Archive for fiscal policy

MarketWatch’s Rex Nutting On Obama Spending (Infographic)

It’s been going around Facebook and the Twitters.

It’s been rated “mostly true” by Politifact.

It is the MarketWatch piece on how Obama hasn’t really increased spending all that much.

And I’m damn tired of picking it apart 140 characters at a time, so I put together this sarcastic infographic showing exactly how sloppy this piece really is.

(Correction: An earlier version of this infographic incorrectly identified the $3.8 Trillion 2013 as a CBO projection. That is the spending request from President Obama 2013 budget.)

UPDATED (05/24/12, 3PM):

There are three things in this infographic that should be called out more explicitly.

First, much of the debate here centers around who exactly should catch the blame for FY 2009 spending. This is actually a very tricky question and I think compelling cases can be made for both sides of this debate.

My personal position is that it’s really complicated. But one thing is for certain: in hindsight the CBO January 2009 estimate is so obviously wrong that using it should be called out and mocked.

The January 2009 CBO estimate might have been a “best estimate of what Obama inherited”, but only in January 2009 when spending data was *very* hard to predict. January 2009 marked the worst part of the recession and the uncertainty was very high. Only a few months later, Obama’s budget estimated 2009 spending would be $400 billion higher than the CBO estimate.

But now we can look at the data, not the estimates. And we should. The spending data ended up $20 billion lower than the CBO estimate… and that included the stimulus spending (which Nutting says was $140 billion, but I’m still trying to track that number down). If that is the case, the high-end estimate for Bush’s fiscal year is  $3.38 trillion. If we compare that to Obama’s 2013 budget proposal ($3.80 trillion), that’s an increase of 12.5% (3.1% annualized). Which isn’t that high, but it’s also using a baseline that is still filled with a lot of what were supposed to be 1 time expenses (TARP, Cash for Clunkers, the auto bailout, the housing credit, etc).

Second, Nutting uses the CBO baseline in place of Obama’s spending. This is easily verified and I can’t think of a serious economic pundit who would say this is OK. I can think of two reasons for doing this: Either a) Nutting is a monstrously biased ass who (rightly) figured no one in the liberal world would fact check him so he could use whatever the hell number he wanted to use or b) Nutting had no idea that the CBO baseline isn’t a budget proposal. I’m actually leaning toward the second explanation. Nutting uses so many disparate sources it seems clear he doesn’t know his way around federal finance.

Congrats, Mr. Nutting. I don’t think you’re a huge jerk, only that you’re hilariously unqualified for your job.

Finally, my biggest goal here was to point out the inconsistencies in the analysis. Nutting wants to use the 2009 CBO estimates, but only one column (only for attacking Bush on spending). He wants to compare estimates from one year to actual spending from other years to the CBO baseline from this year. And, as if he is a magical cherry-picking elf, he manages to pick just the right numbers to give him just the right data. This could be an accident. Stranger things have happened. But it seems more likely that he intended to squash a talking point by any means necessary and he went looking for the best data to do that.

I will be accused of massaging the data by people who don’t understand what I’m doing here. I’m pointing out the data massaging on Nutting’s side and calling him on it. I’m saying “If you’re going to use the CBO estimate, use the f***ing CBO estimate!” Don’t use just the part you want and then pretend like the rest of it doesn’t exist. Commit yourself to the data you’re using and follow it, even if it doesn’t go where you want it to go.

OK… references:

Bush requested $3.107 trillion, but the final budget of $3.52 trillion was passed by the Democratic Congress and signed by President Obama on March 12, 2009.

For actual spending, I used the monthly Treasury Reports, which have spending and revenue for every month since 1981 in an Excel file.

For the CBO fiscal year 2009 estimates.

The CBO baseline (which was referenced by Nutting for the $3.58 trillion number) is found here.

President Obama’s actual 2013 budget

And just for kicks, here is the CBO analysis of the President’s Budget which pegs Obama’s 2013 spending at $3.717 trillion.

Romney Tax Day Infographic

The Romney team just released an infographic comparing the federal budget to a household budget. Replicated below:

image

I wanted to give an informal critique of this infographic. I honestly believe creating infographics is a form of art and that we need to give deep and careful consideration to all aspects of this art.

who is the target audience?

What they should want out of this infographic is to have the viewer see themselves in the family budget. They should be targeting a) people who are independents and b) people who might care about the federal budget.

I’m going to go out on a limb and say that the average family of four making under $25K a year doesn’t give a crap about the federal deficit. And complaining about it to them is probably not the best tactic to win their vote.

make the numbers mean something to the audience

On a quick look, the median income for a family of four in the US is about $67K. This is going to be a number people are a little more familiar with. People who do care about the deficit are going to look at the numbers in the infographic and feel a certain disconnect because the income is so far away from what they are familiar with.

