NYT Promotes Confusion Over Budget

Politicians often try to obscure unpopular proposals in euphemisms. Reporters are not supposed to help them in this effort.

"Republicans would demand deep concessions on spending and changes to Medicare and Social Security as a price to raise the debt ceiling a few weeks later."

Of course the Republicans are pushing for cuts to Medicare and Social Security, not generic "changes." They want the government to pay less money and for beneficiaries to get less money. The NYT should be pointing out this fact, not helping Republicans to conceal an agenda that polls consistently show is hugely unpopular even among Republican voters.

The piece also likely confused readers when it told readers that if Congress takes no action on the estate tax:

"estate taxes would rise to Clinton-era levels, with inheritances over $1 million taxed at 55 percent."

The 55 percent tax rate would only apply to the portion of the estate over $1 million. The vast majority of estates that would be subject to this tax would only be slightly over $1 million, which would mean that even if nothing is done, the amount of tax liability they would face would be quite limited. Since most people have difficulty understanding the concept of a marginal tax rate, it is likely that many readers would think that the whole estate would be taxed at this 55 percent rate if they exceeded $1 million.

Taxing income doesn't "drain balances" of wealthy
written by A Populist, December 05, 2012 4:58

Dean,

In the NY Times, Galbraith refers to taxes on the wealthy as "draining balances".

Most people would interpret this to mean actually reducing principle.

Since most people view "balances" as "their money", this is a serious mischaracterization, the tone of which would offend many people.

Psychologically, taxing income has become expected and normal. However, if people feel that their actual "bank balances" are subject to confiscation (at least before they die - as in estate tax) they are likely to find this perceived attitude by Mr. Galbraith as repulsive - and needlessly so, since the "draining of balances" does not reflect real proposed tax policy.

NYT Article Omits That Senate BIll Raises Taxes on All Wage Earners
written by Robert Salzberg, December 05, 2012 5:14

Senate Bill 3412, the Middle Class Tax Cut Act, that passed the Senate this Summer doesn't extend the payroll tax cut so taxes on wages will go up 2% if Republicans in the House pass this bill and President Obama signs it as he has vowed.

This is a huge bear trap that President Obama and Senate Democrats have set for themselves. Taxes go up on the middle class, no debt ceiling increase and Republicans can't be blamed for holding tax cuts for the middle class hostage to get tax cuts for the rich.

http://www.govtrack.us/congress/bills/112/s3412/text

budget confusion
written by jennifer reft, December 05, 2012 7:36

Again it should be a rule that news outlets use the term "cuts to" or "decreased funding" and not "changes" or "reforms" when discussing Social Security, Medicare, or any other social benefit program. I cannot think of an instance IN MY LIFETIME that politicians have considered ADDING resources/money to these programs. It is possible, especially in the case of Medicare that "changes" in the form of cuts are appropriate, but in any case a news organization interested in actually educating its readers would clearly state what politicians are really saying.

Happy Fiscal Hangover!
written by Robert Salzberg, December 05, 2012 7:59

Senate Bill 3412, the Middle Class Tax Cut Act, that passed the Senate this Summer is a huge bear trap that President Obama and Senate Democrats set for Republicans and will now be used against them.

House Republicans will spend the next two weeks pretending to bargain but in the end will just pass Senate bill 3412, that President Obama has emphatically vowed to sign, and leave scoring a huge win, win, win for Republicans and a lose, lose lose for Democrats and America.

Republicans will not have violated their No New Taxes Pledge. Republicans will look like reasonable people by not holding tax cuts for middle class hostage to keep tax cuts for the rich. Republicans get 250 billion in tax cuts without paying for them. Obama's payroll tax cut will expire with all the blame reserved for Democrats and President Obama. Republicans will have run the Treasury dry and flipped the political calculus with Democrats having to compromise to get a raise in the debt ceiling.

Democrats will be responsible for raising taxes on middle and lower class families by letting the payroll tax expire. Democrats will have let Republicans cut taxes once again without paying for it. Democrats will have failed to extend or eliminate the debt ceiling or stop the sequestration. Any new spending for jobs and infrastructure will fade into the realm of fantasy.

