25 thoughts on “Headline Ruse

  1. Ellen Mrja says:

    Excellent observation, Loveland. Not only does this headline hurt Dems today, it WILL undoubtedly be used in TV ads in the fall.

    Those Democrats. Always raising taxes.

    Truth is, no political party has the guts, the courage, to do what needs to be done in this state and in this nation to get us out of the fiscal crises we face. We need leaders. We don’t have any.

    1. Mike Kennedy says:

      Ellen:

      Funny you should say that. I just completed the book “Econoclasts: The Rebels Who Sparked The Supply-Side Revolution and Resorted American Prosperity.”

      It claims to be the first serious academic treatment of supply-side economics, its genesis and its tenants. It is written by Brian Domitrovic, a Harvard history Ph.D. and professor of history at Sam Houston State University.

      What I find fascinating is that it shatters the myth that Arthur Laffer sketched out some theory on a cocktail napkin. The author painstakingly takes us through the theory as practiced as far back as the Roaring 20s.

      The theory behind the name (attributed to former Nixon advisor Herb Stein) is that a favorable tax environment and stable money worked in the 1920s, again after WWII, during the sixties with Kennedy and again during the Reagan/Clinton eras. It also took issue not only with Keynesian theory but also with monetarism.

      Indeed, the modern father of supply side was a Canadian named Robert Mundell, a Nobel prize winner in Economics and professor at Columbia.

      Contrary to popular belief, supply side did not advocate tax cuts for the wealthy and never claimed that cutting taxes would pay for themselves. Even more surprising is that it seems to agree with Keynes on budget deficits.

      With more than 40 pages of sourced footnotes, this book is quite impressive, even though the meat of it is only 300 pages. What would the supply side supporters recommend now:

      Keep tax rates where they are; encourage and restore faith in the dollar — thus raising interest rates; curtailing liabilities in SS and Medicare by reducing future benefits (Generation X or younger); offset new spending by cutting from Bush programs and Republican earmark programs; make serious efforts at getting international consensus on fixed exchange rates and free trade.

      This is as well written as any book on economics I’ve ever read (and I’ve read a few).

      1. Ellen Mrja says:

        Mike: Whew. I need to really study before I can comment on your well-written and thoughtful review. When I have the time (I hope this week), I’m going to write a new post about this very topic and will count on you to critique, expand, help explore it. So rest up. For now, I’ve got to get back to work.

      2. Joe Loveland says:

        And other economists who write books, and win Nobel Prizes and Presidential Medals of Freedom, beg to differ. To name just a couple Paul Krugman and James Kenneth Galbraith.

      3. Mike Kennedy says:

        Yeah, the liberal Keynesian economists do disagree, naturally. They defend their turf. Twas ever thus.

        Uh, I think I pointed out that this school of economic thought takes issue with several others. I believe it was the fourth paragraph of my review.

        To date, I’ve read no intellectual rebuttal of the book and the historical record it documents. I anxiously await a direct response to it rather than some of the stuff I’ve read in the past that completely misrepresents the movement.

      4. PM says:

        Even some very conservative economists would disagree with supply side economics–Kevin Williamson say that there never was supply side economics under Reagan (or either Bush)–never really were any tax cuts under Reagan (or either Bush)–only deferred tax increases.

        Why? Because none of them ever cut spending, so the taxes that they choose to defer simply got paid later, after they became part of our huge deficit.

        http://article.nationalreview.com/431886/goodbye-supply-side/kevin-williamson

      5. Mike Kennedy says:

        PM:

        You are right. We didn’t have it in its purest form. As the book points out, part of the problem was that the collapse of inflation meant that existing debt had to be serviced with nondepreciated currency. Debt from 79-81 had average interest payments of 11 percent but with inflation down to 3 after 1982, the real interest payment obligations of the U.S. increased big time.

        Second, spending ceilings were never adjusted downward and kept the high inflation baked into the ceilings. The 8 and 9 percent levels set in late 70s just kept up with inflation but were not lowered to reflect lower inflation after 1981. And of course, there was Reagan’s defense buildup.

      6. PM says:

        I do think that it is helpful to distinguish supply side economics as economic theory, and supply side economics as politics, and to acknowledge that they are not even close to the same thing (I think that you are agreeing with this, Mike)

        Supply side economics as politics has been an abysmal failure., Supply side economics as economic theory has never been tried.

        Sadly, the same point could be made (and has been made) about marxism as economic theory and politics. Really, the only difference is that there are still a lot of people who are trying to push supply side economics as politics (which comes down to the mantra of tax cuts as the solution to everything)

      7. Joe Loveland says:

        Yes, the conservative commentator who coined the term “supply side economics,” Jude Wanniski, also developed and promoted in the Republican Party a political theory called the Two Santas Theory. What a gift that was to America!

        The Two Santa’s theory essentially advocates for Republicans to trump the Democrats’ historic “Santa appeal” (i.e. government assistance) with a Santa appeal of their own (tax cuts, mostly for wealthy, with some crumbs for the masses).

        In practice, the Republicans put the Two Santa’s theory on steroids. Republicans both cut taxes and increased spending, thus dramatically jacking up the deficit. Then, when the Republicans are out of office, they give the opposition stern Daddy lectures about the need to control the deficit they created. It’s a nifty little political theory.

        The problem is that sometimes deficit spending is needed during economic downturns — such as the worst downturn since the Great Depression — and then the deficit frivolously created during economic upturns severely limits options for stimulating the economy during downturns.

