Asymmetrical Information

How about paying down debt for all $330 billion?

Yes we can play the game too.

535 congressman times their salary of $1,500,000 equals $802,500,000. If the congressman volunteered their time we could give 200,625 inner city children school vouchers of $4000 so they could get a good education.

How could those heartless congressman deprive these poor children a chance to make a success of their lives?

Megan,

Good points overall. In a couple of instances, though, I think you could be overestimating costs.

For example, the health insurance programs. Presumably, they're talking about Medicaid instead of private insurance programs. Those may be doable for $100 a month.

As to the child care workers, presumably they're not totally funded by the government? I'm not sure how those programs work--I didn't think there was such a thing as government babysitting--but one would think they would be partly fee-based? Maybe the $2.08 million is the government portion?

Also, one argument you don't make against the Salon figures that strikes me as quite important is federalism. The feds don't pay for child care, fire trucks, plant security, and many other programs on their list. So, federal budget cuts weren't going to pay for those things anyway.

Actually, the average child care worker makes $16k, no bennies. But that should hardly be a goal. And a federal worker don't make no minimum wage without benefits.

The problem with Medicaid is that few doctors will take it because the reimbursements are so low that only practices that specialize in it [cough]fraud[/cough] can cover their costs. I think you'd find it hard to dramatically expand Medicaid coverage, since most doctors aren't accepting new Medicaid patients.

The Feds do fund things like that through special programs -- remember Clinton's 100K new cops on the street, which didn't put new cops on the street, but did buy new cruisers for every small town sheriff in America? But I agree with you that they shouldn't.

jane a spot-on observation. you've also explained why liberals will never be satisfied and will always be willing to spend our money on their programs.

A non-constructive critique of a non-constructive suggestion doesn't really advance things at all. Why not make your own estimation what can be had for the tax-cut money? And then say whether you prefer the tax-cut or the programs?

Andrew: A non-constructive critique of a non-constructive suggestion doesn't really advance things at all. Why not make your own estimation what can be had for the tax-cut money? And then say whether you prefer the tax-cut or the programs?

Well, we could let the people who earned the $330 billion keep the money and spend it on whatever they like. Which, incidentally, could be child care, health care, food, or any number of other things on the list.

hi jane,

interesting post. thank you. lots to argue with here!

hi twd,

"jane a spot-on observation. you've also explained why liberals will never be satisfied and will always be willing to spend our money on their programs."

where to start.

"Cost of USDA testing of 12,500 cattle samples for mad cow disease, in addition to homeland security measures such as physical security upgrades at lab facilities and background investigation of workers: $21.7 million

I'm trying to wrap my brain around this even more trivial item. We need physical security to prevent terrorists from sneaking in to spike the samples we're testing for mad cow disease, a disease not currently found on US soil? Am I getting this right?"

ok, so, let me get this right: are you are saying that because we don't appear to have a problem with this disease currently (and even though the meat industry in this country still likes to indulge in practices that have been linked to the outbreak of mad-cow's disease) you are saying that $21.7 million dollars is an excessive amount of insurance to take out on this apparently $188 billion industry and on those folks who ingest beef products?

"Gross receipts from sales of cattle and calves in 2000 totaled $40.76 billion accounting of 21% of all agricultural receipts making the beef sector the largest single agricultural enterprise. The estimated $40.76 billion of gross output from beef production activity supports an additional $147.4 billion of economic output for a total of $188.4 billion of direct and indirect economic activity throughout the U.S. economy. "
http://www.beef.org/documents/Econ%20Impact%20Beef%20v2.doc

perhaps we should dismantle the fda and have the beef folks police themselves instead?

or were you just being playful on this issue?

You've done a good job of debunking... as always.

Let me just chime in on the issue of teachers, since education is one of my passions. I think you'd find most teachers would be insulted if you offered them a salary of $31,000 a year with no benefits. Heck, even in Oklahoma (47th in the nation in teacher pay) we pay our teachers an average of almost $35,000.

Of course, the first and most fundamental flaw is assuming that they actually know how much money the tax cut will "cost," since it's in fact a tax rate cut, and any estimate, whether scored statically or dynamically, will almost certainly be wrong.

Well, Dwight, that's an interesting question.

I have no idea how much the bill coming out of conference will ultimately cost, and I don't think anyone else does either. For simplicity, let's assume a 10-year trend-line cost. With the ten year note yielding around 3.35%, I get a net savings of less than $5b a year on a discounted basis, against which I'd weigh the long-term growth promotion prospect from equalizing capital gains and dividend income so as to lower the disincentive to invest caused by the corporate income tax. We're talking about a savings of less than a quarter of one percent of the federal budget, overall.

I'm not against testing for mad cow disease, Cas. I was making fun of the "homeland security" aspect they threw in, presumably to make it sexier. But the overall cost is too trivial to link to the tax cut, plus it should be paid for by the meat industry.

The teacher pay is probably starting salary, but that's of course not the true cost, since there are no benefits, and the shortage of teachers ae in specilties where you won't get any more takers even at a low starting salary. Also the biggest shortages tend to be in areas where the starting salary is more like $45K than $31K.

How about paying down debt for all $330 billion?

How about cutting out all the welfare-state dreamchild social experimentation programs like Head Start and others that Megan enumerated, and sending that money towards debt principle? Or, better yet, cut those programs and their appropriations from the budget entirely, drop the nation to a flat tax and watch revenues over the next few decades do the work.

Re: EPA. Many polluters are bankrupt or no longer in existence. Even though the basic rule of cleanup is "polluter pays", in lots of places there is no polluter to pay.

And on that note, aren't you strongly against the polluter-pays rule on the grounds that their conduct was legal at the time? Shouldn't you be encouraging the socialization of environmental cleanup?

Two points:

>>If you can only make your point by deceiving your readers. . . well, maybe it's time to look for another point

In which case, perhaps you'd consider retitling this post with another title than "Krugmanomics", since Paul Krugman transparently did not commit the fallacy you accuse him of?

>>I get a net savings of less than $5b a year on a discounted basis, against which I'd weigh the long-term growth promotion prospect from equalizing capital gains and dividend income so as to lower the disincentive to invest caused by the corporate income tax

It is utterly inappropriate to compare these two issues; any alterations to the dividend tax could have been carried out on a fiscally neutral basis (but were not), so pretending that the deficit is in some way redeemed by the alleged effects of this disincentive to invest (which, if it existed, one might have thought that the UK's investment performance would have been less dismal in the 1970s and 80s) is confusing and wrong.

