Friday, January 21, 2011

Pushing the Envelope on Conservative Math

Steve Benen's got a post about a delusional column by Charles Krauthammer (does he have any other kind?), in which Krauthammer writes:
Suppose someone -- say, the president of United States -- proposed the following: We are drowning in debt. More than $14 trillion right now. I've got a great idea for deficit reduction. It will yield a savings of $230 billion over the next 10 years: We increase spending by $540 billion while we increase taxes by $770 billion.

He'd be laughed out of town. And yet, this is precisely what the Democrats are claiming as a virtue of Obamacare.
And along with Benen, I'm left wondering: What exactly is so laughable about this?  $770 billion minus $540 billion is $230 billion.  That seems like pretty basic arthimatic, even with the word "billion" in there.  Perhaps this is part of the new math, where 770 isn't bigger than 540.

And I suspect that part of Krauthammer's problem is that he's bought into the absurdist myth that there is somehow something wrong or evil about taxes.  As if nothing involving a tax increase can be good for the deficit, while tax cuts are a magical thing that make deficits disappear. 

Protecting Peter to Destroy Paul

And this delusion is so strong that it now permeates even their most basic analysis, as they now seem to have conflated tax revenues with the funds we're collecting from, and if we let rich people keep more of their money, it's the same as the government collecting it.  And since the free markets are better at allocating funds than the government, in their minds, then it's simply better to allow the markets to decide where the money is spent.

But of course, it's not like that and in order to compensate for every dollar we don't collect in taxes, the cut would have to make considerably more in order to keep tax revenues equal.  As a simple example, if we tax $100 at a 40% rate, we'd collect $40 in revenue.  But if we cut that rate to 35%, the person who got the cut would have to generate an additional $14.29 with the $5 he got to keep in order to keep tax revenues at $40. 

And that's why it's absurd to imagine that tax cuts pay for themselves, as that would have to happen every year.  And if private industry can't parlay that $5 savings into an extra $14.29 every year, we'll come out behind.  But to conservatives, this has become a zero-sum game, in which we're robbing Peter to pay Paul, unaware that Peter is part of Paul's expenses and if Paul doesn't have enough to pay his bills, it'll hurt Paul, Peter, and Mary. 

And that's part of another lie, in which government spending only benefits the government, and if we deny them funds, it'll benefit the rest of us.  And so you get the impression that the Fat Cats in Washington are giving themselves huge bonuses with the funds they collect, rather than building roads and helping people who are struggling to survive. 

And even if they acknowledge that the money is spent to help people, it's as if we're to somehow believe that this money falls into a vacuum, rather than pumping up the economy the same as if private industry kept it.  And rather than understand how taxes can help individuals, communities, and the economy; they inexplicably believe that it does none of these things and only makes things worse. 

Even the individuals we help are damaged by these funds, we're told, as it just makes them lazy; which is why they don't deserve to be helped, because they're so lazy that they need help from the government.  It's an amazing piece of circular logic that doesn't even make sense in its own terms.

The Tax Hike Secret

But frankly, I'm just amazed that Krauthammer has at least acknowledged how it is the healthcare law reduces the deficit, even if he finds it laughable for reasons he can't explain.  Most conservatives simply accept it on faith that it'll balloon the deficit, unaware of the tax increases it contained. 

I recently mentioned the tax increases to a conservative friend who opposed the law and he didn't seem aware of them at all and had no response.  Apparently, he hadn't been given a talking point on this, and couldn't even rant against Obama raising taxes.  And for as much as that's odd, as you'd think they'd be screaming about Obama hiking taxes on everyone, I suppose since that'd let everyone understand how Obama's being truthful when he says it cuts the deficit, I can see why they prefer to be mum on the whole thing. 

But seeing as how even an intelligent conservative like Krauthammer considers it laughable that a tax increase could pay for spending increases, I suppose it's just a matter of time until they all accept on faith that "Obamacare" destroys the budget while also raising taxes on those poor rich people.  I truly worry about these people.

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