When a typical man or woman supporting a family of four sees this infographic, they will start this train of thought:

“Well, if I had an income of $24,686, we’d have to move to another house. Gosh, where would we go? Probably rent somewhere, it would have to be under $700 a month. We’d have to sell a car and the kids… wow, we’d have to cancel most of their activities. Would I even be able to afford my iPhone? I’m under contract for another year, so I’d have to wait that out but I don’t think I can function properly without a smartphone…”

Can you see what they’re not thinking about?

THE FEDERAL BUDGET!

Instead, they should have realized that you want the audience to slip easily into the role of the family. To this end, recalculate all the numbers for a median family of 4. I’ve done it here:

Family income – $65,500

Family spending – $100,708

New Debt – $35,208

Total Debt – $434,081

Note: My first calculation was for $65,000, but I saw that this number brought the “spending” number to just  to just under $100,000, which is an psychologically important hump. So I bumped the income up another $500 to hit that psychological mark. These kinds of details should be in the mind of every infographic creator.

These numbers are going to target an audience that cares about the topic at hand, and ultimately make more of the impact we want.

the graphic is not “share-sized”

What you see above is only 25% the size of the original. The original version of this thing is a half megabyte and comes in at 2112 x 3731 resolution. Holy cow.

Everyone knows the new iPad has a monster resolution, right? Here’s how this graphic would look at full resolution on a new retina-display iPad.

image

And on an iPad 2

image

A lot of viewing these days is done on mobile devices with screen sizes much smaller than an iPad 2. By having such a monster infographic, we’ve cut our potential viewing audience way down.

And they have no options for sharing it at a smaller size. There is a link to “download and print” it, but who is going to do that? Infographics are seen online. If you’re going to print them, fit them onto an 8 x 11 piece of paper. This infographic does neither.

I’m glad the Romney team has made infographics a part of their media platform. But they have a long way to go to create infographics that make the kind of impact that they potentially can make.

Retire Hatch? No. Hire Dan.

This is going to be a bit of a wordy blog post, so I’ll summarize at the top: Utah delegate selection is Thursday, March 15th, 2012. The delegate selection process is the best way to get Dan Liljenquist, a candidate I am very excited about, elected to US Senate. If you’re in Utah, please consider making time to attend your caucus and either run for delegate or select a delegate for Dan. You can find your neighborhood caucus at the Utah GOP website

Because I live in Utah and because we have a candidate selection coming up and because that selection involves Orrin Hatch, I wanted to say something.

First of all, I don’t think Orrin Hatch has been a particularly bad Senator for the state of Utah. He’s been a fairly reliable vote for the right and, from what I hear, he’s a decent sort of guy. I have a “thing” against career politicians and, at 36 years, I think Senator Hatch meets that definition, but I’m not on a mission to take the guy down.

For me, the “Hatch election” has nothing to do with Orrin Hatch. It has everything to do with Dan Liljenquist.

I met Dan back in 2010, long before he decided to run for Senate. Holly Richardson, a Twitter friend, introduced us with a view toward taking some of Dan’s work and turning into visuals or videos that he could use for presentations. It was then that I learned about Dan’s incredible political career which, at that time, was hardly even 2 years long.

Dan was elected in 2008 and asked to be placed “where the money is”, so he got dumped into the “Retirement and Independent Entities Appropriations” committee, which was about as boring a place as possible. Except that “retirement” meant pensions and the Utah pension fund was (like nearly all pension funds) a heavily invested fund. Which means when the stock market collapsed in 2008-2009, so did our pension fund.

This wasn’t just “a problem”. This was a life changing, program ending, budget apocalypse type of problem. And Dan got to deal with it. Whee.

But what happened next was remarkable. Dan started with the concept “We will keep the promises we’ve already made to our retirees”. This is important to me because, although it seems like a lot of conservatives are fine with hanging people out to dry, people have lived their lives based on these promises. Maybe some retirees can manage, but for others, their pension is all they have. They’re not about to go start a new career to pick up some extra cash. Dan made it a priority to see that the promises made were kept.

Then, he did an exhaustive study of our pension system. He discovered that there were a number of loopholes including “double dipping” (where someone retires early, takes a 6 month break and can then be re-hired, usually at a similar salary) in our pension process and that the defined benefit program was simply unsustainable. His reforms (which were passed with bi-partisan support) saved the Utah state retirement system and most of our budget.

This was the work I was going to try to help visualize (before life got in the way, as it does) because the Utah plan had been so successful, Dan was being invited to mentor other states on how to save their pension systems.

It is this kind of fiscal reform that Dan is passionate about. When we spoke, it was like talking to my wonkiest friends about where the “real” problems are in federal finance, what kinds of reforms can actually be made and take hold without hanging those who genuinely need the program out to dry. Dan has a passion for fiscal reform and sustainability. In that way, I believe Dan Liljenquist could be a Paul Ryan for the US Senate.

