estimates. There is an effect and it is measurable, is the current state of the art on what is by its nature a very difficult econometric problem.
However, one further piece of pedantry:
>>But most of the people arguing about the current tax package under consideration are lumping it in with the previous round of tax cuts, which was largely focused on marginal rates.
I seem to remember that the bulk of the fiscal impact of the previous tax package was related to the ten year repeal of the estate tax. I agree that there would presumably be some positive effects from this (it would reduce long term medical costs by giving heirs an incentive to bump off their parents in 2010), but doubt that they would be of the same order of magnitude as marginal rates of income tax.
Which brings me to a general criticism of the various Bush budgets; their "laser-like" ([c] Paul Krugman) targeting on the very rich. Surely something more like Max Sawicky's proposals (including both spending increases and tax reductions, because Max isn't a deficit-phobe) would be more worthy of support on grounds of cyclical policy.
By the way, one needs to take care when talking about the "productivity" of government spending when the context is fiscal policy. Long term productivity of government spending is extremely hard to measure because the government typically provides services which are difficult to account for (if they were easy to account for, someone in the private sector would be charging for them, like they did with lighthouses). But in any case, it's a long-term, supply-side factor and is thus irrelevant when the problem one faces is a cyclical recession. Keynes wasn't joking when he discussed the desirability of paying people to dig holes and fill them in again in certain circumstances (just as Friedman's "helicopter drop" was not a joke either).
Ah, the "very rich" again. Tell me, d^2, how exactly did the Bush tax cuts target the "very rich"? It might be useful if you'd in addition describe what you mean by "very rich".
As for govt efficiency I always suspect when someone says that something is unequivocally true but then can't be bothered to actually provide any supporting evidence. If you don't even know where to start to defend your argument then maybe shouldn't be so categorical to begin with?
Also, YOU post that there is a 5%-15% impact but when I ask you to document it in any way you say that economists you talk to told you that and I should bring a counterexample.
I also suspect when someone responds to a post by addressing something the original post did not say. I did not say that public spending was more efficient than private spending. I merely asked where you got that public spending was "insanely inefficient". How did you measure that? What spending did you have in mind? Education? Justice? Security? Health?
Jane thanks for the clarifications.
For the record, I was only questioning your claim about the "productivity killing" aspect of targeted tax cuts not that such tax cuts should be less preferred to marginal rate cuts (which is a statement I agree with). I had not seen mainstream economists (honest or not)argue that the Clinton tax policies had killed productivity.
Also, if I underatand you correctly you are saying the 5-15% increase is not in labor supply responses but in terms of additional revenue. In other words, you are saying that dynamic scoring would generate 5-10% more gains than a static model would. That makes much more sense than what I thought you were saying and I agree that number is plausible, certainly far more than the 100% number that the supply siders like to bandy around. It was not clear from the original post what was increasing by 5-15% which was the source of the confusion.
As you know, I don't believe in stimulus, so that debate goes right by me. And D2, I'm pretty sure you're incorrect about the bulk of the cuts -- I'm pretty sure they're marginal, but I don't have time to look it up. But I'm also pretty sure that the estate tax does have rather large marginal effects on tax revenue, such as permanently diverting assets to tax free trusts, that would actually be larger than ordinary marginal rebounds. I would expect to see substantial economic and revenue growth from a repeal combined with removing the basis step-up on the assets. But that's just my opinion.
Not wanting to come across as a pedant here, but if the stimulus debate "passes you by", then it might be a good idea to wait until after the 50th word to use "stimulus". Speed-readers like me tend to put a lot of reliance that the first paragraph is going to introduce all the major themes.
But I need the Strategic Helium Reserve.
How could I sleep safe at night without knowing that our dirigible fleet has an adequate supply of precious, precious helium?
Hehe...good one, Jeff. You never know when you're going to run out of Helium. And I don't believe in alpha decay.
hi all,
"Democrats: just say it. "I want taxes to be higher because I think that people who are better off should pay more of their income to support other people than they currently do."
i was always fascinated by the bush claim, of which i see an echo here, for why most of a given tax cut should go to the rich. "its because they pay most of the taxes." i won't argue with that, but i have not seen the corrollary to that claim: "that makes sense, because they also get most of the benefits." either personally through deductions, or through subsidies or tax breaks at the corporate level. since rich folks own the lion's share of the stock of this country, they get the lion's share of favourable stock price affects of such policies.
and do we really expect it to be any different? after all, its rich folks who mainly sit in the halls of congress, the supreme court, and the administration. on both sides of the political fence. sorry to sound like a marxist. but any conversation concerning tax cuts should be undertaken with that in mind. so, cut taxes, but cut the benefits that are also handed out through the tax system.
jane: "I mean, name your own program. Anything that the federal government has ever done, it's still doing, and then some. Any new spending we do now will, I guarantee, be with us for years to come."
as i remember it, military spending fell somewhat after the cold war ended. it is still here, true, but it did show sensitivity to historical events. have i misrepresented that or is that a counter-example to your claim?
cas,howdy, interesting point on military spending and i believe that during that same period the number of federal employees (all due to military cuts) fell as well. but did agregate federal spending fall during that same period? i believe the answer is not, but i could be wrong.
Military spending does fall at the end of wars, especially when Democrats control all three lawmaking offices. Wars have a pretty clear beginning and end, unlike, say, poverty. Almost no one in this country is consuming at the 1960 poverty level, yet we're still awash in poverty programs.
And Cas, you're just incorrect. As a percentage of income, the rich pay out way more than they get back. Way more. Way, way more. It could hardly work out any other way, unless you think you're financing our government on the taxes off $5.15 an hour. I mean, that statement is just silly. Enacting a tax cut off a high marginal rate certainly benefits the rich, but it only benefits them to the extent that they're already giving you money. Or, as the guy says: you can only get tax cuts if you're paying taxes.
Well said, Jane.
I'm still waiting for a definition of "very rich", and wondering how it's different from the pejorative "ultra-rich" I've heard so much about. I'm not holding my breath, because I'm pretty sure the utterers of such generalities have no idea, themselves. Or will just define the "very rich" as something like "them that got the tax cuts".
Any luck finding a Democrat that said Well, spending is okay, because it's temporary stimulus. Tax cuts are bad because they cause permanent fiscal havoc , the basis for your post?
I could care less that a wealthy person gets a larger tax break. The odds are still much higher that this money will be spent more wisely than in the hands of a government bureaucrat. We should restrict the public sector to only those duties, ie, the military and our court systems, that are their true functions.