It's also a bit disingenuous to imply that the "seniors" getting free meals, transportation and protection against abuse by their carers are the same people as the "seniors" who would benefit from a reduction in dividend taxation, but I'll let that pass.

I reiterate; potentially good arguments on this weblog are repeatedly being spoilt by being admixed with extremely misleading claims.

Au contraire, D2. First of all, I can think of no revenue-neutral way to alter the dividend/capital gains imbalance while also removing the disincentive to invest in equity; anything revenue neutral would have to push the capital gains rate substantially higher.

As for Krugman's "transparently not committing that fallacy", that's hooey and you know it. He compared a long-term revenue loss to a short term gain to make the numbers seem bigger than they were. You're not telling me that you think it's appropriate to assume that any jobs appearing year one disappear year two, are you? For the record, I don't believe in stimulus, and I doubt that this tax cut will create many jobs. But if you think that tax cuts/spending increases create jobs, you can't compare a ten-year, non-discounted cost to a one year job creation term, which is what he did. Some sort of step down, appropriately documented, might have been called for. But the magic vanishing isn't. Krugman's flailing was pathetic.

I should have said "disincentive to invest in equity", although I'd also assume there's a net investment loss resulting from debt covenant restrictions, liquidity loss, and other such. You may disagree that a corporate income tax introduces costly economic distortion into the system, and I'd be very interested to hear your arguments. But I stand by my assertion: the corporate income tax lowers the return to equity investment while increasing the return to debt, which is economically bad. It also results in managers retaining more earnings than they otherwise would, which is also economically bad. Removing those distortions is economically good. I don't really think you care to debate that proposition, although of course you're welcome to try.

Nor did I say it was "redeemed"; I said it was trivial. I think there's an offset from both the economic benefits of equalizing capital gains and dividends, and from increased equity liquidity, though I haven't tried to calculate what that offset might be.

> This implies that she can insure children for
> $100 a month. Where do I sign up for this deal?

If you were were in Philadelphia, I'd recommend you sign up with Independence Blue Cross.

They've got a plan for $30 a month.

http://www.ibx.com/jsps/article.jsp?id=/plan_info/caring_foundation/chip/cf_chip.html

Much less than the $100 month figure.

> Which would be delightful if anyone had shown that class size or infrastructure has any effect on outcomes

Just wondering -- do you believe that repairing crumbling school buildings is a useless, pointless endeavor?

partha

Partha, those programs are funded by the government for low income people. $30 a month isn't the cost of the insurance; it's the price. The government is covering the rest of the cost, which is unlikely to be less than $100 a month if my experience as an insurance buyer, from blue cross, for an unusually health pool, is anything to go by.

As for the buildings, I don't think that's the federal government's job. The federal government is supposed to do things that the state and governments are unable to do for themselves, not things that we think are nice. I see no evidence that the buildings will not be repaired in the absence of such federal funds, and indeed in the school districts where they are most likely to be a problem, such as NYC, the problem is not lack of funds, per se, but well organized interest groups that suck up capital funds for themselves. If you spent this money, what you'd find in the end was that it went to do things that the schools would otherwise have paid for themselves, and the teachers and administrators got another raise.

>>As for Krugman's "transparently not committing that fallacy", that's hooey and you know it. He compared a long-term revenue loss to a short term gain to make the numbers seem bigger than they were. You're not telling me that you think it's appropriate to assume that any jobs appearing year one disappear year two, are you?

The fact that you refer to "Krugman's flailing" suggests you've read his posts on his own website, and the fact that you've had an education in economics suggests you understood them. You know that I've read and understand them, so I simply don't understand what you're trying to achieve with the paragraph I've excerpted above. Krugman, Sawicky and the official data have all gone over the ground of what the baseline is, when the jobs are created (relative to the baseline) and when they disappear (relative to the baseline) and Krugman comes out of the whole discussion very well indeed.

The idea that the dividend tax cuts couldn't be made fiscally neutral is also pretty laughable. An easy way to remove the distinction between dividends and capital gains on a revenue neutral basis would be to raise the capital gains tax to the income tax rate and use the revenue raised to cut another tax somewhere else. Several countries have actually done it.

Yes, D2, I agree that it would be possible to make the cuts revenue neutral. I disagree that it would be possible to do so while simultaneously reducing the distortions introduced by the corporate income tax, which your suggestion would not accomplish -- it would remove the bias towards retained earnings, while increasing the bias towards debt.

"I am under the impression -- correct me if I am wrong -- that with the requirement to immunize all children before they start school, the current vaccination problems come from parents refusing to get their kids vaccinated, rather than lack of access to vaccines."

This is at least partly incorrect. I live in Eastern Washington, and some school districts in this part of the country have been having to provisionally admit children to kindergarten without their having all the required vaccines, owing to a shortage of the DTP vaccine.

BTW Jnae even the so-called economists of the Krugman Truth Squad hace accepted that Krugman is correct on the economics.

As they said:

"We are disappointed in Donald Luskin. He's become obsessed with the idea that he caught Krugman in a "lie." As a result, he is focusing almost entirely on that issue and ignoring other of Krugman's foibles. Moreover, strictly on the grounds of the macro economic theory being contended, Krugman is right and Luskin is dead wrong.

You may recall that the controversy involved Krugman's method of computing the "cost" of the Bush tax cut package. He divided the total proposed tax cut over 10 years by the value of jobs created over 1 year and came up with some ridiculous number like $500,000 per job based on a $40,000 per year salary. Of course, Krugman being Krugman, he overdoes this analysis to the point of absurdity but, nevertheless, on the narrow point under discussion he is essentially right."

In the original article Jane Galt wrote:

"No serious homelessness researcher believes that the chronically homeless, otherwise known as the "streeted" homeless, are suffering from a lack of affordable abodes, rather than their mental illness, drug and alchohol habits, or profoundly anti-social tendencies, which is what is keeping them out of our current supply of supportive housing."

A year or two ago I would have agreed. Now, at least in my experience, things appear different.

I ride a very long SF Bay Area bus line a few times a week. A year ago, the obvious homeless perpetual riders tended to be of the sort you described.

Now, the drunks and crazies are much reduced in numbers. Replacing them (though not in quite as high numbers) have been old people, and some people with obvious chronic physical ailments, who are obviously embarrassed by being homeless; who are perfectly courteous and well behaved; and who are also obviously homeless. They deboard from an incoming major route, and board the outgoing major route. They have few belongings, no giant bags of random junk, and are obviously struggling to maintain some modicum of human dignity.