      8. Mike Kennedy says:

        PM:

        I generally agree. Again, however, as Domitrovic points out, principles of supply side economics did work in the 1920s, when taxes were cut and the dollar and prices were stable. It worked again in post WWII, during the early to mid sixties and during the 80s and 90s.

        I think the point of the book is that Mundell’s theories worked, sometimes spectacularly. Supply side proponents had little in common with the mainstream Republican Party in the 1970s. It didn’t become politicized until the 1980s and after.

        And once again, it did not advocate tax cuts for the sake of tax cuts. The book is a clear explanation of the school of that and why the pure school of supply side has worked.

        While I’m the last to call Republicans fiscally responsible, I sure wouldn’t award that title to the Democrats who literally controlled the nation’s fiscal policy in the late 70s and made a huge mess of it. I like the line in the below referenced piece: “Republicans expand government spending out of stupidity. Democrats do it out of malice.””

        This is an interesting piece.

        http://danieljmitchell.wordpress.com/2010/05/05/whats-the-future-for-supply-side-economics/

      9. Mike Kennedy says:

        Also, by what measure is this this worst financial crisis since the Great Depression? Decline in GDP or home foreclosures? By those measure, true.

        However, this is nothing like the 1970s early 80s in terms of inflation and interest rates. Inflation ravaged people’s incomes during that time, making everyone poorer and unemployment is about the same as the 1970s.

        Point is, we don’t have to go back to the 1930s to examine hard times and what worked.

      10. Joe Loveland says:

        I’m just a poor country bumpkin, but to me “economic downturn” connotes shinkage in the size of the economy’s output (GDP). And the smart people tell me that GDP went to the lowest point since the Great Depression.

        And by the way, I say “tomato” with an “ay” sound.

  2. I was curious to check one small thing: Sometimes news websites write one headline for display purposes atop the article — often more like what you’d see in a physical paper, written with concern for space, style, often the inclusion of a pun, etc. — and another headline for the page title as it appears in your Web browser — a play-it-straight, just-the-facts headline written for search engines, more than anything.

    But when I click the link you provided to this story in question, I first saw a glimpse of an error page and then was redirected to a different page with a different story by a different writer — though on a very similar topic. Same happens when I visit the pages that show up atop the Google search results for the original Lopez article’s headline. Odd.

    1. Joe Loveland says:

      The soggy Strib on my doorstep blared “Pawlenty’s Eager To Veto DFL Taxes.” TeaPaw himself couldn’t have written it any better.

      Coon Rapids ECM: “House passes state budget proposal with $441 million tax increase”
      KTTC: “Democrats in Minn. Legislature outline tax plans”
      WDIO: “Minnesota Democrats: Increase Taxes for Wealthy”
      KAAL: “Minnesota Senate Approves Tax Increase for Wealthy”
      KSFY: “MN Dems Aim to Raise Income Taxes for Top Earners”

      Some headlines were balanced, such as AP: “Minn. lawmakers vote to raise taxes, cut spending”

  3. Newt says:

    Headlines must come at this topic favoring liberty (the absence of new confiscatory measures by government) over preservation of the state apparatus.

    1. Joe Loveland says:

      I respect that that is your bias, Sir Newton. But it is bias. Are you comfortable with biased accounts of events in the newspaper?

  4. Newt says:

    Sir Loveland – the irony here is that the headline writers’ own bias poorly serves their left-leaning political agenda.

    In writing tax-veto headlines they think it makes Pawlenty appear avaricious and bad. In fact, the prevailing public sentiment is distinctly pro-liberty, anti-tax increase. The headline writers are unwittingly helping Pawlenty, thus your frustration.

    This is one of the rare instances where I am OK with an rare, but favorable unintended consequence.

    1. Joe Loveland says:

      Oh, I understand now. If the headline favors liberals, it’s evidence of a newspaper with a liberal bias. But if the headline favors conservatives, it’s not evidence of a newspaper with a conservative bias. Rather, it’s evidence of a newspaper that has a liberal bias, but is too inept to express it’s bias. Either way, liberal boogeymen at every turn. It’s a scary world out there.

      1. Newt says:

        Sir Joe: Are you trying to tell us the Strib has a conservative bias?

        My only point is that activists have a way of shooting themselves in the foot because they seldom think strategically. Theirs is an emotional response to external stimuli such as tax vetoes.

      2. Joe Loveland says:

        The Strib editorial board is liberal, no doubt about it. Liberal, though timid in tone, as Mr. Lambert reminds us.

        But editorial page aside, the Strib’s political reporters do cover any tax increase proposal as if it is akin to a genocide proposal, and that coverage bias on is extremely helpful to conservatives.

  5. Newt says:

    My favorite quote from the Strib’s story …

    “The DFL’s proposed tax increase is like Jason in ‘Friday the 13th’ — it’s scary and it keeps coming back,” Pawlenty said earlier in the day. “I know the DFL doesn’t look to me for advice, but here’s a tip: People want government spending cut, not taxes increased.”

  6. fishingmn says:

    I disagree with your premise.

    The so called “85%” is really not at issue – both sides agree to those. Therefore, the real negotiation/disagreement is how to bridge the $400M gap. TPaw believes in budget cuts and the DFL is proposing a tax increase. Under that context there is nothing wrong with the headline.

  7. Joe Loveland says:

    The DFL didn’t “agree” with the Pawlenty cuts, Fishing. Budget cuts that harm Minnesota families are at least as unsavory for the DFL to accept as tax increases on the wealthy are to Republcians. But accepting something even when you don’t agree with it is what you have to do to achieve a compromise. The problem is, there needs to be two parties negotiating in good faith to reach a compromise.

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