Time Magazine Brad DeLong Death Spiral Watch (Reporting on Fiscal Policy/Michael Scherer Edition)
I do owe Michael Scherer an apology. I am nerving myself up to make it...
"But math is hard!" says Time magazine stenographer Michael Scherer. He opens with an interesting story:
The Candidates' Tax Plans: Fuzzy Math: "The choice in this election is stark and simple," John McCain said at recent Denver event, repeating a phrase that is a staple of his stump speech. "Senator Obama will raise your taxes. I won't." Seems clear enough, right?... Except it's not true, at least not in the way that it seems. But don't take my word for it. Here is Douglas Holtz-Eakin, McCain's chief economic policy adviser. "I used to say that Barack Obama raises taxes and John McCain cuts them, and I was convinced," he told me in a phone interview this week. "I stand corrected [about Obama's plans]"...
UPDATE: The McCain campaign says that Holtz-Eakin was not serious, and that Scherer failed to get the joke--that Holtz-Eakin was "responding, tongue-in-cheek, to a contention that Obama's fiscal policy would be a net tax cut."
UPDATE 2: Michael Scherer convincingly explains that the McCain campaign was not telling the truth in UPDATE 1: Holtz-Eakin was off-message, and the campaign wishes that he had not said it.
Scherer then misinterprets the story. Scherer says it shows how very complicated and hard-to-understand the Obama tax proposals are, and how even a smart guy and tax expert like Douglas Holtz-Eakin can misinterpret them: This is wrong
That's because unlike sound bites, the policies proposed by Obama are actually complicated. He would raise taxes on those who make more than about $200,000.... But Obama has also proposed a whole range of tax cuts, for poor seniors, working people, homeowners and parents, as well as for health-care expenses and even renewable energy. The net effect, according to experts in both campaigns and independent analysts, would be a reduction in government revenue over 10 years. In other words, a tax cut...
This is completely wrong.
When Doug Holtz-Eakin used to say that Barack Obama was proposing an overall tax increase, he was comparing the Obama proposals to the George W. Bush wish list. Doug Holtz-Eakin says now that Barack Obama is proposing an overall tax cut because the McCain campaign has decided that it has credibility problems--and that enough reporters believe that using the Bush wish list as a baseline does not pass the laugh test. This is wrong too. Holtz-Eakin was freelancing and got off message.
Unfortunately, Michael Scherer is a reporter who does not understand that the dispute was about baselines and not about analysis. And this is wrong.
Michael continues:
[D]on't expect McCain to change his rhetoric on the stump. That's not how this game is played. On Wednesday, the Obama campaign put out a press release claiming that McCain's economic plan was "$2.8 trillion more expensive than his advisers previously admitted." These were ominous words, playing into the old story line about Republicans using budget gimmickry. But the statement was largely based on an interpretation of a tax plan — for an optional alternative income-tax system, with a flat rate — that McCain has never described in detail, let alone with enough specificity to gauge...
However, I still have what I regard as a valid beef with this paragraph.
When McCain proposed getting rid of the Alternative Minimum Tax and replacing it with a different system, an Alternative Maximum Tax, you can bet that somebody on McCain's staff was immediately put in charge of generating a rough, back-of-the-envelope estimate of its cost. Then the McCain campaign decided that it did not want to do a full estimate--did not want to specify how this baroque Alternative Maximum Tax complication to the tax system would work, and did not want to publicize or release any of its own estimates of its costs. When you make proposals and then suppress the numbers associated with them, others are allowed to make the natural inferences. The fact that McCain has "never described in detail" has Alternative Maximum Tax and has never provided "enough specificity to gauge" its costs is not a point for McCain--except in the in-the-tank-for-McCain world in which Michael Scherer lives.
It gets worse: Michael Scherer complains over and over again that math is hard:
The people who run campaigns... translate complex economic projections into aphorisms... turn tax plans that must be read with lawyers' help into sentences a third-grader can understand...
Legislative language in the Internal Revenue Code needs a lawyer's help to understand. These plans do not.
"They are better off speaking in sound bites and generalities," says Bob Williams of the Tax Policy Center, who recently did the unthinkable with some colleagues: he tried to figure out what the two candidates' tax plans would actually mean. It wasn't easy. "One challenge facing anyone who wants to estimate the effects of candidates' tax plans is that no one — not even inside the campaigns — knows exactly what the proposals are," reads an early conclusion of the resulting report. "In a sense, we have done them some harm here by saying we want to pin you down on what you mean," Williams explains.
Yet somehow this Michael Scherer who holds up Bob Williams as honest broker doesn't have the guts to tell his readers that the "$2.8 billion" number he trashed two paragraphs above was the estimate of Bob Williams and his colleagues.
Then--mirabile visu--Michael Scherer admits that the candidates actually have different fiscal policies:
They... offer plans that differ strikingly from each other. McCain's tax plan benefits mostly those in higher income brackets, while Obama's plan benefits mostly those in lower- and middle-income tax brackets. McCain wants a tax cut for corporate profits, while Obama has proposed a whole host of tax cuts that will benefit those in the middle-income brackets. Both candidates have new spending programs, though Obama appears to have more. And both candidates say they will cut spending elsewhere, though they fail to provide many specifics about how.
So what is a concerned voter to do?... According to the Tax Policy Center, neither Obama nor McCain has laid out plans to close the budget deficit over the next 10 years under current spending regimes. Not counting health proposals, the McCain plan would collect about 17.9% of GDP through taxes. The Obama plan would collect about 18.4%. For comparison, congressional accountants predict that, under current law, the Federal Government is projected to spend about 19.7% of GDP in the same time period, meaning both McCain and Obama would run deficits — 1.8% and 1.3% of GDP, respectively — without significant cuts in federal spending or surprising growth in the economy.... Few independent analysts think that McCain has much hope in reaching his goal of a balanced budget by 2013, but then they are just working off sound bites, not actual numbers. The McCain campaign's hypothetical spending cuts would only be achievable, they say, by a President who did not have to negotiate with a historically big-spending Congress. "King McCain might be able to do it," says Len Burman, another author of the Tax Policy Center report. "But President McCain will have a very difficult time"...
One thing a concerned voter might do is look for an honest broker--like the Tax Policy Center. But does Michael Scherer advise voters to do so? It sounds like he does, but then Scherer reverses field:
And so we return to where we began, a war of words with few numbers to back them up. The candidates speak in platitudes and broad swipes.... American voters, if they are interested, must sort through the literature seeking numbers that were never really meant to add up.... The only way to find that out may be to put them in office.
Math is hard!
Why oh why can't we have a better press corps better weblogging economists?