I don't know what caused this change, or whether it is a purely local phenomenon. But that is what I have seen with my own eyes, repeatedly.

Call me a bleeding heart liberal, or a commie, or whatever. But I think something is profoundly wrong that these perfectly decent people have no recourse but to live on a bus.

I'm not suggesting higher taxes. I'm suggesting that something is grossly wrong with "social services" if people like these are left homeless.

He's kind of right, GT. I'm not endorsing Luskin's simplistic math either, but what Krugman did -- simply compare the one year figure with the ten year figure -- was no more right than Luskin's attempt to multiply by ten -- particularly if you're a fellow who's been writing that the economy may be in danger of sliding into a decade-long liquidity trap. He chose the most dramatic possible number to make his point, rather than try to figure out what an accurate one was, or inform his readers that he had made a rather arbitrary choice. He picked the lowest number he could find to make it sound good, and then when he got caught, he pretended that there is an economic argument in favor of the number he chose, when the real number seems to be, in the current economic climate, a lot higher. Again, I'm with the Fed on this one -- but if you think we need a stimulus, as Krugman seems to, his number was extremely inaccurate, although not as inaccurate as Luskin is claiming.

Fub -- those people aren't necessarily streeted. They may well be in supportive housing; they simply don't have anywhere to go during the day. And 1.5m is a simply ridiculous figure for "streeted" homeless. I'm not saying that the housing options available to those in crisis are ideal, but as far as I know, no one has to live on the street.

The idea that the dividend tax cuts couldn't be made fiscally neutral is also pretty laughable. An easy way to remove the distinction between dividends and capital gains on a revenue neutral basis would be to raise the capital gains tax to the income tax rate and use the revenue raised to cut another tax somewhere else. Several countries have actually done it.

D^2, am I reading that right? The way to make the dividend tax cut fiscally neutral is to not cut the dividend tax?

I still would have preferred the dividend tax change be on the corporate side because it would change the dividend/interest (ie equity/debt) effect. And we could easily pretend to make such a change revenue neutral by raising the corporate tax rate. Since part of the goal is for corporations to increase dividend payouts, we can only guess how this changed behavior would affect tax receipts.

Hey, I would have preferred that we eliminate hte corporate income tax and tax both dividends and capital gains at ordinary rates. But since that's not going to happen, this cut is about the next best thing in my book. Even my uber-liberal Democratic ex-boyfriend likes this tax cut, for the same reasons I do -- it removes distortions to corporate behavior.

Jane, you wrote:

The federal government is supposed to do things that the state and [local] governments are unable to do for themselves, not things that we think are nice.

So the case is even more extreme that you make out: there may well be things which the state governments cannot do for themselves, but which the congress has no power to legislate about. If so, that may be a good reason to amend the Constitution, but the Feds still shouldn't be involved until that is done.

Half the things on that list are things which, if the politicians actually read and understood the Constitution, they would not be including in a federal budget. Without tortuous interpretation, nowhere in the Constitution can be found the authority to fund libraries, schools, housing assistance, etc., etc.

howdy cas, happy to have you back in the saddle again.

it would seem to me that the fda would have been able to restructure its baseline budget to accommodate the iniital testing for mad cow disease. the security issue raised was for effect.

on the banks of the housatonic.

hi jane,
"Amount needed to end homelessness for chronically homeless people within 10 years: $1.3 billion per year to create and sustain 150,000 units of permanent supportive housing

No serious homelessness researcher believes that the chronically homeless, otherwise known as the "streeted" homeless, are suffering from a lack of affordable abodes, rather than their mental illness, drug and alchohol habits, or profoundly anti-social tendencies, which is what is keeping them out of our current supply of supportive housing."

the question that can be asked concerning "the chronically homeless" is this: where did many come from, or where are they coming from now. in the old days, we used to lock them up in state asylums. but then we released them. why? as i understand it, there were funding issues...

so what do you suggest we do jane? we could put them back into institutions, but that would cost money--yours and my tax dollars i suspect. perhaps the housing units they have in mind will be "highly structured" and "highly centralized" with "appropriately trained housing facilitators."

on homelessness in general,

http://www.urban.org/Template.cfm?NavMenuID=24&Template=/TaggedContent/ViewByPubID.cfm&PubID=310291

is an interesting place to start.

on mental illness, since the folks we see on ny streets tend to be the ones suffering from mental illness, we make the leap that this is the face of homelessness. however, much of the homeless are hidden. women tend to hide more, staying away from predators in shelters, garages, and old cars. the major reason for the homelessness, is a lack of income married to bad luck. mental illness is one issue that plays a role in this mix but by no means the only one. education is a highly correlated variable. if 200,000 folks are chronically homeless,

http://www.intelihealth.com/IH/ihtIH/WSIHW000/333/8014/362740.html

that still leaves 2.3-3. million americans who face homelessness at some point each year.

For a few hundred bucks we could buy Timmy and cas a lifetime supply of capital letters. But now we can't afford to. I blame Bush.

hi twd,
"it would seem to me that the fda would have been able to restructure its baseline budget to accommodate the iniital testing for mad cow disease."

ah yes, but what would get restructured to make way for it? a marginal cost and benefit calculation? perhaps some monitoring of all that safe genetically modified produce? or the water supply? or some unnecessary supervision of drug trials, or some visits to a processing plant, etc. and/or maybe, as i suspect some might argue--get rid of some inefficient bureaucratic boondoogle that would save the country millions, if only we let the private sector do that job more efficiently...

hi paul,
ouch! when i started doing this email thing a while back, lower case was an acceptable expression of etiquette. must be showing my age...

D2, i tell you what if i can net capital losses against normal income, i will more than happy to tax capital gains and dividends at the lowest income tax margin.

if you don't believe that the current tax regime distorts corporate capital structures, one would anticipate that if we shifted the tax regime ( making debt interest expense a nondeduction and dividends deductable) we would expect no change in the debt equity mix, right.

D2 as you know there are also tax regimes which provide a franking credit for dividends. so the proposed us tax advantage plan for dividends was not a new idea.

finally on the krugman analysis on the tax program, because the duration of the tax plan was back loaded and the benefits were not dynamically scored, his analysis sucked and you don't need to an economist to understand that fact. it is similar to his analysis on deflation and the liquidity trap, a simple decomposition of the analysis has paul chasing his tail.

on the banks of the housatonic

Cas, 3m people is more than 1% of the country. That's a factoid, not a real number. Do you think that one in every hundred people you went to high school with is homeless every year? Even assuming a lot of cycling, that's a lifetime homelessness rate in the double digit percentages.

