CEPR - Center for Economic and Policy Research

Multimedia

En Español

Em Português

Other Languages

Home Publications Blogs Beat the Press Morning Edition Debate Commentary Badly Misinforms Listeners

Morning Edition Debate Commentary Badly Misinforms Listeners

Print
Thursday, 04 October 2012 05:19

Morning Edition's fact check of comments in the debate badly misled listeners by implying that choosing between reducing deficits between higher taxes and greater growth through tax cuts are alternative paths to deficit reduction that people can choose from like flavors of ice cream at the ice cream store. They are not.

There is no plausible path through which a tax cut will generate enough growth to even pay for itself, much less produce additional revenue. The best analysis of this issue was done by the Congressional Budget Office in 2005, when it was headed by Douglas Holtz-Eakin, a Republican who was the chief economic advisor to Senator McCain in his presidential campaign. His analysis found that using the most favorable set of assumptions, additional growth could temporarily replace one-third of lost revenue. This revenue increase was largely offset by slower growth in the longer term.

The country also had the opportunity to experiment with cutting taxes as a way to increase revenue when President Reagan cut taxes in the early 80s and President Bush cut them at the start of the last decade. In both cases, deficit rose considerably as revenue fell. It would have been helpful to supply this information to listeners who may be less familiar with economic research or recent economic history.

The analysis also said that both President Obama and Governor Romney believe in energy independence. That is unlikely since it is almost inconceivable that the United States will become energy independent any time in the foreseeable future unless it imposed huge protectionist barriers on imported oil. Presidents and presidential candidates have been talking about energy independence for 40 years, there is no reason to believe that these two candidates are any more serious than their predecessors.

Comments (13)Add Comment
...
written by Last Mover, October 04, 2012 7:23
Listening to MSM reporters comment on the debate last night is like watching Jim Lehrer moderate the debate. Another deer caught in the headlights of an oncoming car.
...
written by skeptonomist, October 04, 2012 9:51
There is no good evidence that cutting taxes boosts the economy, let alone increases government revenue. The whole subject is a good example of how economic "theory", based mainly on psychologically naive conjecture about motivations, often dominates over data and historical facts. The evidence on private investment, which is what is supposed to be boosted directly by tax cuts, is clear in showing no overall benefits to reducing tax rates:

http://www.skeptometrics.org/PrivateInvestment/

Investment increased after the Bush Tax cuts, but a cyclic recovery is expected and as we know a great deal of this was in housing and probably encouraged by other policy changes, not so much tax cuts. The collapse of this unsound investment was responsible for around 40% of the overall drop after 2008.

In the debate, both Obama and the "fact checkers" let Romney get away with assertions about the effects of tax cuts which have absolutely no basis in fact.
The energy independence issue
written by Floccina, October 04, 2012 10:04
The energy independence issue is so bogus. Petroleum is fungible. There is no good reason for the USA to try to be energy independent. Shows how silly politics is. we have a bad short unemployment problem and the are babbling about energy independence.
...
written by Ellis, October 04, 2012 11:42
I am so sick of hearing about the deficit and energy independence. The fact is that government debt has always been an important source of guaranteed profits for the financial sector. As for the oil companies, we all know what they are up to.
independencia
written by pete, October 04, 2012 12:00
seeking independence from any product or resource is insane. in the 50s there were huge tarrifs on foreign oil, hence we used up our relatively expensive domestic oil. If we had used the Saudi Oil instead, we would not only be "independent" now, we would most likely be exporting oil, and the Saudis would not be able to fund their coming Caliphate. Government should not meddle...when will they ever learn.
Payroll Tax Cut
written by Tyler Healey, October 04, 2012 12:22
According to Mark Zandi, the payroll tax cut pays for itself. This is because the payroll tax is extremely regressive.

If Bush had simply abolished the payroll tax in 2006, we wouldn't be in the mess we're in now.
Outrage
written by Bish$ps, October 04, 2012 1:50

Dean should be the debater or the F....coach. As Dean has so often put the F...consequence of Bishop Romneys policy into a real-world context for all dumb-A** American understand.

No one watching TV even including talking-heads know the effects but the talking-points sounded good and very detailed - and....oh, that piece must be true and you are so smart to rebut with such specificity.

Case in point: Bishop insisted no change to elderly Medicare and my premium-assisted prg will operate parallel for the younger groups. Wow, sounded so good but reality is its like taking your BEST players into a different team and said your team will still be find years from now.

Or, its like converting your most generous Mormon Bish$ps and shift their donations into helping Muslims, but the rest of your Mormon Bish$ps will be fine!
You need to put
What Really Work!
written by James, October 04, 2012 2:15

As a post above correctly noted that "no good evidence that cutting taxes boost economy."

In front of 50 million of Americans, they don't know that. What they will be really impressed is: a trustworthy, truth-telling Mormon said I met this poor small business owner who has five employees and he complained he will NOT hire more people because he is paying too much taxes.

The Mormon would say you see, only if I lower taxes, this small owner will hire more.

Well and in fact, I met more than one small business owner (since I don't exclude 47%) and he sworn that his tax burden does NOT influence his hiring decision. The decision is laregly based on whether there is a demand for his product or not. So, you based it on one owner while i met thousands of owners.
the debate
written by mel in oregon, October 04, 2012 5:27
perhaps the most pathetic debate ever fostered on the american public. lehrer, as poor of a moderator as you could find. obama, stands for nothing except compromise with the wingnuts, the only time he gets angry is when the left blasts him for being a tool of wallstreet. can you believe this president actually said his position on social security & medicare cuts is the same as romney's. no wonder he doesn't do well among older voters. romney as usual didn't answer questions, & has never said how he will trim the budget, or increase employment. just all a bunch of generalities & assorted malarkey. but let's face it, the american people are not very bright, & the corrupt & devious romney just might eke out a victory on nov 6.
...
written by liberal, October 04, 2012 9:03
pete wrote,
If we had used the Saudi Oil instead, we would not only be "independent" now, we would most likely be exporting oil, and the Saudis would not be able to fund their coming Caliphate. Government should not meddle...when will they ever learn.


That's a very good point, but I'd take it further---government should meddle to the extent that, if oil prices don't reflect future scarcity, the government should forbid domestic extraction for the time being, so we draw down other states' resources first.
Bad, but not bad enough
written by David, October 05, 2012 12:53
election.princeton.edu/2012/10/03/post-debate-reaction/

Romney positions himself as defender of the middle class (Obama exposed as not)? Romney takes on TBTF banks? Jesus wept from laughter.
...
written by liberal, October 05, 2012 11:11
David,

Agreed. Anyone who would vote for a politician who lies and flip-flops as much as Romney (and I do think all politicians lie and flip-flop; but it's all relative) needs to get his head examined.
B.but
written by FoonTheElder, October 09, 2012 1:24
B.but lowering taxes increases revenues. That's why I propose we lower taxes to zero. Then the government will have more money than it knows what to do with.

Write comment

(Only one link allowed per comment)

This content has been locked. You can no longer post any comments.

busy
 

CEPR.net
Support this blog, donate
Combined Federal Campaign #79613

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.

Archives