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Thursday, September 8, 2011

Hey Kate Marshall: Keep talking!

Patrick Coolican, a columnist for the Las Vegas Sun, isn't happy about Kate Marshall (D) running for Congress. She blames the payroll tax for at least a portion of Nevada's unemployment problems. She's also not in favor of the government taking on massive amounts of debt. Best of all, she seems more interested in finding ways for government to become more efficient and effective rather than finding new ways to plunder the people. In other words, Kate Marshall fails Cooligans litmus test for Democrats.

This is ironic considering the Las Vegas Sun spent considerable amount of editorial retail space attacking Nevada Republicans for their "no tax hike" litmus test. Apparently Democrats have to be equally as rigid...expect in the opposite direction - tax, tax, tax! It's like Coolican never heard of a guy named Bill Clinton, a Democrat who oversaw reductions in U.S. trade tariffstax cuts in 1997 (yes, Dems seem to forget about those), welfare reform and a reduction in government deficits because of budget cuts that resulted in a budget surplus.

Cooligans errors and omissions are bigger than this alone. Lets review:

Criticizing Marshall's vocabulary, Cooligan writes,
To begin with, anyone who uses the nonword “disincent” should be disqualified from being in Congress.
Well, "disincent" is not a nonword. It is MBA/Economist jargon meaning the opposite of the word of incent. You can also use it as disincentivize or disincentive which is the opposite of incentivize and incentive respectively  So to begin with, maybe any journalist who doesn't know economic jargon should be disqualified from writing about economics.

Attacking her as being not Democrat enough, Coolican has to quote Mark Amodei; her Republican opponent. Kate Marshall correctly attacks Nevada's payroll tax as a disincentive (there's that WORD again!) toward hiring workers. She's right. Nevada's payroll tax takes a percentage of every dollar earned by every employee. In other words, the more people you hire and the more you pay each employee the more taxes you will pay. It's a stupid tax.

Amodei's rebuttal, "I can point to nothing more significant than five years of phenomenal growth and prosperity after [the tax increase]," is asinine. Marshall's point is the payroll tax reduces employment and Amodei's rebuttal (and Cooligan's reliance on it) does not negate that point. He only says: we had a few good years before the bottom fell out. It is very well likely that the payroll tax discouraged employment in the good times too, but is now exacerbated by the poor economic situation.

To demonstrate how asinine Coolican's thinking is, lets examine the Bush Tax cuts which Coolican blames on our current revenue position. Both cuts were enacted in 2001 and 2003 but the economy grew will into 2007. Government tax revenues also grew from $2.3 billion in 2000 to $2.4 billion in 2007 (in constant 2005 dollar values). According to the same logic Coolican uses to criticize Marshall, shouldn't we see years of declining revenue after the tax cuts...even in good times?


Next, Coolican shows he isn't really interested in the creative, outside the box thinking Nevada's government really needs. No, Coolican prefers doing the same thing over and over and over again - raise taxes! Cooligan writes,
Marshall says she would have voted no [on the tax increase], the only Democrat standing with Sharron Angle to take a butcher knife to schools and social services. Oh no, excuse me, she would “drive down costs in other ways and spend smarter.” Please.
Think about this for a moment! Have Democrats written "thou shalt always raise taxes" into stone?  This isn't critical thinking. We need more Democrats like Kate Marshall! Democrats trying to find how to effectively use the resources we already have, rather than providing the brain dead retort of "raise taxes!!!"

Coolican's central fallacy here is that he assumes every dollar the government spent last year was effective and efficiently spent. That is pure and utter nonsense, but this is what he implies every time he argues for another tax increase or criticizes someone who wants to look for savings with government spending.

Next Coolican demonstrates the ignorance on government budgeting the way only a journalist could. (The Las Vegas Sun has been notoriously bad on budget issues in the past). Without the tax increases back in 03-04, Nevada would have needed to cut a meager $100 million or so. Not a big deal over the course of 2 years. But because of the tax increases on top of an economic bubble, the Nevada state government threw themselves into a wild spending bender. In fact, thanks to the "small tax increase" the state government collected and spent over $1 billion a single biennium.

*Figures sent to me by Andrew Clinger during the Gibbons administration back in 2009.

$1 billion extra, it turns out, we wouldn't have when the economy stalled. Our state leaders - led by more brain dead thinkers - raised taxes again to keep the spending bender going.

If Democrats had been as thoughtful as Kate Marshall we wouldn't have spent our way into this mess in the first place!

Next, Coolicans claim that the stimulus packages worked and would have worked better if they had been bigger is laughable at best. There is simply NO evidence that it worked and NO evidence that it would have worked it if was bigger.  The stimulus (under both Bush and Obama) are widely regarded as failures. The federal government uses ridiculous and non-empirical methodology "saved or created" which is nonsensical to any rational and empirically minded American.

Coolican makes enough logical and economic errors in the article to write a book but I will finish off when his last and biggest error. He writes,

Another interesting fact: As a percentage of gross domestic product — in other words, the portion of our total national income — total federal, state and local taxes are the lowest they’ve been in more than 60 years, according to one-time Reagan economist Bruce Bartlett. 
If low taxes are the answer, why aren’t we swimming in good times?"
The problem is that Bartlett is being disingenuous (he knows better) and it is clear Coolican doesn't know economic terms, not that we have low taxes.

Our government spends more today than during WWII

According to the Mercatus Center at the George Mason University combined U.S., state and local government spending as a percentage of GDP is higher today than during the middle of World War II. That is simply stunning. We have big government today, not little government.

Of course, Coolican and Barlett are only talking about federal tax revenues, not what is actually spent by all government. It is true that Federal revenues as a percentage of GDP at the lowest point in some 60 years but there are two central problems with this statement.

1) By definition Gross Domestic Product (GDP) includes government spending. So when government spending increases so does the GDP - this does not mean the economy is improving however. Basically Barlett and Coolican are wanting you to look at revenues as a percentage of GDP without looking at the actual spending, which by definition is part of GDP. In otherwords they're misleading you (its likely Coolican doesn't meant to do this on purpose).

From the Tax Policy Center at the Brookings Institution.
Adjusted for inflation to 2005 dollars.

The important number is how much government spends, not what it collects in tax revenue. Since the high point in 2007 Federal revenues have fallen 21.2 percent. However, government spending has increased 30.3 percent! Every dollar the government borrows is a dollar that can't be borrowed and spent by the private sector. Nothing is really added to the economy although GDP rises or his held steady by the government spending (again only because of how GDP is defined not necessarily because government spending works).

2) Even ignoring state and local spending, Federal government spending is way up! According to the left-of-center Tax Policy Center at the Brookings Institution, Federal outlays (spending) as a percentage of GDP is at its highest point since 1945! Today, the Federal government spends 25.3 percent of the GDP, higher than in 1946.

Yes Mr. Coolican, government spending is up, not down. We have a spending problem and we need critical thinkers like Kate Marshall who are willing to look for ways to get government to work smarter not tax more.

1 comment:

  1. Coolican is just a baldheaded clown and is just missing the red rubber nose. He actually thinks the stimulus and TARP actually worked and if we just spent more money, we would have a robust economy.
    I think he went to the Paul Krugman school of economics/opinion writing.