Mental patient deinstitutionalization was accomplished by the ACLU. The homeless have a right not to take their psychoactive drugs. However, if the less needy homeless are to have their rights, those who do not take their drugs cannot be allowed in long-term shelter. If they refuse hospitalization (and anyone can voluntarily commit themselves to a state hospital), they go on the street. Drug and alchohol users are similarly problematic. It's irrelevant to ask what I'd be willing to pay for, although of course I'm willing to pay for people with serious mental illness to get needed care; they're not in the hospital because they don't like it in the hospital, and no one can force them to go there. The drug and alchohol users are similarly choosing their habit over help.

There are a lot of people we call "homeless" whose problems are not schizophrenia or drug addiction; just extremely poor planning. I worked for an organization that provided homes for these people, known as the "high functioning" or Tier II homeless. But those people don't lack shelter; they lack a lease. They're living with relatives, in government housing, etc. Their lives are unstable and frightening, but the problem is not lack of supportive housing.

Running such projects is very, very tricky. Most -- I'd venture to say "almost all" of the people who require government help for their homelessness are people with big issues. They have horrible planning and coping skills, among other things. The women tend to seek out violent and unsupportive men who abandon them with babies to care for. They lack skills and work ethics. In order to be effective, institutions must be able to kick out people who don't meet the rules. But where do those people go? To less attractive places. Those who have been flunked down the hierarchy and can't meet the minimal requirements of a temporary shelter end up on the street. It's tragic. I don't know what to do about it, but I do know that the problem won't be solved merely by spending money.

cas, where do all these homeless people go during democratic administrtaions?

another one:

"Cost of compensating federal employees called to active duty in the uniformed services or National Guard for the difference between their civilian and military pay: $89 million over the 2004-2008 period

And they're going to give back all the pay and benefits we gave them when they didn't have to go anywhere? I'm grateful to our reservists, but it's not as if they signed up without knowing they might have to go to a war. A lot of them signed up for the nice boost military service gives their civilian pay. And how come we're only compensating federal employees, if this is such a hot idea?"

hmm, if i understand you rightly jane, you appear to be saying that the pay these folks get whilst doing their weekends has this added bonus of going overseas to exotic locations for long stretches. it might also be the case that you are arguing that they might actually get help with college costs and such, and this extra service helps pay them back for their initial "loan from the government." i don't have an issue with this second argument per se. but i do have a problem with the first argument. if i did not avail myself of the college benefit, and i just went to earn a little money to help pay some bills, then does your argument hold up? i do not think so. the armed forces got my effort and willingness to train, and i got a paycheck commensurate with the enormous amount of hours i spent out in the field training, getting diddly-squat sleep, etc. to then, as an added bonus, give me the opportunity to serve overseas at a wage that will not cover my family's needs is not just.

in that case, the current system hurts those who joined the reserves for other reasons than the great civilian education it might help finance.

That's not what I was talking about. As I understand it, reservists get bonus points within the civil service system for pay and promotion, which means that we've already increased their pay. And if we feel, as a nation, that we should increase reservist pay to civilian levels, why only federal employees? Why not state, local, and private sector employees as well?

Reservists, for their service, get retirement points and use of various military perks like the PX. They became reservists knowing what the deal is. I see no reason to up the pay of only federal employees to their civilian level for wartime service, when we didn't do it for, say 9/11 service, or for emergencies where the guard is called out.

Jane, it seems you still don't understand the economics of what Krugman wrote.

Krugman's point is simple.

Over time the job benefits of the tax cut disappear, as the job level resulting from the tax cut converges with the baseline level (the number of jobs we would have had without the tax cut).

In Krugman's model, which he explains in greater deatil on his website, this convergence happens in one year.

Even the WH agrees there is a convergence although their model seems to suggest a longer period. You can go here (http://maxspeak.org/gm/archives/00001178.html) for more details.

If Luskin had any real knowldege of economics he could have argued against Krugman's point by saying that the convergence period was longer and so the tax-cut cost per job was different. Of course this would require actual understanding of the issues. And it probably wouldn't have changed the point in any case, just reduced the cost per job.

That's why the very first sentence of this post is factually wrong when you say that Krugman compares something over 10 years vs something over 1. He doesn't. He compares 10 years vs 10 years. We have the 10 year cost of the tax cut vs the 10 year impact of the jobs (which in his model dissipates after the first year).

I have written before that if you or anyone else is going to criticize Krugman on the economics, better make sure you understand the issue first. Luskin has already made a fool of himself.

jane, cas is absoulutely right. and how much is Tommy Franks being paid as compared derek jetter or bill clinton earnings of last year.

the man just fought and won two wars. but then again maybe Franks when into the service because of duty, honor and country. ...........hmmmm, nah franks is smarter than that he must be getting apiece of the action.

on the banks of the housatonic

GT, I read the website. That's not what he says; he says it's some indeterminate near-term time frame, which he implies, but doesn't say, is one year, presumably because the idea that the economy could ramp up to full employment from its current state in a year is -- odd. And since he's elsewhere pushing deflation fears, I don't know how he reconciles the notion that we're facing a liquidity trap with the notion that we'll be at full employment in 12 months.

hi jane,
on homelessness, that sounds like we are in agreement (i am shocked, and i may be misinterpreting you) that mental illness is not the only issue.

as for
"3m people is more than 1% of the country. That's a factoid, not a real number. Do you think that one in every hundred people you went to high school with is homeless every year? Even assuming a lot of cycling, that's a lifetime homelessness rate in the double digit percentages."

yep, that seems to be what the *estimates* suggest, since no-one knows for sure, given what we know about how homeless folks operate. i know that it really can happen to anyone, given the right circumstances (income, degree of support network, bad luck, medical bills, rising cost of rental accomadation, kicked out of home, etc). this appears to be consistent with someone being in and out of homelessness in a given year or homeless for a short period of time.

on the aclu connection: thank you. i did not realize that part of the story (just the bit on the funding crunch). if you have something i can read on that part of this issue's history, i would be grateful to you. as for freeing the homeless, i stumbled upon this

http://www.nationalhomeless.org/crimreport/crimreportpart1.pdf

which seems to suggest that one way around this issue is to just imprison them anyway (16% of all prison inmates have some form of mental illness--does not mean that they would be homeless if out in the world, but its an interesting observation). and that uses taxpayer dollars as well.

gt, i'm going to make it really simple for you.

we have a 10 year bullet bond with a face vaule of $1 million as compared to a 10 year annuity of $100,000 per year.

paul aggregated the cash flows and divided by 10 resulting in the same value of $100,000 for each. Are they equivalent values?

what is the economic value of each, if the discout rate is the same?

