The Case for Obama - Part 5: Election Minutiae

Part 1: On Election Mythology
Part 2: On Trajectories and Private Sector Jobs
Part 3: On Deficits, Taxes, and The Figment of Our Collective Imagination
Part 4: On Tax Cuts for "Job Creators"

For our final entry, I'm going to throw out a bunch of bullet points. Whereas I tried my hardest to stick ONLY to facts in the first four, most of these are my own opinions, and I'm not trying to pass things off as anything other than that. These are primarily observations I've made over the past six months of campaign season.

• Mitt Romney said at the second debate that "government doesn't create jobs." Begs the question, then: why is he running for president if he believes that being in government won't create jobs?
• Mitt Romney's dad George ran for president. He released 12 years of tax returns when he was asked for just one. His reasoning? One or two years could be a "fluke" instead of the full trend. Mitt Romney released more than 20 years of tax returns to John McCain's campaign in 2008, and McCain picked Sarah Palin. That should tell you something about what's in those tax returns, people.
• Mitt Romney has a commercial out with five reasons not to vote for Obama. Two of the five reasons are outright lies, one is conjecture, and two are reasons that will not change under a Romney presidency. Lie: Under Obama, taxes on the middle class will go up $4000. The truth: "The ads cite a conservative group’s study, but even the group itself doesn’t say Obama will raise taxes on middle-income taxpayers. It says his budget could result in a “potentially higher tax burden” over the next 10 years." Lie: Obama cut $716 billion from Medicare. The truth: "Medicare’s money isn’t being taken away. The Affordable Care Act calls for slowing the growth in spending, a move that — if successful — would keep the hospital insurance trust fund solvent for longer than if the reductions didn’t happen." Of note, Paul Ryan took that same $716 billion out of Medicare in his own budget. Conjecture: 20 million could lose their employer based health insurance coverage. The truth: "The truth is that might happen under a very pessimistic scenario, according to the Congressional Budget Office. But the agency said it is more likely that about 3 million to 5 million fewer people, on net, would obtain health insurance from their employer under the law. The CBO said it’s also possible more people would be covered by employers, not fewer (which is what the CBO said actually happened in Massachusetts)." More on that one below. Same: Our debt will increase to $20 trillion. True, but Romney's proposals would increase the debt to $19 trillion by the same standards. Same: Energy costs will continue to go up. No president affects gas prices. They just don't. Neither candidate's energy plan will affect gas prices. If these five things are the core of Romney's argument, well, it isn't much of an argument.
• Some say regulations kill jobs. I say dirty air and dirty water kill people.
• Abortion rates are higher in countries where the procedure is illegal. To my right-wing friends, please explain to me how you can argue that making guns illegal won't get rid of guns and gun violence, but that making abortion illegal will suddenly get rid of abortions. Further, please explain how limiting or removing affordable access to birth control will lower the number of unwanted pregnancies and, by extension, abortions.
• To that end, please explain to me why any woman can support Mitt Romney, who cut an ad in Indiana supporting Richard Mourdock, who thinks it's God's Will when a women gets pregnant from rape. Romney distanced himself from Mourdock's comments, but won't pull the ad. Let's not forget that Todd Akin thinks a woman's body will shut down a pregnancy because it knows it's conceived of rape. Or that Paul Ryan was one of the guys who tried to write the law change to delineate some rapes as "forcible," and recently noted that rape was really just another method of conception. THESE ARE THE GUYS DRIVING YOUR BUS, REPUBLICAN LADIES.
• Please cite specific examples of voter fraud that necessitate all of these states--coincidentally swing states that Romney needs to win in which Republicans are in control of state government, hmm--creating laws that make it harder for people to vote. Go ahead. I'll wait. Maybe if you had good ideas, Republicans, you wouldn't have to try to suppress voter turnout.
• Just want to reiterate that tax cuts don't create jobs, but they DO create giant deficits.
• Republican policies over the past 10-15 years have completely favored the rich at the expense of the poor. I don’t like to ascribe religious leanings into politics. I hate the national myth that the religious and moral high ground belongs solely to Republican policy makers. I don’t think God is on anyone’s “side” when it comes to purely political issues. But I also don’t remember Jesus--in what I’ve read--ever talking about rewarding the rich at the expense of the poor or of minorities, and that’s ultimately what these policies of tax cuts for the wealthy and off-setting that by cutting things like education and Medicaid while destroying Medicare and Social Security do. Are there some magical benefits that we’re all missing that make it OK to do this, from a purely moral perspective? Or have I been misinterpreting the Gospels all this time?
• As we noted above, Republicans argue that Obamacare might (AGAIN: MIGHT) cause 20,000,000 people to lose their employer-based health insurance, though there are plenty of sources that call that claim false. In addition, the nature of Obamacare means that people that lose employer coverage can still get insurance through state exchanges. However, repealing Obamacare will increase the deficit, per the CBO. It will also DEFINITELY mean that people who couldn't get insurance because of pre-existing conditions STILL WON'T BE ABLE TO GET INSURANCE. Whether you like the machinations of the bill or not, IT EXPANDS INSURANCE COVERAGE TO 30 MILLION PEOPLE. So, if you're scoring at home, that's 30 million more insured people (not to mention easier access to preventative care) vs. 20 million people who might lose the coverage they have now but will still have the option to buy other coverage. Again, I hate to inject "morals" into politics, but which one is more moral, purely from a "love your neighbor" standpoint?
• If Paul Ryan's Medicare plan is so freaking great, why can't current retirees have it? Oh, that's right, because if you mess with their Medicare, they won't vote for you. Food for thought.
• Likewise, if we had privatized Social Security in 2005, how many people would have lost their entire life savings in 2008?
• Finally, they're called "entitlements" because we've been paying into them our entire lives. Thus, we're "ENTITLED" to that money.
• The current Supreme Court--at least a majority of it--thinks corporations should have the same rights as people. Mitt Romney thinks corporations are people. Corporations are not people, because as Elizabeth Warren correctly said: "People have hearts, they have kids, they get jobs, they get sick, they cry, they dance. They live, they love, and they die. And that matters. That matters because we don’t run this country for corporations, we run it for people. And that’s why we need Barack Obama." And, I would add, people can go to jail when they break the law.
• Along those lines, the next president will get to appoint two Supreme Court Justices.
• This president has been treated with less respect than any other president sitting in my lifetime. He has had his citizenship questioned (can't remember ANY other presidential CANDIDATE being asked to produce a birth certificate), he has been shouted at and called a liar by a sitting Congressman DURING the State of the Union, he has had a sitting governor stick her finger in his face while admonishing him, he has endured the mantle of being the first non-white president, and he has handled it all with a calm and cool we have not seen from nigh any other president. That, in my book, is the kind of leader I want: a leader that can ignore all of the noise and focus on his job. You need thick skin to be president, and this campaign has showed me that Obama has it, and Mitt Romney does not.