I find it appalling that those who have been formally educated in economic theory are not unhesitatingly contemptuous of government incompetence. The overwhelming evidence proves that private enterprise will do a vastly superior job in most instances.
hi jane,
"And Cas, you're just incorrect. As a percentage of income, the rich pay out way more than they get back. Way more. Way, way more. It could hardly work out any other way, unless you think you're financing our government on the taxes off $5.15 an hour. I mean, that statement is just silly. Enacting a tax cut off a high marginal rate certainly benefits the rich, but it only benefits them to the extent that they're already giving you money. Or, as the guy says: you can only get tax cuts if you're paying taxes."
first, i looked back over my post. as far as i can tell i did not say that rich folks get all their money back that they put in as taxes. i said they get most of the benefits of gov't spending/taxing decisions. that is not the same thing (i apologize for not being clearer about this). i will give you some concrete numbers of what i am talking about. one estimate (from "economics as if people mattered") suggests that tax breaks/gov't spending/subsidies in direct or indirect forms amounts to $200 billion a year to the wealthy and middle classes (welfare payments of various types amount to $20-30 billion per year, i understand). one example of that money: tax write-off of mortgage payments on any number of houses you own. it would seem to me that you could argue for one house (hey i benefit from that), but that dream of the condo on the beach is just out of reach i am afraid. maybe next year.) but more than one? let us ask a question: why is there no tax break for folks who rent accomadation (assuming rent and mortgages bear at least some passing resemblance to each other as measures of rates of return on goods)? this is strictly social engineering, but it definitely benefits the wealthy and those of us with aspirations to being in the middle class!
so, jane, given that i may not have been saying what you thought i was saying i would still very much enjoy looking at some concrete evidence to support the claim you made re "As a percentage of income, the rich pay out way more than they get back. Way more. Way, way more." i don't mind having my statements called silly, but i like to be educated about my possible prejudices at the same time with evidence. i learn that way. otherwise its hard to know what to make of your claim.
hi twd,
"but did agregate federal spending fall during that same period? i believe the answer is not, but i could be wrong."
i don't know the answer to that off hand. i will do some research. if anyone knows, that would be great.
as for the very rich, david: i am not sure what that means, but a good rule of thumb usually starts looking at rich at about the top 10-20% of income earners. that top quintile earns somewhere between 46.5-55.6% of all aggregate income depending on the way one defines income:
http://www.census.gov/prod/2002pubs/p60-218.pdf
if i remember correctly, people in the top decile earn roughly $130,000 or more a year as income.
hope that helps
GT, I've always got the answers for you, and now is no exception.
Back on Oct. 24, 2001, guess who wrote:
" The remarkable thing about the "stimulus" package that passed the Ways and Means Committee on a straight party-line vote is that it barely even pretends to serve its ostensible function. It consists largely of permanent tax cuts, not the temporary cuts that you would expect in a stimulus package."
From the January 7, 03 NY Times:
" Right now a sensible plan would rush help to the long-term unemployed, whose benefits — in an act of incredible callousness — were allowed to lapse last month. It would provide immediate, large-scale aid to beleaguered state governments, which have been burdened with expensive homeland security mandates even as their revenues have plunged. Given our long-run budget problems, any tax relief would be temporary, and go largely to low- and middle-income families.
" Yesterday House Democrats released a plan right out of the textbook: aid to states and the jobless, rebates to everyone. But the centerpiece of the administration's proposal is, of all things, the permanent elimination of taxes on dividends.
" So instead of a temporary measure, we get a permanent tax cut."
Also, from the same place, on March 11th:
" the Treasury under secretary Peter Fisher; his point is that because of the future liabilities of Social Security and Medicare, the true budget picture is much worse than the conventional deficit numbers suggest.
" Of course, Mr. Fisher isn't allowed to draw the obvious implication: that his boss's push for big permanent tax cuts is completely crazy."
Then the same guy just said last Sunday on ABC's This Week:
" We have the Bush Administration is projecting budget deficits every year for the next 50 years and that those are overoptimistic projections. We really, you know, we're no longer in a situation where there's any plausible route towards fiscal sanity given the existing taxes. And here we are proposing more permanent tax cuts."
howdy, cas, your statement
one example of that money: tax write-off of mortgage payments on any number of houses you own. it would seem to me that you could argue for one house (hey i benefit from that), but that dream of the condo on the beach is just out of reach i am afraid. maybe next year.) but more than one
is incorrect for two reasons, maybe three.
1. the mortgage deduction is limited to two abodes;
2. itemized deductions are prorated depending on your income and eventually fall away.
3. itemixed dedcutions are subject to the AMT (alternative minimum tax), they do make an exception for mortgage deduction. so it really doesn't count, but i had to throw it in.
cas: I would be wary of defining the "rich" or "very rich" as the top quintile or top decile or whatever. In any conceivable income distribution short of an absolutely flat one, there will be a top quintile and a top decile. Are they to be "rich" by definition? (I have the same problem with people who define "poverty" as being in the lowest quintile or whatever — a definition that insures that literally nothing will eliminate "poverty," ever.)
While GT is scratching his head trying to figure out who could have said such things in my prior post, here's Robert Kuttner in Business Week:
http://www.businessweek.com/magazine/content/02_25/b3788039.htm
" I'm not one of those who equates temporary deficits with fiscal sin. In a recession, we need deliberate deficits as countercyclical stimulus, whether through public spending or tax cuts. But this year's deterioration is not such a deficit. It's a structural hole in the revenue stream that will become enormous if the tax cuts are permanent.
" Congressional Budget Office projections suggest that a permanent tax cut would create permanent deficits...."
Then there's Brad DeLong:
" Boosting an economy isn't hard. You have the government buy more things, and you get extra money into the hands of those who need it and will spend it. A sensible plan would rush help to the long-term unemployed, whose benefits--in an act of remarkable stupidity--lapsed last month.
[...]
" But instead of a temporary and effective stimulus, we get a permanent and ineffective stimulus--a tax cut. Less than 1/6 of the total will arrive in the first year. The Democratic plan--costing only 1/4 as much--is more effective at boosting spending, demand, and employment in the near future when it may well be needed. provides more short-run stimulus."
Hmmm...the top quintile has a lower limit of 83,500 in 2001 dollars. It's just barely possible that I'm "very rich" or even "ultra-rich". I'd have to check out the inflation-adjusted quintile data in current dollars, though. And just 30k more would put me in the top decile! I'm much closer to the upper crust than I thought.
I never knew I had it so good. Maybe it's time to trash the twelve-year-old Sentra and buy a Lexus.
hi twd,
"1. the mortgage deduction is limited to two abodes;
thanks for that info. that is good to know. it will still be the case that more expensive houses will get bigger tax breaks, or is there a limit on the size of the deduction you can take?
"2. itemized deductions are prorated depending on your income and eventually fall away."
ok, that appears to put a limit on things. idle thought: is there an absolute limit on what you can deduct under schedule a, or under partnership losses, etc under the 1040?
"3. itemixed dedcutions are subject to the AMT (alternative minimum tax), they do make an exception for mortgage deduction. so it really doesn't count, but i had to throw it in."
i wasn't only thinking of mortgage payments, but it is good to know. remind me though, on the point of the amt, isn't it slated for abolishment as part of the tax cuts? that still leaves the indirect benefits of tax breaks and subsidies for companies of various kinds.
hi michelle,
"I would be wary of defining the "rich" or "very rich" as the top quintile or top decile or whatever. In any conceivable income distribution short of an absolutely flat one, there will be a top quintile and a top decile."
ok, i grant that, especially if we look at income distributions in the usa compared with bangladesh. but it is one measure of knowing, for a particular society, who is well off and who is not. question: what would you use then?
and in any case, the breakdown of the bush tax cuts enacted and aiming to be enacted tend to favour people in the top decile, and the top 1%. so, would it be fair to use that as a guide-stick?
add another wrinkle: is income the issue or wealth in deciding who is rich or super rich? the top 10% of folks own >70% of this country's wealth. the top 1% own 38%. would that serve as a way to define super-rich? (now though we enter the realm of estate taxes a.k.a. death taxes)
"Any luck finding a Democrat that said Well, spending is okay, because it's temporary stimulus. Tax cuts are bad because they cause permanent fiscal havoc , the basis for your post?
" Posted by GT at April 23, 2003 03:17 PM "
How about the 400 who signed that letter in the NY Times a few months ago:
http://www.epinet.org/stmt/2003/statement_signed.pdf
------------quote------------
...there are now more than two million fewer private sector jobs than at the start of the current recession. Overcapacity,
corporate scandals, and uncertainty have and will continue to weigh down the economy.