This is why I support Dan Liljenquist over Orrin Hatch. I hate that politics makes us bash one to elect the other (and I haven’t been very happy with the Hatch campaign’s attacks on Dan), but there it is.

The easiest way to elect Dan Liljenquist is through the delegate selection process. Utah has neighborhood caucuses on Thursday, March 15th (you can find where yours will be held here). There, caucus attendees will select delegates for the state convention. At the convention, these delegates will vote to select primary nominees. Dan needs delegates to vote for him in order to run for Senate. If you live in Utah, please attend the caucus to vote for (or be) a Dan Liljenquist delegate.

7 Nasty Liberal Lies about 8 Nasty Conservative Lies

This is a response to the Alternet article 8 Nasty Conservative Lies About the Democrats and Obama That Must Be Debunked Before the Election which is about as unbiased as one would expect from the title.

Oh, this is so boring. But smart people I know have been suckered in by it, so I suppose it needs to be rebutted. How tedious.

1) President Obama actually reduced the deficit since George Bush’s last deficit was $1.416 trillion.

In a sleight of hand worthy of a 7-year-old magician wannabe, he notes that, since Bush signed the 2009 budget, he is therefore responsible for all the debt in 2009, which was $1.416 trillion. He does not, however, explain that the stimulus was passed that year and added drastically to the deficit for 2009. Why is there no mention this? Because the author is interested only in political point-scoring, not the truth.

2) Obama actually cut taxes

This one is actually true. President Obama did cut taxes as a part of the stimulus. But apparently those tax cuts had no effect on the deficit described above, being replaced by money from the happiness rainbow tree that the author believes Obama keeps in the back yard. It is entertaining that the author says these tax cuts were “wasted” since he will soon cite the CBO report on the stimulus, which claims that the tax cuts helped stimulate growth. Consistency is apparently not as much fun as throwing poo.

3) President Obama didn’t bail out the banks, George Bush did.

True, but Obama did vote for the bailout, as did John McCain. Perhaps he is claiming that Senators aren’t important and shouldn’t be held responsible for their own actions and that Congress has virtually nothing to do with governing the nation, in which case the whole article seems irrelevant since it’s not a presidential election and changing Congress won’t actually have an effect on anything. It’s hard to tell, he’s short on details.

4) The stimulus totally worked

He cites the CBO report on the stimulus. Whoop-de-do. The CBO report is an estimate based on an algorithm. When the Obama administration went to the CBO before the stimulus, the CBO plugged the numbers into a computer and said “If you spend X money, you will get Y jobs”. Nearly 2 years later, the Obama administration asked the CBO to plug the numbers in again and – surprise! – they got the same result. It is not based on any actual measurement of the job market, it’s based on a model.

A better way of determining if the stimulus worked would be to ask “Did we follow the unemployment curve the administration said we would?” The answer is “hell no”. Unemployment is far worse than the administration predicted with the stimulus. This is a point which the author explains at length. I’m just kidding; he totally ignores it, perhaps imagining that he had addressed it but could no longer make out the words from behind the spittle covering his laptop screen.

5) Businesses don’t hire based on tax cuts

Young, small businesses hire more than big businesses. They will usually work the people they have as much as possible until it becomes clear that they cannot pull in any more business without new people. Fewer taxes means more money. More money could simply mean more profit (as it has recently with larger companies), or it could mean more growth, more employees, even more money. It varies from business to business. But saying “it’s complicated” does not give the author the intellectual political anger management outlet he clearly needs, so I guess we should be glad he’s not biting anyone’s fingers off.

6) Health care reform reduces gov’t deficits

Here, he cites an article from before the health care reform bill was passed. Since then, the estimate has jumped up as things like the 21% cut in Medicare reimbursement was postponed, then postponed again and large companies like McDonald’s got permission to ignore the law when they told the government that they would drop coverage for their employees if they didn’t get a waiver.

Thus, the various cost-savings of the bill have been shown implausible or manipulative (which is exactly what I said would happen to those absurd estimates nearly a year ago). They were nothing but projection manipulation devices and anyone who wasn’t drunk could see that was the case.

7) Social Security is fine. It’s not a Ponzi scheme.

Yes, Social Security has run a surplus… up to this year when it ran a decifit. Projections have it pushing back into surplus for a couple years until, in 2016, it dips back into deficit forever. “No problem,” the increasingly dense author of the article says, “There’s a trust fund”. Yeah… a trust fund held in US debt. The SS trust fund buys up US debt, which the government pays back regularly, so it’s a pretty safe asset. That trust fund should last for a while, but eventually we will be paying Social Security returns to older investors (the elderly) from their own money or money paid by newer investors (the younger generation).

That is the definition of a Ponzi scheme.