I thank those of you who've read this entire series of posts. It has helped me tremendously to write everything out, to organize what I think are both strong arguments for Barack Obama AND against Mitt Romney. Whatever you do, make sure that you vote. Not just for President, but for your leaders at every level of government.

Cheers. Obama 2012!

The Case for Obama - Part 4: On Tax Cuts for "Job Creators"

Part 1: On Election Mythology
Part 2: On Trajectories and Private Sector Jobs
Part 3: On Deficits, Taxes, and The Figment of Our Collective Imagination

First and foremost, let's call a spade a spade. "Job Creators" is nothing more than political-spin-speak for "rich people." To that end, we’ve had massive tax cuts on “job creators” for the past 11 years. Obama has tried to end those specific cuts while keeping tax cuts for the middle class, but he has admittedly had no success in the GOP-led House.

The heavy lifting, though, in terms of cutting taxes on the very tippy top was done in 2001 and 2003 under George W. Bush. What have those tax cuts to “job creators” given us?

Before we get to the numbers, let's talk about the rationale and some of the myths. The theory on tax cuts, as summarized by David Leonhardt in the New York Times, is this:

The main economic argument for tax cuts is simple enough. In the short term, they put money in people’s pockets. Longer term, people will presumably work harder if they keep more of the next dollar they earn. They will work more hours or expand their small business. This argument dominates the political debate.

But tax cuts have other effects that receive less attention — and that can slow economic growth. Somebody who cares about hitting a specific income target, like $1 million, might work less hard after receiving a tax cut. And all else equal, tax cuts increase the deficit, as Mr. Bush’s did, which creates other economic problems.

There's no doubt that having some extra capital in the hands of startup businesses and other small operations would help. However, in researching, I stumbled across an interesting piece from 2010 by Peter Cohan of Forbes. In it, he interviewed 17 startup CEOs, and slipped in this nugget:

One other thing -- with a single exception -- none of the Job Creators I talked with plan to hire people solely because of the tax incentives being discussed in Washington. Since many of them have been losing money during their startup stage, they don't need the tax breaks. And even if they did, they say such incentives wouldn't be an important factor in their decision to create new jobs.

So, while extra capital can certainly help small businesses, from Cohan's (albeit small) sample size, most people are more concerned with growing their businesses regardless of the tax policies enacted. Or, to put it another way, they're not going to hire people ONLY because of tax cuts, which throws the notion that we NEED tax cuts on "job creators" out the window. It should also be pointed out that most startups lose money during their initial years, these are hardly the wealthy incomes that are going to see a tax increase under Obama. We'll have more on this below.