The tax cut plan proposed by President Bush is not the answer to these problems. ....
Passing these tax cuts will worsen the long-term budget outlook, adding to the nation’s projected chronic deficits. This fiscal deterioration will reduce the capacity of the government to finance Social Security and Medicare benefits as well as
investments in schools, health, infrastructure, and basic research. Moreover, the proposed tax cuts will generate further inequalities in after-tax income.
To be effective, a stimulus plan should rely on immediate but temporary spending and tax measures to expand demand, and it should also rely on immediate but temporary incentives for investment. Such a stimulus plan would spur growth
and jobs in the short term without exacerbating the long-term budget outlook.
--------endquote----------
Military spending has come down at the end of wars, including the Cold War, but military programs live forever, even when the generals and admirals don't want them.
About the only military spending program (besided individual weapons systems) that has seen real cuts has been military bases. The Bay Area has seen many bases closed in the past decade: The Presidio of San Francisco, Alameda NAS, Oakland Army Base, Fort Ord, and a number of smaller ones.
cas said:
i was always fascinated by the bush claim, of which i see an echo here, for why most of a given tax cut should go to the rich. "its because they pay most of the taxes." i won't argue with that, but i have not seen the corrollary to that claim: "that makes sense, because they also get most of the benefits." either personally through deductions, or through subsidies or tax breaks at the corporate level. since rich folks own the lion's share of the stock of this country, they get the lion's share of favourable stock price affects of such policies.
then cas said:
first, i looked back over my post. as far as i can tell i did not say that rich folks get all their money back that they put in as taxes. i said they get most of the benefits of gov't spending/taxing decisions. that is not the same thing (i apologize for not being clearer about this).
This seems to have been in response to Jane saying:
Democrats: just say it. "I want taxes to be higher because I think that people who are better off should pay more of their income to support other people than they currently do." Of course, that's an election loser. But so's "tax cuts are evil, but government spending makes us all better off." I mean, don't y'all remember what happened to Dukakis?
End Jane quote.
So cas, if the rich put in more in taxes than they receive in goods from government spending, and if the poor put in less in taxes than they receive in goods from government spending (and you seem to agree that this is the case) then isn't it honest to say, as Jane does, that a higher rate of taxation on the rich amounts to saying that:
"I want taxes to be higher because I think that people who are better off should pay more of their income to support other people than they currently do." ?
And welfare is not the only (or indeed the main) means by which wealth is redistributed through taxation. Building infrastructure that benefits everyone, but is paid for mostly by the well-off is also redistributive, if the well-off almost entirely pay for it, and the poor also benefit from it. This is true even if the well-off benefit more from it than the poor do.
If you believe that the redistribution of wealth through taxation is a good idea (and I bet that even Jane does, at least to some extent- to what extent being the crucial question), say so, and specify to what degree you think it is. And what level of inefficiency you are willing to tolerate in that calculation. I don't mean to speak for Jane (and I don't of course), but it seems to me that that is all she is saying in the quote above, and I agree with her.
There is at least one fat young man without a good word for anyone who has commented on this thread already who might disagree with me, and who is certainly more qualified than I am to speak on this issue, and I'd be curious as to what he has to about it.
You also oversimplified recent income-tax change history. Reagan cut taxes, but also (in '86) raised some of them back again. A lot of that cut was offset by the "save social security" tax raise that followed.
"But at least the Democrats are more honest. They realize that Americans want a certain level of spending and are not willing to go much below that..."
I doubt it's the American people who are that attached to most non-defense government spending (except for education & social security, unfortunately). It's the politicians who would hate to see their influence diminish with the budget. So you see a lot of posturing about budget cutting, but never any real budget cutting.
Try a little thought-experiment. Force a Congressmen to use their free mailing privileges to send out complete and accurate weekly reports back to their constituents in, say, Tennessee, "How I spent your money last week." Include every hidden spending clause in every bill they voted for, who gets the money, what percentage goes to the actual purpose of the program and what gets burned in overhead, and how much it costs the average taxpayer. Put weekly and cumulative totals at the bottom.
Do you think that Congressman would get re-elected? Never mind that the really outrageous programs were all done in exchange for other programs that of interest to his constituents, like tobacco subsidies? But what happens in the real world is the Congressman takes public potshots at a few easy-to-criticize programs (Mapplethorpe "art" exhibitions come to mind), but doesn't actually work with other congressmen to end them, brags a lot about bringing home the tobacco subsidies, and keeps quiet about the rest. His constituents never figure out that he traded away more of their money than they got back.
hi tagore,
""I want taxes to be higher because I think that people who are better off should pay more of their income to support other people than they currently do." ?"
yes, i don't think the first tax cut was warranted in its size, so i would roll some of it back (for all kinds of reasons). i think this one that they are now proposing is not economically rational.
yes, i think that redistribution of wealth is a good idea. how much is open to debate. at the moment, i think we are about to keep on doing it in the wrong direction (see below)! you make a good point about infrastructure, etc. even so, i don't think that negates what i am saying, but i will let you be the judge of the following two observations:
observation one
the top one % of folks in this country amounts to roughly 2.7 million people. the bottom 20% amounts to 55 million people. how much, on a per capita basis do you think these bottom quintile people benefit from gov't services/tax breaks/subsidies? would you argue that on a per capita basis they get more than folks do in the top 1% of incomes/wealth (we can have a nice argument about tax cost-benefit differentials if we can find empirical data on this issue--anyone?). sure, folks in the bottom quintile do not pay much in taxes (they are, as the wsj editorialized, the "lucky duckies."). these lucky duckies also saw their real after tax income drop $100 from 1979-1997. on the other hand, sure the top 1% paid a relatively and absolutely bigger amount in taxes(the "poor unfortunates") but they also saw their after tax income grow by $414,200 in the same period.
http://www.cbpp.org/4-10-03tax.htm
[could someone please help me with the technical details of how to make these references i am using html links, so you can visit them with a minimum of fuss, if you are so inclined?]
why bring this up? second observation: how did the "poor unfortunates do it? don't you think that it is a bit strange, given that gdp rose significantly in this period, that the overtaxed top 1% raised their share of the wealth of this country from 19% to 38% (1976-1998), whilst the undertaxed over-subsidized bottom 20% saw their share drop relatively and absolutely in the same period?. one would have thought that given the tax burden these "poor unfortunates" had that they would have really redistributed wealth to the "lucky duckies." (bottom 90% saw their relative share of wealth in this country drop from 51% to 29% in the same period)that does not appear to have happened. so, your thoughts are requested on this, because i do not understand this phenomena given much of the rhetoric of the administration and of some folks here (concerning fairness to the rich), and your insights would be appreciated.
my apologies for the long post.
Pat,
Not a single one of your posts addresses what Jane said. Did you even understand what she said?
Jane said that the Democratic Party line is that spending is temporary and tax cuts are permanent. So quoting Krugman who talks approvingly of the Democrats plan to provide aid to states and the jobless, rebates to everyone in fact directly contradicts what Jane said.
But nice try.
Oh, and not one of the people you quoted represents the Democratic Party, which is what Jane was referring to. No, Brad de Long is not an elected Democrat or an official or representative of the Democratic Party. Neither is Krugman or Kuttner or any of the other economists.
howdy cas,
of that 20%, what percentage represent new immigrants, also is it static a population?
answers to the above is sound beginning to the overall conversation about taxes.
cas:
Well, I was responding to a very specific question that you asked. And it seems to me that you have conceded the point in question. Am I wrong?
