Relevant and even prescient commentary on news, politics and the economy.

Unemployment “Truthers”

Via Mark Thoma’s Economists View comes Bruce Bartlett’s post at The Big Picture

by Bruce Bartlett:

Unemployment ”Truthers’

Donald Trump and Other Republicans Are Unemployment “Truthers”, The Big Picture: Among Donald Trump’s stump sound bites is that the national unemployment rate is far, far higher than the official rate of 4.9 percent. He is not alone in making such claims. Both former Texas Governor Rick Perry, who dropped out of the presidential race last year, and retired surgeon Ben Carson have repeated this claim during this election cycle. Its origin dates back to the 2012 election when many Republicans believed that Barack Obama had ordered the Bureau of Labor Statistics to report a much lower unemployment rate in October, just before the election, than seemed plausible. It also feeds into a growing distrust for government statistical data that parallels a denial of scientific facts such as climate change.

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Bruce Bartlett and Yves Smith on Overhyping the Fiscal Cliff

This video featuring Bruce Bartlett and Yves Smith on Overhyping the Fiscal Cliff is worth watching.

Independent political and economic analysts Bruce Bartlett and Yves Smith join Bill in a discussion that’s become as rare as it is necessary — why are Washington insiders talking about the deficit crisis and not the jobs crisis? Bartlett, former advisor to Presidents Ronald Reagan and George H. W. Bush, got into hot water with fellow conservatives when he aired concerns about the direction of their ideology and wrote critically of the second George Bush. His most recent book is The Benefit and The Burden: Tax Reform — Why We Need It, and What It Will Take. Yves Smith, who spent more than 25 years in the financial services industry, is the founder and editor of the popular blog Naked Capitalism, and runs a successful management consulting firm. Published on Dec 14, 2012

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Disappearing inconvenient data

Via Barry Rithotz at The Big Picture comes Bruce Bartlett’s take on
:

Bruce Bartlett and the dangers of Republican know-nothingism 

Bruce Bartlett goes off on some of the denialist behavior from the GOP. Bartlett writes: When a study doesn’t support their dogma, the GOP censors it: Nonpartisan Tax Report Withdrawn After G.O.P. Protest

Original study still available here: Taxes and the Economy: An Economic Analysis of the Top Tax Rates Since 1945 (PDF)

Bartlett discussed how Republicans destroyed much of Congress’s analytical ability when they took over in 1995: Gingrich and the Destruction of Congressional Expertise
He adds “This is part and parcel with poll denialism, global warming denialism, and the general right wing disdain for facts and reality.”

Note: Before making any kneejerk partisan reaction to this, note that Bartlett — Like Stockman and others — sre not trying to mske a pro-Democrat argument; rather, they are acknowledging a major societal concern when one of the 2 major political parties have foresaken science and reality and facts when they disagree with their agenda.

(Dan here…I am willing to bet this is a non-partisan issue to some extent and age old way of supporting agendas…but if data cannot be trusted to have a bit of independence, where does that leave us?)

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Bartlett: Mitt Romney, Carried Interest and Capital Gains

Via  Taxprog blog:

Bartlett: Mitt Romney, Carried Interest and Capital Gains
New York Times:  Mitt Romney, Carried Interest and Capital Gains, by Bruce Bartlett:

A key reason for Mr. Romney’s low tax rate is that a very substantial amount of his income comes from capital gains – 51% in 2011 and 58% in 2010. Capital gains, no matter how large, are taxed at a maximum rate of 15%, whereas wage income can be taxed as much as 35% by the income tax plus taxes for Medicare and Social Security. The latter two are not assessed on capital gains.
The New York Times recently commented in an editorial that while the carried interest loophole is unjustified, the core problem is lower tax rates on capital gains generally. Said The Times, “As long as income from investments is taxed at a lower rate than income from work, there will be no stopping the search for ways, legal or otherwise, to pay the lower rate.”
The view that capital gains should be treated as ordinary income for tax purposes is one that is widely shared by liberal tax reformers. They got their wish, briefly, from 1987 to 1990 because Ronald Reagan agreed to raise the tax rate on capital gains to 28% from 20% in return for a reduction in the top rate on ordinary income to 28% from 50%, as part of the Tax Reform Act of 1986.
There are three big problems, however, with taxing capital gains at the same rate as ordinary income.

First, even if that were the case, capital gains would still be treated more beneficially, because the taxes only apply to realized gains. …
Second, there is a problem with inflation insofar as capital gains are concerned. Many academic studies have shown that a considerable portion of realized capital gains simply represent inflation, rather than real increases in purchasing power. …
Third, it is a fact of life that those with great wealth are the principal beneficiaries of the capital gains tax preference, and they exercise influence in our political system far out of proportion to their numbers. …
[I]t is a pipe dream to believe that eliminating the capital gains preference is the key to fixing the carried interest loophole. It can and should be addressed by treating carried interest as ordinary income, without requiring that all capital gains be taxed as ordinary income.

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Wealthy Non-Taxpayers — From 60 to Thousands in 30 Years

by Noni Mausa

Wealthy Non-Taxpayers — From 60 to Thousands in 30 Years

Bruce Bartlett provides the numbers, but it’s so much easier to see in a chart.

Wealthy Non-Taxpayers 1977 to 2009, showing incomes over $200,000 per year.  Blue is percentage of total households over $200,000 paying no taxes, purple is numbers of high-income households paying no taxes. Numbers from chart here: http://economix.blogs.nytimes.com/2012/06/05/rich-nontaxpayers/, drawn
from IRS data.

On this chart, the percentage appears relatively stable with a low of 0.066 to a high of 0.529 (66 per 100,000 to 529 per 100,000) but actually that’s an eightfold increase, mostly accruing after 2004.
The numbers of households, however, leap like a gazelle after 2004, reaching a high of 22,000 high income households paying no taxes, from a low of only 60 in 1977.

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What it means to be a Conservative Economist Today

Bruce Bartlett posts a note that could have come from me (but, for reasons that will become obvious, did not:

During the 8 Reagan years, when marginal [tax] rates were sharply cut (but deficits were substantial), equities on the NYSE and the S & P 500 about doubled.

During the 4 Bush 41 years, when the top MTR was increased (only slightly), equities rose about 50%.

During the 8 Clinton Years, when MTRs were substantially increased, equities tripled, deficits turned into large surpluses (as far as the eye could see, leading some to fear that the Fed would be unable to conduct monetary policy if the public debt was redeemed).

The market today is roughly where it was (a bit higher) when Bush 43 took over, who cut MTRs, but ballooned the deficit.

So, Bush 41 and Clinton raised MTRs without tanking the economy, and Clinton left Bush 43 with a fabulous fiscal situation.

So much for the Republican argument that reducing MTRs is the nirvana of tax/economic policy and raising MTRs its death knell.

The e-mail was from “a person well known in conservative economic circles” who “asked that [Mr. Bartlett] not use his or her name if I used this information.”

We’re not talking about proprietary information here. And it is saddening that a prominent economist would not be able to discuss such elementary data in public without the promise of anonymity.

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