Much like Bush's early agenda, tax cuts--skewed toward the wealthy, no matter what Romney may say to the contrary--are the cornerstone of Romney's recovery plan. So, is there any evidence that tax cuts really drive growth in the employment market? Let's look at some raw employment numbers.

When Bush came in in 2001, the U6 unemployment rate was 7.3%. Bush inherited a budget surplus and an economy not yet in recession, immediately cut taxes, and saw that rate jump to a peak of 10.4% in 2003 before settling back to 9.3% by the end of his first term. When Bush left in 01/2009, the U6 was 14.2%. The private sector lost a total of 646,000 jobs over Bush's eight years in office, though it must be pointed out that private sector jobs dropped from 2001 through 2003, rose from 2004 through 2007, and then fell off a cliff in 2008.

Obviously, there are many factors that affect job creation in this context. But, is there evidence that sustained tax cuts created jobs at a better rate than without them? It wouldn't appear so. It would appear that tax cuts passed by Bush in 2001 and 2003 had mixed results, based purely on the numbers above. So, let's ask a rhetorical question: do tax cuts create jobs?

One of the better articles I've read on the subject is by Rick Ungar, who writes for Forbes (though he is admittedly their "token lefty" in his own words). He reviews two different measuring sticks to determine whether George W. Bush's massive tax cut package for the very wealthy spurred job growth, as compared to the job growth rates under other two-term presidents over the last half-century. And, to give Bush the best possible outcome, he even didn't factor in the last year of Bush's presidency in which the economy was bleeding jobs. What were the results of his study?

So, should we argue over which measuring stick is the better judge of success?

No need. Let’s use them both because, whether we use one tool or the other, the growth in jobs following the Bush tax cuts remains surprisingly small in comparison to the job growth achieved by two-term presidents without the benefit of the mega-tax cuts for the wealthiest among us as delivered by President Bush.

Using the CES survey, employment during the period measured grew 4.5 percent. Using the CPS approach, employment grew 7 percent—both numbers producing a large yawn for Gary Burtless, a senior policy analysts with the centrist Brookings Institute, because neither number is very impressive, particularly if one is seeking to make the case that cutting taxes on the so called ‘job creators’ equals job growth.

By Mr. Burtless’ calculations, the Reagan years produced double-digit job growth. Same goes for the Clinton era, the 8 years of the combined Nixon and Ford administrations, and the 8 years of the combined Lyndon Johnson and John F. Kennedy terms (both Ford and Johnson finished the terms of their predecessors.) Indeed, the only two-term president in modern history to experience job growth as sluggish as that experienced during the President George W. Bush years used in this analysis, even before the recession set in, was Dwight D. Eisenhower.

...

So what does this data tell us?

For starters, given that all of these two-term presidents experienced better job growth without the assistance of the massive tax cuts for the wealthy provided by President George W. Bush, it certainly seems fair to note that a certain amount of job growth would have come during the years George W. was president—whether he had given us the tax cuts or not.

And if one feels the need to argue that tax cuts are the great driver of employment, the comparative numbers presented make it shockingly clear that these tax benefits to the wealthy do little to nothing to even keep up with the employment increases under all of the other two term presidents of the modern era, with the exception of poor old Ike.

So, in Ungar's summaries, we see that, even without counting the dreadful last year of Bush's presidency, his rate of job growth was much lower than any other two term president this side of Eisenhower. And, his last note is important. As I noted in previous posts, the rate of growth that Romney's campaign numbers cite is SLOWER than the current job growth trajectory of Obama's recovery.

Not exactly a ringing endorsement for tax cuts, eh?

In addition, two other snippets come from the NYT article I linked to above. First, a September report from the Congressional Research Service found that over a 65 year span changes to the top tax rate “do not appear correlated with economic growth.” CRS is a part of the legislative branch within the Library of Congress, and confidentially works primarily and directly for Members of Congress, their Committees and staff. They are non-partisan.

For the second item, we'll give the final word to Donald Marron, who was quoted in the NYT article to which I linked above: “At the level of taxes we’ve been at the last couple decades and the magnitude of the changes we’ve had, it’s hard to make the argument that tax rates have a big effect on economic growth.”

Donald Marron is the director of the Tax Policy Center, and was a former member of the Bush administration.

Romney would be inheriting a less stable economy than Bush did, but one at least heading in a positive direction over the previous three years. Bush's job rates grew more slowly than any other two-term president in 50 years. And if you factor in Bush's entire legacy, where is the evidence that his tax cuts did ANYTHING to help the economy? Further, is there ANY precedent that we should do the exact same thing on a much larger scale now?

But what about Obama's plans, you might ask? The first issue: many small business owners complain that raising their taxes will stop their growth, because higher taxes on higher income levels remove the incentive to grow to that point. Some argue that small businesses might even lay people off to get under that threshold. Some even argue that a tax increase might force them out of business. Very scary stuff, indeed.