I guess I am, because you also say:
"how much, on a per capita basis do you think these bottom quintile people benefit from gov't services/tax breaks/subsidies? would you argue that on a per capita basis they get more than folks do in the top 1% of incomes/wealth (we can have a nice argument about tax cost-benefit differentials if we can find empirical data on this issue--anyone?)."
I would say that the net benefit of the poor from taxation is larger than that of many (but not all) in the top quintile (which must, on average, be negative). I think that most people in the top quintile pay more for the goods that they receive from the government than they receive in return. I think that many in the bottom quintile (all, really) receive more. I think that a lot of people in the second through fourth quintiles get shredded in the crossfire. Have you ever payed self-employment tax on an income just shy of the top quintile? I have, just a year after being in the bottom quintile, and let me tell you- it's a shock to the system, and a real disincentive to make money.
I would also argue that many of the governmaental controls that are supposedly designed to change this, in fact perpetuate it. And I think that the fact that there are some in the top quintile that receive more from the kitty than they contribute is unfortunate- even disgusting, in some cases. But I would also guess that that is probably unavoidable given the general trust that is placed in government spending, and the complexity of current legislation.
As long as you try to understand our economy, and the law that drives it, from the perspective of rich and poor, you will miss the point. It's not really about rich and poor anymore- it's about influential, and not influential.
hi twd,
"of that 20%, what percentage represent new immigrants, also is it static a population?"
i think i understand where you are going with that line of inquiry, and it is a good question, and i do not have the complete answer off the top of my head except for the following:
immigration to usa
Entered 1990 to 2000 13,178,276
Entered before 1990 17,929,613
http://www.gcir.org/about_immigration/usmap.htm based on census 2000 figures.
on the economic power of these folks:
Nineteen percent of recent immigrants—versus nine percent of U.S. natives—work in service occupations, which include occupations such as food preparation, childcare, and janitorial services (U.S. Census Bureau, 1999).
Forty percent of all foreign-born persons work in the manufacturing and service industries compared to 30 percent of natives (Fix, et. al, 1994).
Thirteen percent of non-citizen workers are low-wage workers who live in low-income families with children compared to 4.3 percent of whites and 9.9 percent of blacks (U.S. Census Bureau, 1999).
Even though only seven percent of all workers are non-citizens, almost 20 percent of all low-wage workers who live in a low-income family with children are non-citizens (U.S. Census Bureau, 1999).
http://www.gcir.org/about_immigration/employment.htm
assuming 30-40% as an estimate of those 30 odd million are working min wage/sweatshop conditions (i am trying to extrapolate on the run here) that runs to 10-15millions of that 55 million we know are not making much.
i would also point out that poverty rates in the usa by race, 1999, for whites non-hispanic 7.7%, white 9.8%, asian & pacific islander 10.7%, hispanic 22.8%, and african american 23.6%
http://www.census.gov/hhes/www/povty99.html
unemployment rates:
1980
white 5.5%, african-american 13.0%, hispanic 8.7%, all races 6.3%
1990
white 4.6%, african-american 11.1%, hispanic 7.3% all races 5.4%
2000
white 3.47%, african-american 8.2%, hispanic 6.4% all races 4.0%
Bureau of Labour Statistics, Employment and Earnings, January 2000, and Most Requested Statistic Series- Table A-2. Employment status of the civilian population by race, sex, age, and Hispanic origin http://146.142.4.24/cgi-bin/surveymost
does this help?
thanks for the thoughts tagore,
yes, i suspect that there are many (most?) folks who have a bigger negative differential in the top 1%. but in absolute terms, i don't think that the folks (as individuals) in the lower strata are getting anywhere near the absolute level of benefits that an individual in the top 1% is getting (let us hold taxes out of it just for the moment and look at what each actually receives from the gov't in its myriad ways). whimsical moment: out of curiosity, who would you rather be given the relative tax burdens: someone in the bottom 20% or in the top 1% (sorry to hear about the breath-taking tax burden you got).
"As long as you try to understand our economy, and the law that drives it, from the perspective of rich and poor, you will miss the point. It's not really about rich and poor anymore- it's about influential, and not influential."
i am not certain what you mean by that. anyhow, a question: what makes someone influential in america today? call me a cynic, but i think its got lots to do with how much money and resources you have. the more of those, the more influence you have.
cas:
Well, I'd like to respond, but it's late, and I've had enough beer that I'm better off discussing simpler things, like sex involving housepets, peanut butter, and United States Senators- oh, and the Sapir-Whorf hypothesis:
(http://www.scalzi.com/whatever/archives/000096.html)
I'm afriad I'll misrepresent myself if I try to directly answer you, and in fact I think you raise some good points. Influence is certainly not independent of wealth in this country.
I usually don't revisit threads (at least to comment on them), but I might come back to this one, so if you're interested in a response, check back in in a day or so.
Would throwing some money to the states to deal with their deficits be a "permanent spending increase"?
"I doubt it's the American people who are that attached to most non-defense government spending (except for education & social security, unfortunately). It's the politicians who would hate to see their influence diminish with the budget. So you see a lot of posturing about budget cutting, but never any real budget cutting."
This is the "cutting the fat" fallacy. The problem is that there really isn't any. Can you find a program in the budget whose only constituency is politicians, yet is large enough to make a noticable difference on federal spending? Check out table 8.3. Unless you go after an entitlement (all of which have wide constituencies) or defense, you've got 18% of the budget to work with (the nondefense section of the discretionary budget). 8.8 has further details on the nondefense discretionary programs; I don't think the elimination of any is really politically feasble.
cas,
I don't give a rip about the relative wealth distribution, as long as everyone--the lower brackets most definitely included--are better off. And we definitely are. Even such contentious areas as health insurance can be quite misleading. Despite the admitted fact that at lower income levels people find it hard to find decent medical insurance, the fact is that the poor consume more medical resources than they did 30 years ago--much of it paid for outside the fee/insurance system by means of cost shifting.
Jason: the fact that there are sufficient groups with sufficient pull to keep their programs alive does not in any way imply that a majority, or even a large plurality of Americans, support them, or the level of spending. That's teh problem with doing more spending -- it just creates another program with a loud constituency that will fight tooth and nail to see it continued.
hi kirk,
"I don't give a rip about the relative wealth distribution, as long as everyone--the lower brackets most definitely included--are better off. And we definitely are."
what evidence do you have for this remarkable claim, apart from asserting it to be fact? i made the claim not just about relative income/wealth, but also about absolute income/wealth. true, many americans found themselves better off in absolute terms, but not all (did you read my claim above?). i think i could muster some more statistical evidence to show you that not all americans did wonderfully well, even during the last boom. but you can also find it at the bureau of labour statistics, if you want. its an interesting site. the picture is not as sanguine as many people think. if you want an intution for this, note that many folks in the bottom quintile work minimum wage jobs with no benefits. what do you think has been happening to the real value of the minimum wage over time? apart from some occasional increases to help stem the erosion of its purchasing power (vigourously resisted in congress), it has been on a fairly clear downward trend since 1968. so why would you be surprised about the results for the bottom quintile?
oh, i haven't found the statistics for this, but leading back to an excellent question from twd, i remember that the ability of folks upwardly to leave any particular quintile has been falling (even during the last boom). however, if someone has those stats, with a link, i would love to follow it up. the overall picture is that people at the bottom are not progressing through the quintiles as fast as they used to. that is worrying. if that is true, the proposed tax cut, as well as the last one, will do, directly, diddly-squat for these folks. spending targeted at them would have helped (or tax cuts aimed at these lower quintiles?)