Well you must not have read it very well.

His post is clear:

"Whatever model the CEA is using, it clearly has the property that fiscal expansion has only a temporary effect on employment: the number of jobs increases at first, then falls back to the baseline. There's a reason their model does that: it's a property of every macroeconomic model I can think of. Only someone completely ignorant of what's in the textbooks would expect the Bush tax cut to have an effect on employment that is permanent, let alone one that grows over time.

My own view is that the tax cut - or any fiscal policy - will have a positive effect on employment only as long as the economy remains close to a liquidity trap. That is, once the Fed is no longer constrained in how much it can cut interest rates, fiscal policy adds nothing to the ability of policy to achieve full employment. Now most forecasts presume that we'll be out of the trap by next year - that is, before most of the supposed job creation from the tax cut takes place. Even if you're more pessimistic than that, we're probably looking at only 1-2 years when fiscal policy creates jobs."

That's his model, that's what he based his piece on.

To say, as you did, that he compared 10 years vs 1 year is wrong and indicates a lack of understanding of the economics behind it all.

gt, thank you for the explanation of a static economic model. apparently you are unaware that the economy is dynamic.

on the banks of the housatonic

Timmy,

Huh?

No offense but if you don't understand the issue why do you post?

Static, dynamic, what are you talking about?

GT, this is quibbling. Krugman gave a definitive number for something that he now says he doesn't have a definitive number for, and he picked the one that's most dramatic. Then when someone pointed out that you couldn't just compare the one-year salary, he backpedaled for an explanation that justifies a number smaller than Luskin's, but doesn't justify his number. It's flailing. All of the things cited in my post also have various effects which, aggregated over time, would alter their cost; that doesn't mean that it was appropriate to compare the average one year cost with the ten year cost of the tax cut. Krugman did the same thing. You may argue that the ten year cost is close to the one year cost, although even Krugman has shied away from doing so explicitly. But it is not exactly the one year cost, which makes what Krugman is doing incorrect. Moreover, the idea that he, as he states, assumed that his New York Times readers had deep familiarity with this macroeconomic stimulus model, is idiotic.

Quibbling?

Why is it so difficult for you to recognize when you are wrong on Krugman? I remember your posts on the CA energy crisis, the budget, and SS among others. And now this.

Your post on the 10 vs 1 comparison is clearly and unequivocally wrong. Krugman compared 10 years vs 10 years.

Maybe you disagree with his model. That's fine. But he is being perfectly consistent.

What's quibbling is saying that he doesn't have a definite number. Well, who has? Did you read the CEA report? It's full of caveats. Yet Bush and his economic team talked about the 1.4 million jobs as if it was written in stone.

The bottom line remains the same. Krugman made the point that the job-related tax cut benefits dissappear oevr time. He used a model of 1 year. You can use different models (say 700,000 each year for 2 years) but the end result is basically the same.

GT - Why are you trying to defend the indefensible? Krugman's opinion piece was at best grossly misleading. He said the tax cut was costing several hundred thousand dollars per new $40,000 job, strongly implying that it would be better to simply give the beneficiaries of the new jobs $40 grand to do nothing than to pass the tax cut. When I read the editorial, before reading any of the commentary on it, that's the impression I got. I remember thinking: "Bogus! The man's comparing the cost of the tax cut over 10 years with the benefits from new jobs to be had in the first year." If he meant to say: "Based on my economic modeling, any new jobs from the tax cut would have been created by the economy anyway within 12 months.", it certainly didn't come across in the original.

Either Krugman is one of the worlds sloppiest writers or he was fully aware that the original column would be "misunderstood" by many of his readers. Having read a lot of his pre-NYT stuff, I have a hard time believing he is unable to write in a manner that promotes understanding and makes misreading his intent difficult. I believe in giving anyone the benefit of the doubt, but Krugman's NYT record makes that impossible. Reluctantly, I conclude that he intends to mislead his readers to sway them dishonestly to his view. It's NOT that his view has no merit. It's that he expresses his view dishonestly that's the bother.

gt, i come from the supply side view of the economy, that is, private as compared to government spending is more efficient and thus a dollar spent in the private sector (as compared to the government sector) moves the long-run aggregate supply curve to the right.

i know the cbo continues to score staticly but i believe they are wrong. additionally, if monetary policy is held constant (a constant growth in the money supply) fiscal policy does have an impact on job growth (i believe the univ of chicago is of that opinion) at least that is what i remember from my macroeconomic theory class.

i'm not an economist (thank god) but then again if macroeconomic models were a highly useful tool, we would never have any economic problems would we.

Re: Homeless numbers. I remember an actual study and count done in the very late 80's or early 90's (probably the former) by either Northwestern U or the U of Chicago. A large number of grad students spent two of the coldest nights of the winter visiting homeless shelters and poking around in the hangouts and any place else that looked likely. They found fewer than 5000 homeless in a city of 3,000,000. The study was published, because I read it (may have been social anthropology or some such), but widely ignored. While one may quibble with some of the methodology, etc., it sure blew a hole in the estimates of homelessness in Chicago.

The situation is also exacerbated by the failure to differentiate between those who are long-term homeless, those who are periodically homeless, and those who are short-term homeless. All are treated (in most counts) as if they each represented a person who is homeless all year round.

One of the problems with understanding the problem (I spent a lot of time volunteering at PADS) was that anyone who was helped or sheltered in any of our rotating shelters (churches and such) evidently was counted in each place as if he/she were a homeless person for the entire year. Thus, one person who was sheltered in 7 different churches over the week was counted as 7 homeless people all year, even if it was a temporary situation. I still don't understand that one, except it makes the problem sound more dramatic.

Plus, of course, the original 3,000,000 homeless in America was pulled out of his *ss by Mitch Snyder, the unfortunate man.

hi twd,

"i know the cbo continues to score staticly but i believe they are wrong. additionally, if monetary policy is held constant (a constant growth in the money supply) fiscal policy does have an impact on job growth (i believe the univ of chicago is of that opinion) at least that is what i remember from my macroeconomic theory class."

as i remember it, the dynamic estimates they came up with didn't sound a ringing endorsement for these tax cuts,because they are not the right sort of cuts to do what you want them to. second, as with the money supply, the fed doesn't target a money supply figure anymore, since it is hard to target something that has so radically changed over time-m1, m2, m3, m? and all the others. they target interest rates. on that issue, this tax cut will be a disaster (given the impact of the deficits that this thing will create...)