However, as Matthew Yglesias points out in Slate, it doesn't really work that way at all. In order to see ANY tax increase, a small business owner must be making AT LEAST $250,000 in profit each year. That means that, after ALL of their expenses and overheard, they're making $250,000. And, per Yglesias (emphasis mine),

The way U.S. income tax brackets work is that taxes are levied on marginal income. In other words, the rate applied to income earned over the $250,000 threshold is irrelevant to the first $250,000 worth of taxable income. If you have $250,010 of taxable earnings then only that last $10 is taxed at the higher rate. In all cases, higher pre-tax earnings lead to higher after-tax income.

Similarly, a curiously large number of the small business owners surveyed by House Republicans don’t seem to understand the difference between profits and revenues. The issue here is that some (but not all) small firms are organized as what are called “pass-through entities” for tax purposes. ... A pass-through entity... pays no taxes. Instead its profits are distributed to its owners (typically a small group of people) and they pay income—but not payroll—taxes on the proceeds.

So, it would seem that all these doomsday scenarios about what will be happening to small business if taxes are raised on the rich are either intentionally misleading, or are due to a lack of understanding of how the tax code actually works. I'll admit, I had to look it up myself.

Most importantly, even John Boehner has admitted that only 3% of people classified as "small businesses" will face any tax increase at all. The scare tactic that "half of small business income will see higher taxes" is because that top 3% makes HALF OF THE SMALL BUSINESS INCOME. Think about that for a second. 97% of "small businesses" make less than $250,000 a year, and therefore will see NO TAX INCREASE.

Second, does raising those taxes on the top earners stunt overall job growth? Recent history would actually suggest that it might have the opposite effect and spur MORE job growth. In fact, raising taxes to help combat rising deficits has happened twice in the past 20+ years: despite his campaign promises, George H. W. Bush raised taxes in his 1990 budget at the behest of the Democratic Congress, and Bill Clinton raised them again in 1993.

There was a recession in 1991, but from January 1990 through December of 2000, the economy added 23.672 million jobs, of which 20.943 million were private sector jobs. Obviously, there was a tech boom during that period of time, but it doesn't appear that the "job creators" were too strapped for cash because of higher taxes to invest in those jobs.

This isn't to say that Obama's plan to raise taxes on the wealthy will create 20 million jobs. After all, it's not intellectually honest to quote someone who says that the tax rate of the top 1% doesn't directly affect the economy and then turn around and say raising taxes will create jobs. I'm not saying that. But, consider: the CBO has already predicted that the economy would create 9 million jobs:

The Congressional Budget Office is required to consider the effects of the so-called “fiscal cliff” if a year-end budget deal is not reached, which many experts believe would push the country into a recession. But even with that caveat, the nonpartisan agency assumes 9.06 million jobs will be created between 2013 and 2017. (This is a revision downward; CBO had estimated 11 million in January.)

The biggest caveat is that the result of Bush 41's and Clinton's tax increases is that, by the end of the decade, the federal budget deficit was gone. After eight years of Bush 43 and tax cuts, the budget deficit was back to $1.3 trillion.

So, whose tax plan is better? History tells us it's Obama's, by a HUGE margin. A decade of higher taxes, during which the economy was NOT stalled and created almost 21 million private sector jobs and erased deficits in the budget, or eight years of tax cuts that produced no net job gains in the private sector and blew a hole of over a trillion dollars in the yearly budget deficit?

This shouldn't be hard to figure out.

Tomorrow, we'll attempt to wrap this up with Part 5: Election Minutiae.

The Case for Obama - Part 3: On Deficits, Taxes, and The Figment of Our Collective Imagination

Part 1: On Election Mythology
Part 2: On Trajectories and Private Sector Jobs

We've looked at some myths about Obama's first term, as well as some of the more important trends in the labor market. Today, we're going to (try to) tackle the issues of deficits, debt reduction as a campaign tool, and taxes--more specifically, tax cuts--as they relate to the current deficit situation.

(As a note, there are two words used a bunch below, but they are not used interchangeably. For reference, when I use the word "deficit" I'm talking about the yearly fiscal budget deficit. When I use the word "debt" I'm talking about the national debt. Big difference, and important in many of these contexts.)

One of the big campaign points of the Romney campaign is the issue of the national debt, and tangentially the federal budget deficit. I looked at the deficit in very small part on Monday as one of the four myths. Today, we're going to look at Romney and his political party, since they of late have been driving this "deficit and debt" bus.

I take serious issue with the notion that Romney will be better on the deficit. As high as the deficit is, it hasn’t grown under Obama (yes, the national debt as a whole has, but it has been growing steadily since 1957 and yet here we all still are...). I take issue with this notion that Republican politicians are somehow misers when it comes to deficit spending; it’s just not true, even though in 2010 they started trying to sell the idea that it is.

