Wednesday, March 24, 2010

Another good blog I have found...

...recently is capitalgainsandgames.com. Bruce Bartlett, an economist from the Reagan administration, wrote a good piece the other day about the tea partiers. (All emphasis mine.)

The first question that was asked concerned the size of government. Tea partiers were asked how much the federal government gets in taxes as a percentage of the gross domestic product. According to Congressional Budget Office data, acceptable answers would be 6.4%, which is the percentage for federal income taxes; 12.7%, which would be for both income taxes and Social Security payroll taxes; or 14.8%, which would represent all federal taxes as a share of GDP in 2009.

Not everyone follows these numbers closely and tea partiers may have been thinking of figures from a few years ago, before the recession when taxes were higher. According to the CBO, the highest figure for all federal taxes since 1970 came in the year 2000, when they reached 20.6% of GDP. As we know, after that George W. Bush and Republicans in Congress cut federal taxes and they fell to 18.5% of GDP in 2007, before the recession hit, and 17.5% in 2008.

Tuesday's tea party crowd, however, thought that federal taxes were almost three times higher than they actually are. The average response was 42% of GDP and the median was 40%. The highest figure recorded in all of American history was half those figures: 20.9% at the peak of World War II in 1944.

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In short, no matter how one slices the data, the tea party crowd appear to believe that federal taxes are very considerably higher than they actually are, whether referring to total taxes as a share of GDP or in terms of the taxes paid by a typical family.

Tea party goers also seem to have a very distorted view of the direction of federal taxes. They were asked whether they are higher, lower or the same as when Barack Obama was inaugurated last year. More than two-thirds thought that taxes are higher today and only 4% thought they were lower; the rest said they are the same.

As noted earlier, federal taxes are very considerably lower by every measure since Obama became president. And given the economic circumstances, it's hard to imagine that a tax increase would have been enacted last year. In fact, 40% of Obama's stimulus package involved tax cuts. These include the Making Work Pay Credit, which reduces federal taxes for all taxpayers with incomes below $75,000 by between $400 and $800.

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Probably the simplest motivation the tea partiers have is the one that Howard Beale (actor Peter Finch) gave in the 1976 movie Network. "I'm mad as hell and I'm not gonna take it any more!" he said to cheering crowds. In other words, tea parties just represent unfocused anger at current economic conditions. Those who feel this way have latched on to the tea party movement not because they really believe that their taxes are too high, that taxes are rising or that taxes are at the root of our economic problem. Rather, they have joined because it's the only game in town; the only organized force with at least the potential of bringing about change that might make things better.

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