Jane Galt wrote:

"Fub -- those people aren't necessarily streeted. They may well be in supportive housing; they simply don't have anywhere to go during
the day. And 1.5m is a simply ridiculous figure for "streeted" homeless. I'm not saying that the housing options available to those in
crisis are ideal, but as far as I know, no one has to live on the street."

I'd be inclined to agree if I saw them on the bus during the day. But they're on the bus when I take it hours before dawn on Sunday mornings. I really do think they'd rather not be riding the bus at that hour.

The numbers aren't huge, and obviously one repeated observation isn't a sample. They deboard a bus from deep in one county, and board a bus going deep into another. I ride the latter.

The most striking was a woman who must have been pushing 80, who rode for a few months. Her belongings were neatly packed in one of those little two-wheel shopping dolly things. She was neatly groomed and dressed in clothing that would have been quite stylish 50 years ago. I regularly lifted her cart onto the bus for her, for which she always said a very refined "Thank you."

I got the distinct impression from watching her minimal interactions with the driver and other passengers, that she was thinking "I shouldn't be here. I should be playing bridge with my friends."

I'm no spring chicken myself, old enough to be your father if you're under 40. I bicycle and ride the bus to go from pt. A to pt. B. I've always been a libertarian and fiscal conservative, and still am. But I do believe that old people and children deserve better lives than to ride the bus to stay out of the weather.

cas, no the cbo doesn't do dynamic scoring. that is , $1 of a tax cut, generates a $1 of deficiet, unless you cut spending by $1.

if i remember correctly the fed preferred measures of money supply is M1, although over the last fifty years they have used other measures.

btw, where do the homeless hide when there is a democratic administration. i thought for sure you would know.

on the banks of the housatonic.

If Krugman isn't guilty of mandacity, he's unquestionably guilty of opacity. A newspaper column shouldn't need 10 web pages' worth of exegesis. Shouldn't someone at the NYT sit him down and explain that his readers are those same dummies who have their money in 10-year Treasuries at 3.35% even though the evil Bushies have made us a banana republic?

I might suspect that someone who chose to count the homeless in Chicago in mid-winter was trying to minimize the number found. Anyone intending to live through the winter in Chicago (or most other northern cities) will either find somewhere to stay indoors (maybe just a friend's couch, but that still makes them "housed), or hitch a ride to warmer climates by November. I'd also expect the hardcore homeless to be fleeing Chicago even in the summertime, unless the police and city government have drastically changed their attitude towards those who are "different" in the 30 years since I was there last... I'd guess what those Chicago students were counting were mostly people near the bottom of the economic scale who'd lost their housing in midwinter and couldn't immediately find somewhere else. This count is not very meaningful without some way of estimating how many Chicagoans were among the homeless in the south and in Frisco...

The good news is, I've never heard of large numbers of frozen bodies emerging from the snow in the springtime in Chicago or any American city. (Unlike Moscow after the Bolshevik takeover, for instance.) This seems to indicate that finding housing - or getting into homeless shelters - is easy enough that even the really crazy street people usually manage it when survival is at stake.

Frisco's weather is usually survivable, and it seems to welcome bums. That doesn't explain the new homeless Fub was observing, but if Fub really is a "a libertarian and fiscal conservative" it shouldn't be too hard for him to figure out the causes: (1) Downturn in the economic cycle, that only surprised people too young or too stupid to comprehend that cycles always have a downside, (2) magnified by anti-business city governmental policies, and (3) a limited housing supply and high market-rate rents caused by too many years of rent control. One part is just life, the other two parts are liberal government...

My sympathies to those old ladies riding the bus all night, but more government would make it worse in the long run, not better.

David,

Although I agree that Krugman could have phrased his piece better how was it misleading? It may not have been clear but it certainly wasn't misleading.

If anything the lack of clarity in explaining his point probably cost him in the eyes of many readers, like yourself, that mistakenly thought he was comparing 10 years vs 1 year.

cas,

the thing to remember about military Reservists is, THEY VOLUNTEERED !

> when i started doing this email thing a while back, lower case was an acceptable expression of etiquette

When? Even in the mid/late 70s, it was seen as an cutesy affectation. E-mail isn't much older than that.

The two monocase crowds have argued that it is acceptable. Some in the 80s even tried the "back when I started" argument. The cycle repeated in the 90s.

Ma'am,
As a long-time health professional, I call to your august attention a distinction missed in your fine fisking of Krugman's economic whine.

We can pass laws requiring inoculation, but we cannot REQUIRE immunization, as being immune to something is quite different from having been inoculated for it.

Several problems come with inoculation (giving a human an injection or otherwise introducing some foreign-body protein into their body IN HOPES OF stimulating normal, existent and properly-functioning self-defense mechanisms to create the antibodies which will provide 'immunity').

1) The shot-inoculation may CAUSE the disease, with results as bad as or worse than letting the human contract (or risk contracting) the disease in ordinary course of events.

2) The shot-inoculation may CAUSE some OTHER disease, malfunction or dysfunction, as bad as or worse than the target disease.

3) The shot-inoculation may NOT precipitate/trigger the body's immune system, leaving the person still at-risk of contracting the target disease.

ALL THESE outcomes, these sequellae, must be weighed by parents and people considering 'inoculation', every time, every disease, every person. We are NOT identical, we humans, as we have significant differences one with another AND with ourselves from time to time.

If 'inoculation' were equal to 'immunization', we could all go onto autopilot and just get our shots. The truth, however, involves a number of aberrant reactions every year, with deaths, paralysis, incapacitation and other sad results.

Hence the growing awareness among informed adults across America and Europe, that governments might well find better things to do than get involved in PROVIDING health-care, or mandating it. Assure quality? Great! Get into funding and requiring it? Not so good at all...

And this is a small Eye Opener!

Jane --

Lots of fun stuff in the original article with which to disagree. Lots of good comments, too.

About the reservists being called up, and whether they should get pay differential: It is my impression that the US is atarting to rely more and more on reservists, which makes the odds of being called up greater. That means that a potential reservist has to accept that he may spend a year or so at some point making very little money, which pretty much eliminates any financial incentive to become one. In fact, it gives a strong incentive not to do so.

While I don't think we should rush out to make up the full difference in pay, it is something that's going to have to be addressed. The current administration seems intent on sending more people with more guns to more places. If we can't get people to sign up for the reserves, and we've reduced our permanant forces, who are we going to send?

Truthfully, though, I think that for many on the left the real thought is that the Bush administration shouldn't have waged the Iraq conflict in the first place, so it's just not fair that the reservists have to suffer.