Cas, this assertion is simply untrue. Please provide a link and we can discuss.
There's some discussion of this here, but I believe the conclusions they arrive at are somewhat colored by expectations. I, for example, think that if 25% of the people in the lowest quintile are able to move up one or more quintiles in one year, that's a high level of mobility. Anyone starting in the second quintile had an 18% chance of moving down, but again had a 25% chance of moving up. Middle quintile had roughly 20% chance of moving up and 20% chance of moving down. The 4th quintile had 17% chance of moving up to the top and 22% chance of moving down.one or more. And the top quintile? The one where supposedly everyone gets stuck? 20% moved down one or more quintiles.
Granted, this is 1990-1991 data we're talking about. Perhaps you can dig up something more recent.
I think the most important thing to consider, though, is whether the mean incomes and division line movements over the years indicate whether the respective quintiles are enjoying a real increase in income. But I'm not an economist, and the chance that I'm wrong here is not insignificant.
Cas, insofar as we can fix their problems, the standard of living of the bottom quintile is undisputably improved from any time period you'd care to name. Their consumption is steadily rising, even as their income is stagnant. They have color tv's, cable, heat and light, sufficient food, a roof over their heads. . . I mean, the list goes on. Their health outcomes are improving steadily, although not as fast as they would if the poor weren't disproportionately obese.
From what I've seen of poverty programs, we've run up against the limits of cash transfers to fix the problems of the poor. Their problems are still very real, but the main two problems they have are their own behavior, and the behavior of the poor people around them. I don't mean that moralistically. THere are plenty of middle class people with behavior problems whose families subsidize them while they get over them. Families, however, have a vastly more efficient feedback system for changing behavior than the state; any attempt to provide that level of safety net is politically, legally, and financially unworkable, as it would produce even more pathology than the welfare program did.
The big issues the really poor have are drug use and extremely poor planning. We now know that no matter how much treatment you provide, an addict won't stop until they're ready; and we haven't yet found a way to make people stop being impulsive.
The other big problem they have is that other poor people with major problems are allowed to live in the public housing they need. Because the government can't kick these people out, the projects turn into filthy war zones. But there's no way to remedy that without taking away the rights of some of the poor to housing.
I'm not a hard core "fuck 'em, I've got mine" libertarian. But the problems of poverty are very complicated and require a lot of individual judgement and discretion to best deal with, and some people still aren't going to be saved. Those kinds of problems are not ones that government is good at solving. Taking my tax dollars to piss away on a program that won't replace a failing one, but will instead expand the realm of things we waste my hard-earned dollars on, is not true compassion. If you can show me that you can take some guy mired in poverty and get him out of it, I'm all ears. But first, display some willingness to get rid of the programs that don't work.
"Would throwing some money to the states to deal with their deficits be a "permanent spending increase"?"
Of course it will. The deficits that states are suffering are related to new spending and increased spending instituted during the last boom. States are returning to pre-boom revenues, but not pre-boom spending.
Throwing money at the states simply encourages them to keep up their high spending. It also allows the Feds to keep piling mandated spending on the states with minimal protest... the logical progression of this would be a Federal Government becoming completely free of Constitutional constraints by paying the states to do its extra-constitutional dirty work. (we already see some of this in regard to laws regarding alcohol consumption, for instance)
The feds should instead drop every single mandate placed on the states, and stop sending money to state governments. A state's leaders and residents should be motivated to pick state programs by a determination of which ones they deem worth paying for, not a determination of which ones they can get the residents of the other 49 states to pay for.
"oh, i haven't found the statistics for this, but leading back to an excellent question from twd, i remember that the ability of folks upwardly to leave any particular quintile has been falling (even during the last boom). "
If the income spread of the quintiles themselves are expanding (and they are whenever that perennial bogeyman "income inequality" shows up), then movement from one quintile to another requires a larger change in income.
>>Their consumption is steadily rising, even as their income is stagnant. They have color tv's, cable, heat and light, sufficient food, a roof over their heads
They're working longer hours, something which I am old-fashioned enough to believe is relevant to the "standard of living".
They're working longer hours, something which I am old-fashioned enough to believe is relevant to the "standard of living".
Source, please? It's not immediately clear to me how working longer hours is detrimental to standard of living, particularly when longer hours is on the short side of full-time. Data is therefore required to substantiate.
The ones who are working longer hours are mostly doing so because they're working. The American sentiment does not regard the right not to work as one that the taxpayer is obligated to provide to their fellow citizens, though I know that more Europeans, and some of our left, disagree. OVerall, most of the increase in working hours is at the top rather than the bottom of the income scale.
Still no luck on those quotes?
I mean, I thought they were the basis of this whole discussion. I would be shocked, shocked I tell you, to find they don't exist.
Can't anybody find an example of the Democratic Party saying that tax cuts are bad because they are permanent while spending is good because it's temporary?
I'll wait.
GT, if you had read the original piece, you would see that I was referring to people I had talked to. In person. My friends don't publish all of their thoughts, more's the pity. I've also heard it from several correspondants, including bloggers, who may out themselves or not as they choose. And it's come up in several conversations with very connected Democratic types, who I'm not going to out here.
In general, I'm no longer responding to your demands for extraneous information, given my time constraints, but this is getting to be a waste of bandwidth.
hi david,
thanks for the link. i checked it out. the thing that i found interesting is that it concludes by saying: "there is no evidence that significant family income mobility increases have occurred or that american family income mobility is significantly higher than that in other industrialized countries." p3 it goes on, p23, to say "that the probability of staying in the same quintile increased into the early 1990s indicates that mobility was declining somewhat, not increasing, during the same period that income inequality was rising"- year on year transition rates: 73% in 1978 stayed in the bottom quintile; 75% stayed there in 1990. p23-24 as for the 25% figure we have escaping, well 25% had to fall back down there! However, what is really significant is “the fact that 46.9% of those in the bottom quintile were still there and another 25.1% stayed near the bottom over a 23 year period indicates substantial immobility.” P18Many escape, but many stay behind.
other points I drew from the study:
relative income mobility was greater for white folks than for minorities in this quintile (29.4% versus 14.4%) p17;
welfare recipients have an upward mobility of 7.5%
more education improves chances of escaping (41.8% versus 23.7%)
this is not alot david, but it appears to offer some support for my contention. I understand your caution though about the fact that this 1990-1991 data. A lot may have changed in the mean-time.
Additionally,
http://www.ceps.lu/paco/documents/pacwp26.pdf appears to support the relative immobility of income inter-nationally
while it is easier to get a job in the usa (low-paying), it is harder to get out of that bottom quintile (as a member of the working poor) than in germany for example.
“In light of major socioeconomic changes occurring in the quarter-century under study, have the determinants of mobility changed over time? Our findings indicate that mobility rates in the 1980s differed little from those in the 1970s. However individuals in families headed by a young person or a person without a college education were less likely to experience upward mobility in the 1980s than in the 1970s.” not the whole paper, just an abstract.
http://www.cicred.org/rdr/rdr_uni/revue99-100/09-99-100.html
a paper by gary fields using more recent data, up to 1994, suggests that income mobility stopped being effective as a way to equalize long term incomes around 1980. what I understand to mean is that there was less income mobility after 1980.
http://www.ceip.org/files/pdf/fields.pdf
anyway it’s a start. I hope that helps some.
David Perron wrote:
>>It's not immediately clear to me how working longer hours is detrimental to standard of living
from which I deduce that he is Jennifer Lopez' pedicurist or something.
I see.