For 20 years, under Reagan and the Bushes, the national debt increased compared to GDP every single year. Dick Cheney himself said: "Reagan proved deficits don't matter." When Reagan’s first fiscal year started, the debt was $998 billion. He increased it by over 186% in eight years, or 23.3% for each year. George W. Bush increased his national debt by 89% in eight years, or 11.1% for each year. George H.W. Bush and Clinton grew it by 54% and 32% respectively. So, yeah, the national debt has grown under Obama by 36%, only slightly higher in relation to his predecessor, and ahead of two other Republican presidents over the past 30 years.

Most damning in terms of evidence of where we are right now comes from the CBO, which releases a 10-year forecast every year. Then, each year, they take a look at the past 10 years as compared to their forecast from 10 years ago. If we're seriously going to look at deficits and national debt, this is a damn good place to start. From the CBO, revised in June of 2012:

In January 2001, CBO's baseline projections showed a cumulative [budget] surplus of $5.6 trillion for the 2002–2011 period. The actual results have differed from those projections because of subsequent policy changes, economic developments that differed from CBO's forecast, and other factors. As a result, the federal government ran deficits from 2002 through 2011. The cumulative deficit over the 10-year period amounted to $6.1 trillion—a swing of $11.7 trillion from the January 2001 projections.

Funny, we're $16 trillion in debt. CBO says we could have only been $4.3 trillion in debt. And, though the Republicans are so quick to blame Obama for this, remember this: George W. Bush inherited a budget SURPLUS of roughly $127.3 billion in 2001, which followed three other surpluses under Clinton: $69.2 billion in 1998, $125.6 billion in 1999, and $236.4 billion in 2000.

This was not that long ago. That national debt was still substantial when Bush was sworn in: around $5.7 trillion, and that coming even after four straight years of a budget surplus. However, Bush IMMEDIATELY said that the budget surplus meant we were all paying too much tax! Tax cuts for everyone! And so, it is with great non-objectivity that I state that anyone that voted for Bush even once has no right to complain about the national debt under Obama. Why not, you ask?

The 2002 budget deficit, which was Bush's first budget? $157.8 billion deficit. Total budget deficits under George W. Bush, from 2002-2009: $3.5474 TRILLION.

So, when Republicans--especially ones serving in government currently--claim to be the party of fiscal responsibility, the numbers don’t lie: we know better. The truth is that EVERYBODY in government since Bill Clinton and the teeth-gritting bipartisan work of the late 90's--when they weren't trying to impeach him for getting a hummer--are the last people that can lay any claim to any kind of fiscal responsibility.

Check VP candidate Paul Ryan’s voting record when it comes to deficit spending. And he's supposed to be the "budget hawk"!! Check Ryan's budget proposals, which Romney has said he would sign into law were they to land on his desk as president. Per FactCheck.org back in 2011:

Ryan says his plan would not increase the debt. In fact, under his plan the public debt would increase from $10 trillion in 2011 to $16 trillion in 2021, by his own figures. That’s a slower increase than under President Barack Obama’s budget, but the debt would still rise substantially.

I think almost everyone can agree that deficit spending needs to be curbed. However, the notion that it’s ALL on Obama right now just isn’t accurate. And, there’s no data that Romney would somehow slow deficit spending. In fact, it seems like he’ll increase it. THIS is the figment of our collective imagination: that we can just keep on cutting and cutting taxes, and still somehow balance our budget. The only president to balance a budget since Richard Nixon was Bill Clinton, and he did it by raising some taxes. Republicans have all signed a pledge to Grover Norquist--a non-elected official, mind you--that they won't even CONSIDER any tax increases. So, if it is your policy belief that taxes need to be cut to stimulate the economy, then you have to take the issue of debt and deficits off the table. Those two ideas cancel each other out.

Romney STILL hasn’t told us how his tax cuts--which, as we discussed previously, will create jobs at a slower rate than our current job gains--will even be revenue-neutral and won't heavily favor the rich. The Tax Policy Center has said it’s mathematically not possible (source), and the big reason why is that his tax cuts do away with the Alternative Minimum Tax, which is put in place to keep the super-rich from taking enough deductions to reduce their amount paid below a certain threshold. He's also cutting the capital gains rate and the estate tax, both of which heavily favor the very wealthy.

And, despite the claims that the cuts will somehow broaden the base enough to create enough revenue to balance everything out, Romney’s claim is just 7 million jobs over 10 years. 700,000 additional tax payers per year isn’t enough to offset the $500 billion-per-year deficit the tax cuts would create, unless each of those new taxpayers forks over $714,285.71 a year.

