Oy. There goes the MSM again, trying to distract the American people with cynicism and verbiage, even in the midst of a story about policy. Such are the conclusions of TAP’s Ezra Klein and Atlantic’s Matt Yglesias who link to my Fuzzy Math Tax Plan story this morning. Since I have downed beers in both Matt’s and Ezra’s kitchens, I must take these concerns seriously.
On substance, they both make the point that there is nothing complicated or fuzzy about the differences between the tax plans of John McCain and Barack Obama. McCain’s plan mainly benefits the wealthy, while Obama’s plan has higher taxes on the wealthy and mainly benefits the lower/middle class crowd. They’re right. And I would be embarrassed for omitting this obvious fact, if I had omitted this obvious fact. From my story:
They do, however, 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.
For both Ezra and Matt, this is the most important fact. And they are not the only writers on the progressive side of the political divide that think so. (Conservatives counter with the argument that the overall economy will be hurt by Obama’s comparative tax increases for the rich, hurting those in the lower brackets.) But my story was interested in more than just that fact. I wondered which candidate was more fiscally responsible, given the universal concerns about a spiraling national debt that could eventually mean economic ruin. And when you start looking into that question, you quickly realize that the numbers are fuzzy, and the campaigns are cagey, which was the overall point of my story.
To illustrate this point, let me take a stab at the “current policy” benchmark that Ezra brings up in his post. This benchmark assumes that the Bush tax cuts do not expire and that the AMT patch continues–neither of which is a sure thing–meaning there will be less revenue coming into the government. Under the “current policy” benchmark, both campaigns look pretty reasonable. Obama would raise revenue about $800 billion over a decade. McCain would cut revenue about $600 billion over a decade. This analysis does not take into account the candidate’s health care plans, which include additional tax cuts. Both the Obama and McCain campaigns agree that when you add in the Obama health care tax subsidies, there is a net decrease in revenue over ten years. McCain’s decrease in revenue would also get even larger.
But what happens if we compare the candidate tax plans to the “current law” standard, which the Tax Policy Center scholars prefer. Under this standard, the tax cuts expire as expected and the AMT continues to grow as planned. That’s good news for the nation’s debt, but bad news for the campaigns, which suddenly look fiscally irresponsible. Under the “current law” standard, both campaigns are planning massive tax cuts for the American people: $4.2 trillion for McCain and $2.8 trillion for Obama, over ten years. So much for acting fiscally responsible on the stump. The Obama campaign made it very clear to me that it was just not realistic to use the “current law” standard. But there is an irony to this: The Democrats, who once claimed that the Bush tax cuts were a great abomination visited upon the national debt, now want to assume the Bush tax cuts as a baseline, because to do otherwise would be to admit that they are proposing another abomination. Suddenly the campaign’s math looks a lot more fuzzy. This was the reason I chose to avoid these numbers altogether in my story, and instead compared the two tax plans to GDP.
More after the jump…
Along these lines, consider another big difference between the fiscal plans of McCain and Obama. McCain assumes that the money we are spending on the Iraq war now, which is effectively not paid for by taxes, is not sustainable spending. When the war ends, which the McCain economic projectors expect at some undetermined point, McCain plans to stop spending that money on anything, to help balance the budget. Obama, on the other hand, thinks that deficit spending on the war is essentially free money that can be put to other uses. And he will do that. You can decide who has more honest accounting. (And we have not even begun to discuss all the zany spending cut assumptions that both campaigns make, but that will come later. The TPC is working on another analysis and there is a forum planned to hash out these issues.)
As to the larger point that Ezra and Matt make about my cynical framing of the story, I think they have a fair argument. But I don’t agree with them. The cynicism in the story is directed at the campaigns, not at voters. I am not trying to get anyone to avoid policy. My point is that the campaigns are organized to obfuscate and deceive voters. This is especially true when it comes to issues of fiscal responsibility. So here’s the question: Does pointing out this “fuzziness” lead to increased voter helplessness and apathy? Or does it help voters understand the complicated shell game that is being played? I think the latter. Ezra and Matt think the former. And one day, we can all hash it out in someone’s kitchen over beers.
The Tax Policy Center report, which is the basis for all of this discussion, can be found here.