You could have said “ I talked to a friend of mine who is liberal and votes for the Democrats but who does not represent them and he says that tax cuts are bad because they are permanent while spending is good because it’s temporary” but I guess that wouldn’t have had the same effect, right?
You are pretty good with words and are aware they have meanings. When you say, in the very first sentence, that you are talking about the Democratic Party line I’m sure you realize most people don’t equate that with a chat with a left-wing acquaintance over coffee.
And your point about not wishing to out anybody makes even less sense. If this is a party line how can you out it? Shouldn’t it, by definition, be public?
You have a habit of posting things, as in this case, that when I ask the simple follow up question (“Where did you get that from?”) you simply refuse to answer or claim it’s a waste of time. Not sure why.
You did the same with many of your posts about Krugman where at different times you claimed he said things or wrote things he never did including Krugman supposedly saying that tax cuts in the future explain deficits today or Krugman misrepresenting the SS report. In all these cases I wondered where you got that from and you never came up with any answers. Maybe it was from another chat over coffee with friends?
from which I deduce that he is Jennifer Lopez' pedicurist or something.
From which I deduce that you don't have the faintest idea what deduction is all about. Hint: its primary purpose has little to do with evading the question.
hi jane,
"insofar as we can fix their problems, the standard of living of the bottom quintile is undisputably improved from any time period you'd care to name. Their consumption is steadily rising, even as their income is stagnant. They have color tv's, cable, heat and light, sufficient food, a roof over their heads. . . I mean, the list goes on."
ok, it would always be nice if you have some evidence to back this claim. at the moment, you appear to be using anecdotal evidence of your own (and friends') experience which, no matter how valid, does not give us a clear indication of the big picture. even so, what i understand you to be saying is: "look, even if the relative mobility of these folks has not been great, the absolute mobility of that bottom quintile has risen over time as they have been raised by the general growth of the economy, so even if they are in the bottom 20% of folks, overall, they are better off." yes, i think that is true in part (and david's link supports that claim in part--but of that lowest quintile, 31% of those in the lowest quintile didn't rise with that economic growth and ended up with stagnant absolute mobility as well even after 20 years!). further, my understanding is that service prices have not fallen anywhere as dramatically as goods prices, and in soome cases have actually reason quite strongly; i am thinking of the price of real estate and rental accomadation in cities over the last five-ten years. so, i am still unconvinced by your claim on that basis as well.
"If you can show me that you can take some guy mired in poverty and get him out of it, I'm all ears. But first, display some willingness to get rid of the programs that don't work."
perhaps this was a rhetorical device or perhaps it was directed at something i wrote, but as far as i can tell i have never said "keep the programs we have, no matter what." i grant a lot of what you said. many programs are not economically rational, as currently constructed because there are too few rational incentives put in place to encourage people to do socially and individually useful things to help themselves.
what can be done: one sure fire way that the link that david provided pointed to is education. it works in less developed countries. it can work here. that is a whole new can of worms, i know, and not directly related to your original post. finally...
as for the alternative: i would appreciate it if you could please explain to me how you think the tax cuts that have been enacted are going to help this individual you speak of above? and the cuts that will be enacted? there are some bones in there, but they are bones. i don't see it--so feel free to open my eyes.
hi david,
">>It's not immediately clear to me how working longer hours is detrimental to standard of living"
one thing might be that part of our standard of living is that we have leisure, or some leisure at least to do other things of value to us--like sleep. if you are working 100 hours a week, you either love your work, don't have a life, or have no choice, or... maybe some combination therein.
"Jason: the fact that there are sufficient groups with sufficient pull to keep their programs alive does not in any way imply that a majority, or even a large plurality of Americans, support them, or the level of spending."
Ok. Can you name a significant program 50.1% of americans want to zero out? Even farm subsidies are iffy.
That's just the problem, Jason. Americans have to lobby to zero out spending programs. Spending programs don't have to rejustify themselves in order to maintain funding. Getting half the country to get off their asses and write their congresspeople on any issue at all is a near impossibility.
Now...cas, my point and Jane's is that the bottom quintile working more hours now than ever before COULD mean that more people are being employed full-time than in previous times. Therefore, the datum that on average the bottom quintile is working more hours is meaningless.
Yes, leisure time is nice. But if I was only getting 20 hours a week at minimum wage, I'd be looking to increase my hours.
Cas, I worked for an organization providing homeless services, which I kept in touch with through volunteering afterwards. I've spent a fair amount of time paying attention to poverty programs and such. My mother worked as an NYC social worker, and some of our friends still do. That opinion is the distilled wisdom of watching how poverty programs operate. It implies no less sympathy for a kid growing up in a garbage neighborhood with hideous schools, etc, but rather a total frustration as to how to do something about it. Education doesn't just "work" -- my best friend, as it happens, is a professional evaluator of school programs, and the poor have a large raft of problems that prevent them from learning, with which the schools struggle desperately to cope -- and the teachers unions block any meaningful attempt at reform, so you can add the public schools in poor neighborhoods to the pile of poverty programs that don't work and can't be changed. The reforms that do get instituted are overwhelmingly things that help the union and show marginal-to-no benefit to the kids, such as smaller class sizes, or are actually detrimental, such as the disastrous fixation on whole-language reading instruction.
"That's just the problem, Jason. Americans have to lobby to zero out spending programs."
Still waiting on an answer.
hi jane,
i told you that my mentioning education could open a can of worms! so, i will wait out on your post to a more appropriate time (like a discussion focused on those issues). i have no problem with the power of your anecdotal evidence--its a valid form of evidence, yet i think it is limited by its necessarily personal nature. i feel that your opinion would be even more powerful and effective (and open to shared community) if it was also augmented with more statistical evidence. i don't have your experience, just mine (and vice versa), and given empathy, statistical/experimental analysis is a way to bridge that gap.
Amazing how JG common sense and basic economics can generate so much nonsense. Discouraging really. Most common argument seems to be the “Republicans aren’t much better, or do the same things.” Well yes. The Republicans haven’t had sensible responsible opposition in decades and get away with lots of dumb inconsistent stuff. Anyone who has worked for years in the Government knows that much of what it does is harmful, most over priced, and all of it inefficient. Anyone who has worked for years in the third world knows that the elite take a leftist, nationalist, protectionist, and interventionist demagogic stands because they control the goodies, the tariffs, the subsidized interest rates and can avoid the taxes. Why do we assume that our own demagogues are any different? Concern for the poor is how the elite protect their power all over the world. Whether “bourgeoisie” rolls bitterly off the tongue of old wealth, or young Marxists, its anti middle class. High marginal tax rates, distributive policies, and most interventions do not hurt the rich, sometimes help some of the poor but almost always hurt those who are or would become bourgeoisie. Obviously we should chuck our tax system, significantly lower marginal rates but eliminate all deductions, treat all corporate income as personal income, privatize or eliminate all entitlements, adopt a VAT, and reduce the federal government by half. Only opposition parties that tend in this direction are libertarians who seem more interested in gaining access to pot. In the mean time we take the cuts and the reforms we can get, even if poorly designed
"this is not about arguing whether the Democrats or Republicans are better about X, Y, Z. It's a tiresome argument, and no one's mind is going to be changed.... I've been more than willing in the past to criticize conservative tropes on taxes that I thought were incorrect, such as the idea that supply side tax cuts make back all the revenue through the magic of marginal thinking."
Serious weaseling, Jane. Your post mostly attacks Democrats for stupidity. And when you criticized "conservative tropes" your main point was that nobody ever made the idiotic claims that Republicans were accused of making. Except, as was amply pointed out, Bush, Cheney, etc. DID make those claims. So spare us the objective observer pose. That's another dog that won't hunt.