I know, I know, it's not really that simple. More taxpayers would imply lower unemployment, which in turn means fewer monies paid out by government support agencies. But, look at that number. And, consider that, here in Ohio, if you made ZERO income in wages for a calendar year from June 2011-June 2012, your MAX unemployment benefit is $2678.00. 700,000 people at that rate would only account for $1.875 billion in savings over a year. The tax cuts cost $500 billion over a year. It still doesn't add up, unless everyone starts paying a ton more sales tax and we jack up payroll taxes. But that won't happen, because the Republicans all signed a pledge for NO NEW TAXES!

The ironic thing is that, in a way, Romney is potentially proposing a Trojan Horse tax increase. The original notion was that removal of deductions would cover the revenue needed to pay for the tax cuts (which begs the question, aren't you just robbing Peter to pay Paul by paying a lower rate but still somehow owing the same amount of money?), though he won’t say specifically which deductions are on the table.

All I can say is: if the mortgage and charitable donations deductions go away, my tax obligation WILL GO UP even if my "rate" is lower; you'll have to take my word for it that I'm squarely in the middle class. It doesn't take a slide rule to figure this stuff out.

And this is Romney's sleight-of-hand. He can say that he's not raising taxes on anyone, because he's cutting the rate for everyone. However, we all lower our amount of money owed (hence, tax refunds) by deductions. And, it's just simple math: for people of very modest incomes, giving up deductions definitely has a very large impact in the percentage of money owed. So, Romney can "cut middle-class taxes" while still causing members of the middle class to either owe more money come tax time, or get smaller refunds. And that, by every definition, is not a "tax cut" for the middle class.

Conversely, by removing the AMT, cutting capital gains, and gutting the estate tax, there's no "floor" for the super wealthy anymore. How all of THAT doesn't add up to a huge drop in revenue--and therefore a huge increase in the federal budget deficit--is a feat of mathematical genius we've not seen on this planet before. Except that it isn't, because Romney STILL hasn't explained how it will work.

The "broadening the base" argument doesn't add up, as we showed above. Romney's latest tack has been this notion of capping deductions, which I'm sure sounds like a great idea in theory. But, until we hear specific numbers (Romney just made one up on the spot in the town hall debate), there’s no way to know if it will work. But, I'm a subscriber to the principle that all things being equal, the simplest explanation tends to be the right one, combined with the notion of "following the money" when it comes to deciding what's true.

Romney took a deduction for his wife's dressage horse that was more than I've made in any one year of my now-14-year professional life. Am I to believe that Romney is now suddenly going to cap deductions in such a way that he’d forfeit enough of his to balance out this tax rate cut? Follow the money.

Further, if you believe him, Romney believes the government has little to no role in the lives of every-day people (unless you're gay or are putting something into/taking something out of your uterus). Why, then, would I believe that he’s suddenly going to change the deduction policy to give up MORE of his own money to an institution he doesn’t believe in? He didn’t become a gajillionare by giving away more of his money. The simplest explanations tend to be the correct ones. Follow the money.

But, to be fair, those last two paragraphs are pure editorializing on my part, mainly because Romney simply won't tell us how it's going to work. He skirts this notion of the math by saying that "the rich will still pay the same share of the taxes that they do now." Well, sure. But the devil's in the details: If the top 10% pay 70% of the taxes, then (as an example) they'd be paying $700 million of a $1 billion pie. Romney wants a 20% rate cut across the board, which would imply that the new pie would be $800 million. The top 10% can still pay 70% of that pie, but that slice drops from $700 million to $560 million. So, just in this tiny example, the top 10% have gotten out from under $140 million in taxes while "still paying the same share" of the taxes.

This is just math, people. Maybe this is why Obama is pushing so hard for more math teachers. Romney just wants us to trust him that it will work. Vote for me! We'll sort the whole thing out after the election! I, for one, don't trust him, and neither should the average middle class person. Romney can say he's concerned about the middle class all he wants, but there's no real evidence that his policies somehow don't favor his super-rich buddies.

On top of that, Romney wants to increase military spending. The $2 trillion number is a bit of a reach by Obama; what Romney has said is that it shouldn't drop below 4% of GDP. However, in a fact-check of the argument, Glenn Kessler had this to say:

To sum up, the $2 trillion figure is not adjusted for inflation, is based on predictions of the size of the economy 10 years from now and makes assumptions about Romney’s policy that his campaign says are not correct.

Still, Romney is proposing a significant boost in defense spending. By the campaign’s own account, the budget increase is as high as nearly $1.6 trillion over the president’s current path — or at a minimum almost $1 trillion more than Obama’s budget two years ago.

So, regardless of what figure you use, Romney is essentially proposing at least $160 billion a year in additional military spending. And, regardless of whether or not you think that spending is necessary, it's STILL SPENDING that is not accounted for by increased revenues.

