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Home Publications Blogs Beat the Press Giving Tax Breaks to the Rich Will Add to the Deficit

Giving Tax Breaks to the Rich Will Add to the Deficit

Tuesday, 21 December 2010 16:57

Okay, I was going to ignore this one. After all, it is in an opinion piece in the Washington Post, so a lot of leeway is granted, but give me a break.

This sentence is given as an example of "obfuscation through language distortion," in a column by Kathleen Parker. She goes on to say:

"Pardon? How does money in someone's own pocket add to another's debt?"

Umm, is this one really hard? I owe my bank $200,000 for my mortgage. I don't pay the money. Is it hard to understand that my decision to keep the $200,000 in my own pocket adds to the bank's financial woes?

More practically, the deficit is the difference between spending and tax collections. Anything that reduces tax collections adds to the deficit just as anything that increases spending adds to the deficit. We all may not like certain taxes just as we don't like some areas of spending, but that doesn't change this accounting identity.

One would hope that accounting identities held true even on the opinion pages of the Washington Post, but apparently not.


Comments (9)Add Comment
Freudian Arithmetic
written by izzatzo, December 21, 2010 5:16
The explanation behind Parker's claim that untaxed money in one person's pocket (of the rich) can't possibly add to the debt of another person is given in this quote, also from the WaPo article:
More concerning than the limits of sharing or the boundaries of transparency are the intentional manipulations of language to obscure truth. Totalitarians throughout history have relied on writing and speaking badly - that is, without clarity - to keep the masses confused and captive. Clarity, the enemy of deceit, is anathema to authoritarians everywhere.

Enough said.
it's even worse
written by Adam, December 21, 2010 5:22
Apparently, Ms. Parker only recently came to this conclusion, because she takes the complete opposite position in her column from just two weeks ago, explaining how we got to our current high debt/GDP ratio:

"As Altman and Haass point out, the national debt was only about 35 percent of GDP just 12 years ago. Furthermore, the debt had been shrinking to the point that some thought it might even be paid off. With the 2001 and 2003 tax cuts now animating the professional bickerers in Washington, the wars in Iraq and Afghanistan, and the prescription-drug benefit for Medicare, we shifted our fiscal policy so significantly that we are faced with an era of austerity."

Maybe it's only the tax cuts for the rich that don't increase the deficit, but money in poor and middle class pockets can "increase someone else's debt?" Don't they have editors at these papers?

written by joe, December 21, 2010 5:49
Her statement is based on the bogus assumption that US citizens are not responsible for congressional spending. For example, if we go out to lunch and I pick up the tab, according to conservative dogma the proper way to look at my generosity is that I merely let you keep your own money and you didn't receive a free lunch. Tax cuts that are not offset by spending cuts are a free lunch.
DB Looked Good On MSNBC
written by JL, December 22, 2010 1:40
U looked good on the show...

Let us know when u show up on the network!
Mystical Economics
written by Ron Alley, December 22, 2010 5:37
Apparently Kathleen Parker is a follower of the Isabelle Allende school of mystical economics.
Preestimated Deficit
written by RBaker1018, December 22, 2010 8:39
One clear explanation is that the ending of the tax cuts, as called for by the 2001 "temporary" reduction of taxes, has been calculated into every estimate of expected deficits since 2001. When the tax cuts were extended, the estimated deficit immediately had to jump up overnight.
Once upon a time in a far off land...
written by diesel, December 22, 2010 11:32
She complains about the abuses of language, stresses the importance of clarity and intellectual honesty and then goes on to say, "Permit me to reword the issue just a tad" and then equates government spending with a that of a profligate drunk. Not a nod to essential services. And Joe, the drunk, spends twenty times as much as possessed by the struggling, honest rich. No mention of the fact that the rich control Joe's spending through their money's influence.

And in her once-upon-a-time-world, the poor rich have just enough money to buy food. It's not the poor poor who have trouble putting food on the table. And Black-Hatted Joe's behavior is menacing, leaving her with "less security of her own". Where is the good Joe? The White-Hatted Joe who provides police and military protection for Poor Mary? Who will untie her from the railroad tracks? Who will release her from the log headed inexorably towards the spinning saw blade???

Her own words provide her own best critique, "You see the problem. It isn't the money. It's the dishonesty of the argument."

We "demonize the wealthy, as if they somehow have wronged their fellow citizens by working hard and achieving what everyone else wants", because, to put the matter plainly, only the wealthy work hard. And everyone else wants what the wealthy have. They don't want talent in music, baseball, painting, scientific research or to make themselves useful to others. Just what the wealthy have. More wealth.

And only "the doers who create jobs for others", do. The rest of us don't do. Or rather, what we do, doesn't count. Because we're not wealthy. Get it? And you "wonder why Americans don't trust them enough to fork over more of their money?" I do. I trust them not to fork over more of their money, for the work I do.
written by zinc, December 23, 2010 4:16
Uh, that's what the mental giant from Minnesota, Michelle Bachmann, teaches:

“I don’t agree with that definition,” Bachmann told Meredith Viera on the Today Show. “When people keep their own money, that’s considered a deficit to government, but it’s not a deficit to your pocket or mine, so I think it’s important that people can keep their money.”

Our nation's loopiest congress lady has also revealed Top Secret government intelligence plans to give half of Iraq to Iran.
GOP Changs the Meaning of "Reality"
written by Gene Harlot, December 25, 2010 12:45
This is an official GOP talking point that is quickly becoming reality. I've noticed more and more newscasters either allowing it to go unchallenged or parroting it. Say it enough times and it becomes real. Only math and accounting majors will care soon enough. Amazing, but hey, if the Peter G. Peterson Foundation, the GOP, and everyone else want to change reality to suit their goals, which are destroying the social safety net, cutting federal income and capital gains taxes to zero for the rich, and imposing a flat tax, they'll get it because our "media" are going to do everything they can to help them get there!

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.