My reaction to the Salon article, other than to not read it seriously in the first place, is: So What? We weren't going to fund those things anyway, tax cut or no. A more important question is, what was going to get money? What is a reasonable guess as to the actual effect of the cut, other than to help raise the national debt? Who is going to suffer who would not have otherwise?

"Amount needed to hire an additional 100,000 teachers to reduce class size, provide grants to repair 6,000 schools and assist with new-school construction, and provide additional math and reading help for over 9 million eligible low-income students: $300 billion.."

Anyone still believing the problems with U.S. public schools are caused mainly by a lack of money has something seriously wrong with his thought processes. Given all the evidence on disfunctional organizational behavior, it's really hard to believe anyone can be this blind. Why? What's the root cause of this willful stupidity? Any ideas?

"Although I agree that Krugman could have phrased his piece better how was it misleading? It may not have been clear but it certainly wasn't misleading.

If anything the lack of clarity in explaining his point probably cost him in the eyes of many readers, like yourself, that mistakenly thought he was comparing 10 years vs 1 year."

GT - You and I disagree on whether Krugman's phrasing was inept or intentional. Given how well he wrote before his gig at the NYT, and how often his writing at the Times leads itself to just this kind of "misunderstanding" of his intent on the part of his readers, I choose to believe his phrasing is intentional. You are more charitable. (Although, I don't know that you are doing Krugman a favor. Your position assumes good intent on his part, but that leaves only one other explanation: Krugman is too poor a writer to keep from constantly confusing his readers. Which view do think he would prefer -- well meaning but inept, or smart but willing to play on the edges in a good cause?)

I think there is support for both views. Krugman's animosity towards Bush leads me to believe him more than capable of trying to over state his case in an attempt to score points. Since the record indicates that this MIGHT be what he has been doing (and since the same kind of thing keeps happening) I conclude his "poor word choice" was intentional.

"Given how well he wrote before his gig at the NYT"

That's absolutely correct! One only needs to read Paul Krugman's previous articles on Slate.com. They were very sane and balanced--and thought provoking. The current Paul Krugman of the New York Times reminds one of a stark raving lunatic obsessed with destroying his own Moby-Dick.

“Your position assumes good intent on his part, but that leaves only one other explanation: Krugman is too poor a writer to keep from constantly confusing his readers. Which view do think he would prefer -- well meaning but inept, or smart but willing to play on the edges in a good cause?)”

Yup, one is indeed either forced to conclude that Paul Krugman is a very sloppy thinker---or someone unable to clearly state his views. My inner amateur psychiatrist suggests that the man needs to seek help.

Chichka:

My reaction to the Salon article, other than to not read it seriously in the first place, is: So What? We weren't going to fund those things anyway, tax cut or no.

Mmmff...you need to hang around more forums where left-leaning thinkers gather. I've seen red herring arguments exactly like these proferred by intelligent people who really do seem to think that such statements serve as refutations.

Hence this discussion, expounding upon the weaknesses.

David,

I don't see how he misled anybody. He may have confused them, thus doing HIMSELF a disfavor. But how did he mislead anybody?

GT - Are we going to have an argument about the meaning of words? If, as I suspect, Krugman phrased his argument in a manner he knew was likely to be "misunderstood" by many of his readers, he "mislead" them. At least that's how I use the word in this context.

One could argue that Krugman did not mislead because, if his readers had fully followed his argument (as supported by his additions on his web page) they would have agreed with him. That may be true. It may be that the tax cut is poor economic policy, but if a reader came to that conclusion based on Krugman's column, the reader reached that (proper) answer based on gross over statements and misrepresentations. That, too, in my book would be misleading.

Krugman's presentation of the tax cut made it appear to be so wrong headed no sane person would support it. (That is, no sane person who was also honest and cared about the country would support it.) Why spend $500,000 per $40,000 job for crying out loud (as if job creation were the only justification for the tax cut)? If a reader were to rely ONLY on Krugman's column, the reader would have to conclude not only that thte tax cut is poor policy but also that Bush is a fool, corrupt, or both.

For the sake of this argument, I'll stipulate that many economists think the tax cut is poor policy, this may even be the majority opinion. That does not mean the tax cut does not have support among many, if a minority of, economists. By stating his position in a way that ignores the substantial debate about the proper course of action, Krugman over stated his case. By using numbers, without disclosing the numbers were based estimates, he should have known a casual reader would misunderstand how solid -- or soft -- his position was. Thus, he mislead his readers.

markm wrote:

"Frisco's weather is usually survivable, and it seems to welcome bums. That doesn't explain the new homeless Fub was observing, but if Fub really is a "a libertarian and fiscal conservative" it shouldn't be too hard for him to figure out the causes: ...liberal government..."

Of course those are causes. I was saying that I have seen an effect, without speculating on the greater economic causes. One cause I think supervenes even the greater causes might fall under your category "liberal government", but I'd suggest "inept government services" is more specific.

Even if one believes it is not good to have any government services at all, one must accept that they exist, and it is to everyone's interest, taxpayers and homeless alike, that they not be run so ineptly that those who most clearly deserve help don't get it.

"My sympathies to those old ladies riding the bus all night, but more government would make it worse in the long run, not better."
I distinguish between "more government", and "better government". You are correct that the former is almost always counterproductive. I did not advocate "more", only "better".

Fub: "Better government services." You really are a dreamer!

David,

You say you suspect that Krugman phrased his argument in a manner he knew was likely to be "misunderstood" by many of his readers.

How so?

You think he wanted people to think he had mistakenly compared 10 years vs 1 year?

Krugman's point is correct. He correctly compared 10 years vs 10 years. But his piece reads as if he were comparing 1 year vs 10 years.

GT - Do I know what was in Krugman's heart when he wrote what he did? Of course not. Not even Krugman may know his true motivations. Still, when I compare his NYT screeds with his prior work, I conclude that he thought he could get away with an invalid comparison. Why? I suspect that he believes that the Bush administration is so malignant it needs to be stopped -- even if the truth must be sacrificed for the greater good.

Krugman is in a tough spot. An intelectually honest presentation of his position might have bored his readers to tears and would have taken more space than the NYT would allow. So, he did some verbal slight of hand and created a false comparison that (for him) presented the truth about the tax cut. That's what I think he did. Can I prove it beyond a reasonable doubt? No, but this isn't a court of law and I don't need to meet such a burden.