What I’m trying to argue today is that, if we truly want to cut the deficit and national debt--for which both parties bear plenty of responsibility--who’s being more realistic in 2012? Obama, who is willing to admit that we’ll have to raise revenues while also cutting spending, and has proposed raising taxes on wealthy people to help do it? Or Romney and Ryan, who are proposing a spending package so massive that it ALONE will cover almost HALF of our current budget deficit EVERY YEAR FOR TEN YEARS? Without any provable means of offsetting that increase? And no discernable boost in job growth according to their own numbers?

It just doesn't add up. And, NO ONE on the Republican side should talk about the debt and deficit reduction as a reason to sack Obama, because math is not on their side.

Romney claims the president's proposals will raise taxes on the middle class. Factcheck.org says that's not true on its face, and is based on a partisan report that offers no definitive answer as to what will happen.

And, with Romney as a whole, the spending collateral damage of his tax policies elsewhere is, in my opinion, catastrophic. Is Romney’s tax cut proposal so good that we have to sacrifice Medicaid for it, for instance? That we need to make it legal again for insurance companies to deny coverage to people with pre-existing conditions (even though, as the CBO pointed out this summer, repealing "Obamacare" would actually RAISE the budget deficit by almost $2 billion per year)? That we need to cut women’s access to birth control and cancer screenings via Planned Parenthood because they use 3% of their money nationwide for abortion services? And on that issue, that we need to force a woman who’s been raped to have a baby she doesn’t want? (Romney's tried changing positions on that last one, but look in the Republican platform and listen to Paul Ryan; it's still there. Also don't forget that when Romney ran for Senate in Massachusetts in the 1990's, he was firmly pro-choice.) Giving student loans back to big banks so they can soak fees off of the money loaned? Raising interest rates on those student loans? Cutting pell grants?

Do we need to go to fucking war with Iran?

All of that shit--and much, much more, some of which has no bearing on jobs but instead comes from antiquated religious and social fears--is what comes along with Romney’s tax plan by virtue of the wingnuts on the far right of his party that are driving the bus. Is it really worth it? Is it so good that we have to take all the other junk with it, just to give some super-rich people a huge tax cut?

Barack Obama says that we don't. And I agree with him.

Beyond that, unless Romney pulls some magical data about his enormous tax cuts and their stimulative impact out of his ass, his use of deficits and the national debt as a campaign tool is nothing more than an obfuscating tactic meant to stir up anger at incumbents. Nothing more. And if Romney truly wants to blame all of the people responsible for free-wheeling spending, he need look no further than his own running mate.

Tomorrow, we'll look at whether Romney's tax plan really stimulates the economy in Part 4: On Tax Cuts for "Job Creators".

The Case for Obama - Part 2: On Trajectories and Private Sector Jobs

(Read Part 1: On Election Mythology)

Yesterday, we covered some of the more pervasive myths about Obama's first term. But, what this is really all about is the next four years. So, let’s look at where we’re heading, with the context of where we've been in our minds. This is where you have to put on those critical thinking caps that your teachers tried so hard to get you to use back in school.

You can look at a snapshot of the economy devoid of any context and say, “It’s bad.” And no one can really argue. But, when you look at trends and trajectories, there’s a lot more going on. The economy isn’t “great” right now, but in the standard electoral question of “Are you better off than you were four years ago?” the answer is pretty clear. First, here's the overall private sector job trend from Obama's first term (all graphs created at BLS.gov):

Obama has recovered all of the jobs lost from his end of the recession. However, I think it's important to look at the way the economy was going before he took office. From January of 2008 to January of 2009, the economy LOST 4.662 MILLION JOBS. In terms of trajectory, that’s an average of 388,500 job losses every month, and the peak was that January of 2009 just before Obama took office, when the economy lost 839,000 IN JUST ONE MONTH! Here's the 2007-2008 private sector job graph:

So, that downward slope is what was happening--for a full year--before president Obama took office. And, as it got closer and closer to him taking over, the trend was heading steeper and steeper downhill.

So then what happened? The economy’s rate of job losses decreased to 734,000 in February, and continued to decrease until the economy lost just 35,000 in February of 2010. From then on, it’s done nothing but gain jobs.

Compare the trend and trajectory from 2008 to 2009: in 2008, it was going downhill like a snowball picking up steam as it went. Obama took office. The snowball started slowing down. Within a year it was stopped, and the economy began to go back in the right direction. Here's the 2009-2010 trend. Notice how it levels off and starts back up again:

Now, let’s look at another trend. From February of 2010 until now, the private sector has gained jobs every month, to the tune of a monthly average increase of 152,452 jobs for 31 straight months. Here's the graph from 2010-2012:

So, which trend is better? -388,500 jobs per month for a year, or +152,452 for almost three years? ARE WE BETTER OFF THAN WE WERE FOUR YEARS AGO? YOU BET!