Next year will be doomed by slightly higher taxes that mostly hurt the middle and lower classes paired with historically lower discretionary spending, ie austerity light.

I hope I'm wrong.

Re: budget confusion
written by Dennis Doubleday, December 05, 2012 10:01

@jennifer: you can't remember as far back as Medicare Part D?

understanding marginal rates....
written by pete, December 05, 2012 10:24

I remember my blue collar days, and getting some overtime, and my check went up by a seeming tiny amount because I was bumped into an entirely new bracket. Remember that weekly payroll deductions assume that the current pay is 1/52 of the annual pay. I think many people run into this now and again. I remember thinking, wow 10 more hours, another $100, and then I only got like $40 or $50....bummer.

...
written by Oarboar, December 05, 2012 11:01

@Dennis Doubleday: Don't be too hard on Jennifer. Medicare Part D was passed with a shocking lack of media coverage. The same "liberal media" that now wrings its hands over the deficit and champions Republicans as fiscal conservatives was too busy worshipping at George W. Bush's feet to point out to anyone that Part D was thrown on to the budget without any funding.

55% marginal tax on largest estates
written by Richard Genz, December 05, 2012 12:35

Looks like the 55% rate will kick in only for largest estates. According to WSJ, "If Congress does nothing, the federal estate-tax exemption in 2013 will drop to $1 million. The top rate on the highest estates will soar to 55%" http://online.wsj.com/article/...45538.html

Anyone know potential tax brackets for estates over $1M?

estate taxes encourage dead beats
written by ethan, December 05, 2012 1:14

I have long held the opinion that beyond some point -- $1,000,000 per legatee, $10,000,000 per legatee, $100,000,000 per legatee, take your pick -- the estate tax rate should be 100%. Sure we let the Sam Waltons of the world keep vast amounts of their money, but why should we let the Sam Walton, JRS, of the world get for nothing such vast amounts of money -- and, hence, political influence? Don't we just encourage them to be non-productive, lagging, lay-abouts, giving money to influence their particular political preferences? OK, maybe their profligate spending sprees help the economy, and maybe they actually invest in industries that need financing, and maybe by not getting jobs they increase the number of openings for others, but come on!!!

the "government" does not pay for Social Security.
written by coberly, December 05, 2012 1:50

The workers do. By design. FDR said, "so no damn politician can take it away from them."

What the Big LIars are trying to do is use the debt to scare people into letting them "make changes" in Social Security that will end it's usefulness as insurance against poverty.

It wasn't so long ago that Republicans viewed "turning it into welfare" as a good first step to destroying it.

Now, we have "progressives" advocating making the rich pay for it... that is, turning it into welfare.

Poor FDR. poor workers. who will protect us from our protectors?

the estate tax
written by mel in oregon, December 05, 2012 2:24

ethan is totally right. if the very wealthy were good citizens of high character & made decisions with the best interest of everyone in mind instead of what they do, which is set into place politicians that they have bought who will continue to impoverish working class people in order to further inhance the very wealthy, then a huge tax on all inheritances over a million is in order & should have been put in place long ago. huge unearned wealth encourages sloth & speculation. the biggest deadbeats in the world are people like gw bush, romney, norquist, ryan, rove, the waltons, & the kochs. of course this list could go on indefinitely.

mel
written by coberly, December 05, 2012 2:51

the rich are very like you and me. they regard their wealth as "their money," what they got by being smart and working hard. they are not amused by plans to take it away from them or their heirs and give it to people who they regard as "from each according to his talents, to each according to his deserts."

i suspect that most of those rich could be persuaded to support... pay taxes for... a reasonable level of welfare, but if you frighten or anger them by proposals to take all of their money and "distribute it equitably" to end "inequality," they will fight you ... even if it takes more of their money to fight than it would have to just give it to you. and they will win.equ

...
written by liberal, December 05, 2012 8:32

coberly wrote,

the rich are very like you and me. they regard their wealth as "their money," what they got by being smart and working hard.

It's hardly our fault if they're too stupid to understand the concept of economic rent, or too evil to acknowledge that rents are never earned, but rather always stolen.

NYT Promotes Confusion Over Budget

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