I just need to decide, for myself, who the truth tellers are. Krugman no longer makes that list. Which is a shame. He has a real talent -- almost as good as Jane's -- for making complex economic topics accessible. I'm a fan of his pre-NYT work. I didn't read everything he wrote, but I did seek him out. Now, I avoid him. His NYT work requires too much filtering to be worth my time.

Jane appears to have given up on the substantive point with respect to Krugman, so fair enough. On to the question of dividend taxation:

Timmy wrote:

>>D2 as you know there are also tax regimes which provide a franking credit for dividends. so the proposed us tax advantage plan for dividends was not a new idea

There's no reason that anyone should know this, but I worked dealing with one for most of the 1990s. The UK's abolition of Advance Corporation Tax in 1997/8 was a natural experiment of precisely this kind:

>>if you don't believe that the current tax regime distorts corporate capital structures, one would anticipate that if we shifted the tax regime ( making debt interest expense a nondeduction and dividends deductable) we would expect no change in the debt equity mix, right.

This happened in the UK and it is extremely hard to find any effect on capital structures as a result. It is also very hard to impossible to find the overnight 10% drop in the value of the FTSE100 index which everyone predicted. It was this more than anything else which prompted me to abandon a previously rather simplistic view of financial economics which I held at the time.

And on an unrelated point, David wrote:

>>Krugman's opinion piece was at best grossly misleading. He said the tax cut was costing several hundred thousand dollars per new $40,000 job, strongly implying that it would be better to simply give the beneficiaries of the new jobs $40 grand to do nothing than to pass the tax cut.

In terms of jobs created versus fiscal cost, of course, PK would have been correct to make exactly this point, as I seem to remember proving on Brad Delong's weblog. The cost in Krugman's article per $40K job over ten years was $530K iirc, and a quick comparison of (40 x 10) and 530 reveals a simplified version of the logic I assumed PK was following at the time, before his clarification.

"In terms of jobs created versus fiscal cost, of course, PK would have been correct to make exactly this point, as I seem to remember proving on Brad Delong's weblog. The cost in Krugman's article per $40K job over ten years was $530K iirc, and a quick comparison of (40 x 10) and 530 reveals a simplified version of the logic I assumed PK was following at the time, before his clarification."

Had Krugman said the tax cut would cost $530,000 for every $400,000 of new salary created, I wouldn't have called his column misleading. His readers would have been in a better position to determine whether other benefits from the tax cut (whatever they might be) were worth the excess cost. The way Krugman posed the 10 year cost against the 1 year benefit, a casual ready was likely to conclude that no reasonable weighting of the benefits could justify the cost of the tax cut.

"Had Krugman said the tax cut would cost $530,000 for every $400,000 of new salary created."

That wouldn't be accurate, either, unless you think we'd still be in a recession 10 years out; employment over that long run is determined by Greenspan.

David,

It seems we are still debating the basics.

Krugman did not use the $40K figure instead of the $400K figure.

The $40K figure is the correct one.

Yes, $40K for the WHOLE TEN YEARS.

That's the economic point that Jane seems to not be able to (or willing to ) understand.

The reason is simple. After the first year the tax cut no longer produces any job benefits.

Suppose there are 100 MM jobs. On January 1st, 2003 a nex tax cut is enacted. This results in 1MM new jobs in 2003. Without the tax cut there would have been no jobs.

Now we move into 2004. We start with 101MM jobs (with out the tax cut we would have had only 100MM). And that is increased by another 1MM to 102MM. But the model tells us that without tax cuts we would have had 102MM jobs in any case.

How is this possible? Because without the tax cut job growth in 2004 would have been 2MM. Yes, the tax cut actually reduces the rate of job growth in later years.

This is not controversial by the way. In fact this model is exactly the one the WH uses.

Krugman is perfectly correct on the economics and even the economists from the Krugman Truth Squad accept this.

What may be debatable is the rate at which the two job numbers (with tax cuts and without tax cuts) converge. The longer it takes and the higher the initial job growth then the more job-years result from the tax cut. But the basic point remains the same.

GT - I understand the economic theory that would have it that the tax cut does not produce a permanent increase in jobs (but would simply create earlier jobs that would have been created through the normal growth of the economy). Krugman didn't make that argument in his original column. Had he done so, his readers would have been able to determine for themselves whether the tax cut would produce a structural change (leading to a permanent increase in economic activity) or whether the cut was just a "pump primer" that would only bring forward growth that would occur anyway.

Even if you accept that Krugman thought his readers were familiar with the idea that the tax cut might not have any permanent benefits (which would be a gross misreading of his readers' familiarity with economic theory), Krugman's column was still misleading because he gave no indication about the substantial debate surrounding his methodology and his estimates. Indeed, he didn't even say they were estimates or that the benefits might range from $x to $y.

As an alternative example, consider someone advocating a reduction in CO2 production because of concerns about global warming. If the person were to write: "Without the desired change, the earth's temperature will increase by 4 degrees over the next decade leading to mass flooding and starvation," when the science shows that the range of increase might range from 0 degrees to 4 degrees and that there is substantial doubt about what ill effects from any increase might be, the statement would be misleading. It would dramatically over state the science and lead the casual reader to put too much faith in the precision of the numbers. (Note: I am NOT trying to start a debate about global warming. Assume for the sake of the example that the range of expected increase is 0 to 4 degrees and that their is substantial doubt about the ill effects of any increase.)

I think Krugman did a similar thing. There is no way that a casual reader, one who is familiar with business matters but not too familiar with economic theory, could read Krugman's column and understand just how soft his numbers were. And that, GT, is misleading.

I don't think the numbers are soft. Unlike your example of global warming there isn't much debate that the job impact will be temporary. Like I wrote even the WH paper accepts that. The only debate is as to the speed of convergence and therefore to the number of job-years.

But even if thew numbers are soft, they are no 'softer' than those the WH has published.

Yes, if Krugman could add a footnote to every point he makes it would be clearer. But that would be true of every other column published by every other writer in history.

And it would also be true of Bush and his adminstration. Maybe next time Fleischer talks about jobs created he can add "well, there are many caveats to this. Numbers could be higher or lower. It's based on a series of assumptions we beleive to be true but are not sure."

Krugman took Bush's job creation explanation for why the tax cuts are needed and showed (correctly) that is if it's jobs you want this tax cut does not provide much bang for the buck.

David, it's virtually impossible for Bush's tax cut to permanently decrease the unemployment rate, and I'd be surprised if anyone at all out there thinks so.

I don't believe Bush himself has made this claim, only that it'll "get the economy going again" or somesuch - that is, stimulus.

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