Now, let’s talk some more trajectory. The economy is recovering, but some say (cough—Romney—cough) that it’s not recovering fast enough. If we just stay at our current average of job gains for the next 52 months—i.e., October-January, plus 48 more months under Obama’s current trajectory—the economy adds 7.928 MILLION private sector jobs.

Romney says that’s not fast enough. I wrote extensively about this earlier on Facebook (and my number there of 7,317,696 jobs is based soley on a comparison of the second term of Obama), but here is the big hiccup in Romney’s jobs plan: he claims his tax and spending policies will create 7 million jobs alone. However, the source he cites is a TEN year projection, not a FOUR year projection. I don’t have to tell you that that’s only 2.8 million jobs over four years, not 7 million. If you read the whole breakdown, his “12 million jobs” over four years is actually 6.3 millions jobs. Obama’s current tractory is more than 1 million jobs MORE than that. So, who’s really too slow?

The point of all of this is not to say everything's great with the economy. I don't feel like Obama has ever tried to say that it is. The point here is to say that the economy was in total free-fall when Obama took office. He stopped that trend, reversed it in just one year, and has us headed in a sustained, positive direction. And beyond that, Mitt Romney's ENTIRE jobs plan--if we're to believe the numbers he cites--would actually slow the private sector job growth.

So, you may not like President Obama. But, if you really feel like Mitt Romney will be better on the economy and jobs, you'll need to find some new data that says so. All that we have now points to Obama handling the economy more strongly in a second term. Oh, and lest you think we’re done with Romney’s tax plans and his claims, we’re just getting started. Tomorrow, we'll move on to Part 3: On Deficits, Taxes, and The Figment of Our Collective Imagination

The Case for Obama - Part 1: On Election Mythology

The 2012 presidential election has become one of the more polarizing in recent memory (right up there with 2004). What this election is most likely going to come down to is the economy. The choice is whether we keep on the same track of progress we’ve been making, or change direction. As anyone who follows me on Facebook knows, I’m pro-Obama. I’ve reconstituted this blog after four years--for only a couple of weeks--to lay out the case for why I'm pro-Obama.

I'm going to try to explain why I think he will be better for the economy over the next four years, and I’m going to lay out a pretty broad picture over several entries. First up: let's do some myth-busting on the economy.

Myth 1 – Barack Obama caused the recession and is solely responsible for the economy.

The Truth: the economy went into recession in December of 2007, and the bottom fell out in September of 2008. Beginning in April of 2007, the U6 unemployment rate—which some will argue is one of the better measures of the state of employment and jobs in the economy—began rising from 8.0% in March of 2007 to 14.2 at the end of January of 2009, which is when Obama was sworn in. That was 22 months of that rate increasing, and that was all BEFORE OBAMA WAS PRESIDENT. The private sector lost 4.038 MILLION jobs during that stretch.

President Obama took office right in the midst of this horrible stretch.

Myth 2 – Barack Obama’s stimulus “failed,” and the economy is not recovering under Barack Obama’s leadership.

The Truth: Inheriting the downward trends outlined above, Obama enacted policies that put the brakes on that recession. His stimulus bill passed in the spring of 2009, and, “The truth is that the stimulus increased employment by between 1.4 million and 3.3 million people, compared with what employment would have been otherwise.“ (source)

Job losses steadily decreased (more on this tomorrow) until February 2010, and from that point on, the economy has done nothing but grow jobs. 4.256 million TOTAL jobs have been added to the economy since February of 2010. And, incredibly, 4.726 million PRIVATE SECTOR jobs have been created in that period. (source)

Wait, there are more private sector jobs than total jobs? What?? This leads us to...

Myth 3 – Barack Obama has grown the size of government.

The Truth: Again using the BLS website, we see that government jobs under Obama have DECREASED by 575,000 throughout his entire first term.

Myth 4 – Barack Obama DOUBLED the budget deficit in his first year.

The Truth: the widely-accepted notion that Obama doubled the deficit is not correct, and based on a false attribution that Bush’s fiscal-year-2009 budget is “Obama’s spending”. On Jan. 8, 2009, the C.B.O. projected a deficit for the year of $1.3 trillion that didn’t include any Obama policies (source).

The budget deficit has hovered slightly above or slightly below that number in subsequent years. The budget Obama submitted in February of this year for fiscal year 2013 requested just $900 billion in deficit spending. Federal spending has grown more slowly under Obama than under any president since Eisenhower. (source)

Those are four pretty big myths busted, no? To my eyes, it appears that Barack Obama inherited a shit-storm of an economy, put the brakes on a huge slide, and he turned the ship around and got it moving in the right direction. And it has continued moving in a positive direction for almost three full years.

Stay tuned for tomorrow's Part 2: On Trajectories and Private Sector Jobs