FRIDAY, DECEMBER 17, 2010Does anyone ever know anything around these United States: Reading this morning’s New York Times, we were struck by David Herszenhorn’s report about the tax cut bill. Here’s the way he started out. We’ll include the headline:HERSZENHORN (12/17/10): Congress Sends $801 Billion Tax Cut Bill to Obama
Congress at midnight Thursday approved an $801 billion package of tax cuts and $57 billion for extended unemployment insurance. The vote sealed the first major deal between President Obama and Congressional Republicans as Democrats put aside their objections and bowed to the realignment of power brought about by their crushing election losses.Put Herszenhorn’s instant “analysis” to the side; let’s concentrate on those numbers. How many people understand what is found in this bill? Let’s try to answer that question from the liberal perspective.
Herszenhorn breaks the package down into two components. Presumably, most liberals would approve of the $57 billion for extended unemployment insurance. This leaves $801 billion in tax cuts, Herszenhorn says. (The headline describes the measure as an “$801 billion tax cut bill.”)
Let’s break those tax cuts down:
For starters, how many liberals understand that $137 billion of those “tax cuts” represents two years of adjustments to the Alternative Minimum Tax—a “fix” the Congress enacts every year, with complete bipartisan agreement? We’re not saying this is a good or bad thing; we’re merely saying that this adjustment occurs every year, and would have occurred this year in the absence of any larger package or plan. As such, the inclusion of the annual “fix” in this package tends to disguise the actual size of the package. (In 2009, the annual “fix” was included in Obama’s stimulus plan. There too, for good or ill, this distorted the actual size of what Obama had wrought.)
Taking away the AMT fixes, this reduces the size of the Obama “tax cuts” to $664 billion. This is the size of the things Obama has done which wouldn’t have happened anyway, without a word of comment.
Our question: How well do you understand the way that $664 billion breaks down? In particular, how much of that amount stems from extension of the “middle-class tax cuts”—tax cuts Obama always favored, with little liberal opposition? How much of that sum stems from the “tax cut for the rich?” Continuing, how much of that total stems from the one-year cut in payroll taxes? How much stems from the estate tax provision?
How does that $664 billion break down? Scanning two of our major national newspapers, it’s amazingly hard to find out. As best we can tell (using Nexis), the New York Times has never reported how much of the cost of this package stems from the so-called “middle-class tax cuts.” As best we can tell, the Times hasn’t reported how much of the sum stems from the “tax cut for the rich.”
On December 10, the paper of record did suggest that the estate tax provision “would result in $68 billion in lost tax revenue compared with letting the tax reset to pre-2001 levels.” On December 13, the paper reported that the one-year reduction in payroll tax “will cost $112 billion.” In this way, the paper accounts for $180 billion of that $664 billion. But we can’t find the paper reporting how much those other, widely-discussed provisions would actually cost. Nor can we find this information reported by the Washington Post, although Shailagh Murray reported this on December 14:MURRAY (12/14/10): The package would add $858 billion to deficits over the next decade, according to congressional estimates. The bulk of the cost—about $545 billion—would come from a two-year extension of income tax reductions enacted in 2001, as well as provisions to adjust the alternative minimum tax for inflation through 2011, sparing more than 20 million mostly middle-income taxpayers from sharply higher tax payments in the spring.Subtracting the $137 billion for the AMT, this suggests that extending the Bush tax rates represented $408 billion of the total. (Just this once, we’ll let you ask us about our arithmetical methods.) As best we can tell, the Post’s reporters have never broken that down into its two components (“middle-class” versus “rich”).
Our point? Here as always, it’s amazing to see how little our discourse is driven by information. All over the country, people are screeching about these various provisions—yet these two famous papers have made little effort to report their various costs. Taking away the AMT fixes, $664 billion in “tax cuts” seem to be lodged in this bill. But how do the costs break down? As best we can tell, these newspapers haven’t bothered to report such basic facts. Meanwhile, a great deal of additional confusion is introduced by the logic of this situation, in which the continuation of existing tax practice is persistently described as a “tax cut.” (There are reasons for speaking that way, but confusion is churned all the same.)
Do you understand what Obama has wrought? Do you feel sure that anyone does?