That isn't true, Bernard. I've written at least half a dozen posts arguing that supply side tax cuts don't increase revenue, I'm aware that conservatives make that argument (though I wasn't aware that the administration was publicly doing so), and I disagree with it. Search on the word taxes and read for yourself.
If I can't ever have a discussion on factual questions without people sidetracking it into a discussion of how the Bush Administration is THE EVIL OVERLORD OF SATAN'S REALM then there's really no point in having comments.
cas, have you taken a look at the BOD of the CBPP?
Not exactly unbiased. I'd say they have a different agenda than most Americans.
World Bank? Rockefeller Foundation? Children's Defense Fund?
Barbara Blum, Senior Fellow for Child and Family Policy, National Center for Children in Poverty, Columbia University
holy crap..
"rich get moreback in tax breaks and spending"
my fing g-d... while is true that tax credits are equivalent to spending in driving tax rates up, arguing that we should value the breask as equal to the spending on programs is stupid!!!
"so we let you keep 200 billion a year of your own money, when that really shouild have gone to the crackhead next door!"
bolshie what?? letting people keep their money is not morally spending!!!! it is effectively spending for the pruposes of economic distortion and tax rate setting, but it ain't the same
you eliminate mortgage interest credit, the market for houses crashes (since its just inflation)... the credit simply artificially raise the price, just like rent subsidies do...
what you won't see is an increase in revenues! just like tax credits for charities.. you'll see a drop in charitable giving (massively so) but no increase in revs (or at least 90% less of one than you thought)
just get it through your thick skull that not stealing someone's money is not the same as giving someone the proceeds of crime (as is all government spending)
and for the idiot who though that government spending is efficient: say your spending $x on "the poor" now if you give $x to the poor, you're efficient.. if you give $0.3x to the poor, you're the government!
>>Now...cas, my point and Jane's is that the bottom quintile working more hours now than ever before COULD mean that more people are being employed full-time than in previous times. Therefore, the datum that on average the bottom quintile is working more hours is meaningless.
It absolutely isn't meaningless. If you and I have the same income, but I don't have to work for it and you do, which one of us has a better standard of living? The one spending his day fishing.
That's my entire point. You can't make blanket statements about "standard of living" based on ownership of televisions, air-conditioners, etc, without also taking into account the number of hours worked. You might still be able to make the point you want to make, but just ignoring the issue makes you look bad. In actual fact, I know that hours worked went up rapidly in the late 1990s while incomes in the lower quintile didn't move so fast, so there might be a more interesting issue here.
Jane,
C'mon now. We all know you run a fine blog with plenty of "discussion on factual questions." That's why we read you day in and day out. And I certainly appreciate the chance to comment, even if I slip up from time to time and allow a whiff of crankiness to seep in.
However, when you frame your factual questions with a rhetorical "Democrats: just say it. 'I want taxes to be higher because I think that people who are better off should pay more of their income to support other people than they currently do,'" you can't seriously expect that some of your readers won't object to that framing.
And speaking of dogs that won't hunt: Your blue-tick paraphrase that we think the "Bush Administration is THE EVIL OVERLORD OF SATAN'S REALM" is one mangy cur. That sounds like Ari Fleischer trying to taint a challenging question rather than anything I've read here.
Cheers,
hi sandy,
"have you taken a look at the BOD of the CBPP?"
what do the acronyms stand for?
If I can't ever have a discussion on factual questions
But that's the point, isn't it Jane?
You made an assertion about the Democrats which is the very basis of your whole argument. If, as you claim, the Democratic Party was in fact peddling the line that tax cuts are bad because they are permanent while spending is good because it's temporary I would agree 100% with your position.
The problem, as we found out, is that it seems the Democratic Party never said that. Apparently some left wing friends of yours said so at a dinner party but that's quite a different thing. Imagine if some liberal blogger claimed that dinner conversation from GOP sympathizers voters represented the current administration’s policy? What would you say?
You accused the Democrats of deception because they claimed the GOP had said things you thought they hadn’t. And now you yourself claim the Democratic Party says things it turns out it never did.
Well, D^2, I'm ready to start fishing as soon as you're ready to start sending me money.
I guest the "no free lunch" idea still hasn't penetrated your thick, liberal skull yet, has it? I have no use at all for ensuring that others have more leisure time than I do.
>>I'm ready to start fishing as soon as you're ready to start sending me money.
I'm ready to start sending you money as soon as you're ready to give me a shot at being Jennifer Lopez' pedicurist. Face it man, you said a dumb thing. Calling me a liberal (I'm not) and saying I'm thick (I'm not) isn't going to change the fact of the matter; hours worked is an important part of the standard of living.
Only when those hours are in excess of full time, D^2. I think you've earned thick by repeatedly ignoring that point. Liberal, though, I tagged you with out of philosophy. If you don't think you're liberal, I guess I can make a decent claim at being not dumb.
"Only when those hours are in excess of full time, D^2."
So a guy who works 30 hours a week for $60k has an equivalent standard of living to a girl who works 10 hours a week for $60k? Do you read this stuff when you type it?
Still immune to nuance, eh Jason?
Look. It's really so simple that even my six-year-old wouldn't need to have it explained. We're not talking about people earning $60k a year, here. We're talking about people in the lowest quintile. D^2 claimed that they're working more hours than they used to. Sans evidence, of course, and he still hasn't coughed up any.
I've noted that this may just mean more people working at or near full-time rather than a lot more people slaving away, in hopes that this might finally prompt D^2 to divulge where he got his information. But rather than do that, D^2 finds it convenient to indulge his foot-fetish fanasies.
The bottom quintile income has moved up about ten percent in inflation-adjusted dollars over the last decade. D^2 has claimed, without any evidence whatever, that this is due to more hours being worked. So what the hell, I'm going to claim, also sans evidence, that that rise is due t more workers enjoying opportunities to work full-time.
Because, what the hell, there seems to be no penalty for making ridiculous claims without backing.
Oh, I could cite a source that says average hours worked per year only went up by 77 per year for the lowest quintile...over the last couple of decades. Or that the average is still only about 35 hours per week for that quintile. But that would be presenting data, which is apparently verboten in this exchange.
hi all,
on definitions of poverty levels, from today's ny times, here is an interesting idea from amrtya sen (no darling of the right). it argues for something that is more than strictly bare subsistence level:
"Lord Desai recommended focusing on different criteria of the sort first proposed by Amartya Sen, who won the Nobel in economic science in 1998. "Don't think about just food, but think about what you want people to be able to do in life," Lord Desai said. "And if they can't do that, you call them poor.""
http://www.nytimes.com/2003/04/26/arts/26POOR.html?th
hi jason, dsquared, and david,
re hours worked and standards of living. it interests me that you focus on individuals. the major way in which hours worked shows up is not so much individually, but through families. so here is a question david:
i do not know if you have kids, but would you concede the possibility that a family where both folks work long hours so that they do not get to "consume" as much of the beneficial good of "quality time with the kids instead of the day-care/nanny/etc/pre-pre-pre-school approach" could count as having a lower standard of living than a family where one parent chooses to stay home? holding preferences ceteris parabis.
here are some things i found:
"As Chinhui Juhn of the University of Houston notes, wives of low income males work considerably less than those of high income males. Furthermore, between 1969 and 1989, the average number of hours worked per year by wives of low income males increased by 40 percent, while hours worked by wives of high income males jumped by about 150 percent. In 1996, more than four-fifths of families in the top quintile had a householder who worked full-time year-round; this was true for only about a third of families in the bottom quintile."
http://www.epf.org/research/newsletters/1997/et971029.asp
looks like there is more part-time emplyment options utilized in the bottom quintiles--under-employment.
information on families in massachussetts:
"Major Findings: In 1999, the average family, including all adults, worked 2,850 hours per year-the equivalent of a 1.5 full-time workers. Middle-class families (those in the middle three income quintiles) work particularly long hours, as many as 3,900 per year. And the most affluent families with incomes in the top 20% are working an astounding 4,384 hours per year."
http://www.massinc.org/about/press_room/press_releases/press_release5_8_02.htm
for new york:
to achieve a -2% change in average family income in the bottom two quintile from "the late 80s to the late 90s" "married couples families with children worked 3.8 more hours a week, a 5.8% increase. those in the middle income quintile worked 8.8% more hours and those in the second quintile increased their hours by 15.7%"
http://www.fiscalpolicy.org/SOWNY/Report%20Executive%20Summary.pdf
if you check out http://faculty.ccbc.cc.md.us/~ryentzer/hoursxwage.txt there are some interesting stats on relative shares of hours worked from 1968-1998 that suggest that men in the upper quintiles worked longer hours (increased their share of total hours-this is also consistent with overall increase in hours), and that women in the 2nd/3rd quintiles increased their share of the total.
I'm not sure what your point is, cas.
Certainly, things would be tougher in New York than in the average state, given that New York is third highest in state/local tax burdens, and pretty high up in terms of cost of living. Massachussetts is very high up in terms of cost of living and fourth in terms of per capita state and local taxes. Boston has the highest cost of living index in the nation.
"I've noted that this may just mean more people working at or near full-time rather than a lot more people slaving away, in hopes that this might finally prompt D^2 to divulge where he got his information. But rather than do that, D^2 finds it convenient to indulge his foot-fetish fanasies."
A half-dozen posts back, starting this off:
"It's not immediately clear to me how working longer hours is detrimental to standard of living, particularly when longer hours is on the short side of full-time."
Forgive me, but these two quotes don't really look the same; I missed your point. I agree, if the gain in hours worked was entirely due to something like an underclass of part-time workers going fulltime, no one would think that was bad. That's not what happened, though. I haven't the faintest idea where I read this, though, so you'll have to take my word for it. Hopefully davies can produce numbers.
"The bottom quintile income has moved up about ten percent in inflation-adjusted dollars over the last decade. D^2 has claimed, without any evidence whatever, that this is due to more hours being worked. So what the hell, I'm going to claim, also sans evidence, that that rise is due t more workers enjoying opportunities to work full-time."
Your link doesn't appear to agree. For the first quintile, husbands' hourly wages drop by 12% and wives' hourly wages go up by 10%. When you consider that the husbands work three times the hours that the wives do, that's a really noticable decline in hourly wages for the bottom quintile. According to this data, the increase in bottom quintile family income came entirely from the 11% increase in hours worked by those families. This doesn't seem like particularly good news.
Yes, yes, I know there's a productivity effect on excess hours, but the basic point stands.
hi david,
"I'm not sure what your point is,"
the point i am making is that families all over america are working longer hours. please tie this to the question i asked:
"it interests me that you focus on individuals. the major way in which hours worked shows up is not so much individually, but through families... i do not know if you have kids, but would you concede the possibility that a family where both folks work long hours so that they do not get to "consume" as much of the beneficial good of "quality time with the kids instead of the day-care/nanny/etc/pre-pre-pre-school approach" could count as having a lower standard of living than a family where one parent chooses to stay home? holding preferences ceteris parabis."
do you think this argument follows? whether ma and ny are high tax states is not the germane issue to the question that you, jason and dsquared were debating each other about which was whether working more hours meant that you could have a lower standard of living (and under what circumstances that would be true). if you settle that question, your issue about taxation levels and their effects on standards of living would be a good one to ask.
I'm not sure how you find that to be disagreement, Jason. If you check closely, I said nothing whatever about what hourly wages have done. Your perceived disagreement with my point does exactly zero to discount it.
But that source wasn't intended to help bolster my point. Sorry if that wasn't clear. That point was a (apparently vain) attempt to embarrass D^2 into backing his claims with data. I believe that was actually the first item found in a Google search. I was never under the impression that the data in that link made that point for me, and didn't care because the counterclaim was made with intended absurdity.
My sole objective was to get D^2 to actually come up with some kind of fact-based explanation for his absurd claim that more hours worked per year is worse than less. No luck, so far. But, you see, the burden of proof is on D^2. I merely came up with a situation that, if true, contradicts D^2's statement. And provided exactly as much basis in fact for it.
I'm actually interested in what's so, not in taking the word of D^2. Until then, it's still my assertion that more hours is not necessarily worse than less. Especially when you've got kids to feed.
Uh, he didn't assert that "more hours worked is bad." The argument (paraphrased) was.....
1) "The poorest did pretty well, their consumption (and thereby, their income had to have) increased"
2) "No they didn't, the entire increase in income came from an increase in hours worked"
.....followed by an argument over "whether or not it's necessarily bad to work more hours."
You're conflating productivity/hourly compensation growth (the implied subtext to the statement "their income increased") with a shift in the work/leisure tradeoff. As that data makes clear, the income increase of the poor was mostly, if not entirely, due to an increase in hours worked, not an increase in compensation per hour worked. If the productivity gains of the 1990s helped the poor, it sure didn't show up in their hourly compensation.
Ok, scratch that. He didn't really say more hours is worse. That was a misunderstanding on my part.
However, he did make some statements about people in the lowest quintile working more hours for what amounts to a lower hourly rate. This is what I initially pinged him on, and he's yet to cough up any substantiation on it. In fact, the two of you have gone through some rather strenuous avoidance on this. Dunno where that other thing came from. Maybe it was the gratuitous introduction of foot-fetishism that derailed my train of thought.
Wait. Just read the second half of your message.
So. You're saying that the poor have gotten ahead by working harder? Still...data. While you're at it, show me that the rich have not gotten richer in proportion by working harder. And by all means, let's see a trend over the last couple of decades or so, rather than the last couple of years.
I'm not conflating anything. All I ever wanted was the data. Hell, D^2 even confused me with whoever he was having that conversation with to start with.
D^2 made a statement. I questioned it. He went with the insults. I proceeded to assert something I couldn't support with the sole intent of just getting him to disclose what the data was, and where he got it. Instead, I get a large amount of arm-waving from you (for reasons that are still unclear to me) and nearly psychotic assertions regarding Jennifer Lopez's feet from D^2.
Forgive me if I'm not getting more convinced either of you knows what the hell you're talking about.
"So. You're saying that the poor have gotten ahead by working harder? Still...data. While you're at it, show me that the rich have not gotten richer in proportion by working harder. And by all means, let's see a trend over the last couple of decades or so, rather than the last couple of years."
Yes, that's what I'm saying. It's in that Labor-Real.doc you linked, for 1979-1998. Hourly wages went down for the first & middle fifth (the increase in womens' wages gets outweighed by the decrease in mens', because the men work a lot more), but went up (and way up) for the top fifth.
Interestingly, the rich increased their hours worked a lot more than the middle did, who increased them a lot more than the bottom did. No idea what that means, but there you go.
Altogether, a "increased hours" is a better description of the bottom quintile's labor market than "increased incomes". Maybe that's because labor market participation shot up, and hey, that's usually a good thing, but that real wages were declining in that labor market segment definitely is