8 ) Government spending is good for the economy

Here the author talks about how the government spends so much on infrastructure, roads, airports, schools (in an ideal world these things are all good for the economy) but only a “small part of the government’s budget” is for welfare and foreign aid. I’m kind of funny inasmuch as I think that 60% of our budget is not a “small part”. (I’m counting SS, Medicare/Medicaid, Health and Human Services, Housing and Urban Development, and “other” mandatory programs. But not interest on the debt.)

Roads and schools? (Transportation and Education) They account for 3.3% of the budget. Since welfare and foreign aid are such a “small part” of the budget, the author won’t mind if we get rid of it. I’d be delighted if we reduced the other parts of the budget so that Transportation and Education made the bulk of it.

Overall, the author targets builds up conservative strawmen of “lies” and then uses liberal strawmen (and selective data) to “prove” them wrong. This article is nothing more than red meat for people who already agree and don’t have time to do the research themselves. It’s sloppy, lazy, angry and impotent. And, worst of all, it spreads disinformation. Hopefully this post is something of an antidote.

(Note: There are few links here because this data is so easily available and I’m in a crunch time at work.)

The CBPP Economic Downturn Chart is Deeply Dishonest

I was reading Jonathan Chait (who is really smart) the other day and I came across The Stigmatization Of Bush-Blaming.

A quick summary of the post: It’s right and proper to blame Bush for all the economic and federal deficit unhappiness because it’s really and for true all his fault. But if liberals continue to do it, it sounds whiny petty. So liberals can’t say the truth because it is politically non-viable.

An compelling thesis to be sure, especially when it is supported with this chart that Chait pulled up.

And so, as I am wont to do (and apparently Chait is not wont), I looked for the origin of that chart and found this page from the CBPP (Center on Budget and Policy Priorities) that explains the chart.

<TANGENT>

I would like to decry the practice that I’m am hereby dubbing “source masturbation”. It is when you link to yourself to support your thesis and bury the actual source 2-3 links deep. For example, writing a blog post where you link to a post you wrote that links to a report you put out and the original source is in the footnotes. Media Matters does this kind of thing constantly and I find myself just doing a Google search of what they’re talking about rather than try to follow the links.

This post from the CBPP is actually worse… they link to the footnotes at the bottom of the page which then link to the footnotes inside the report… the ones you just clicked on to get to the bottom of the page! Do they link at any point to anything outside their own website? No. No they do not.

This is the internet, people. Use it.

<End TANGENT>

Moving along.

The problem with this chart is that it implies that:

  • the economic downturn is Bush’s fault and will continue to be Bush’s fault
  • the tax cuts will extent into 2019 and they will be Bush’s fault
  • the Iraq and Afghanistan wars are Bush’s fault.

Let’s start with the last one first. I don’t want to argue the Iraq and Afghanistan wars because it will run something like this. “You’re stupid and a jerk.” “No, you’re the stupid jerk.” “You want to murder babies.” “No, you want to let other people murder babies.” “Why didn’t you go into the Army, you chickenhawk?” “You don’t know anything about me. My sibling/friend is over there right now.” “I hope your sibling/friend is happy killing babies.” (I actually had someone say that last one to me. Dear anti-war people: you may have some valid points, but a lot of the guys on your side are complete a**holes. A**holes don’t persuade very well.)

See how much helpful ground we covered? Let’s just say for the sake of argument that Iraq and Afghanistan is all Bush’s fault and President Obama would get out of there if he could, but he’s trying to be responsible given the situation he found himself in. OK? So 10% of the deficit is due to the wars. What about the remaining 90%?

In this chart, the big item here is the Bush tax cuts. The problem with this analysis is that these tax cuts expire this year. That means President Obama will have to sign them back into law if they are going to continue to be a major factor in the budget deficit. After this year, if they are still in effect, they will be the Obama tax cuts, not the Bush tax cuts.

Furthermore, by the estimates that President Obama’s economic team have come up with, letting these cuts expire will bring in $700 $850 billion over 10 years. (Thanks to John below for pointing out my discrepancy.) Which is like saying that letting these tax cuts expire will pay for the stimulus last year.  By the CBPP analysis, getting rid of the Bush tax cuts would bring in… wait for it… $4.4 trillion over the next 9 years. Which is like paying for the stimulus 6 times over.

But if you look at President Obama’s budget, you see that they assume (with the typical optimism associated with any given administration’s budget report) that, with the tax cuts having expired, we will have a $900 billion deficit in 2019. By contrast, the CBPP assumes that, if we let the tax cuts expire, we would have a deficit of $630 billion.

So, putting aside the tax cuts issue, let’s address the economic downturn issue. CBPP assumes that the downturn is Bush’s fault (naturally) and that President Obama can’t do anything about it. They basically say that the “lingering effects” of the downturn (like interest on the debt we accumulated during that period) should also be blamed on Bush.

This strikes me as uncompelling. This is basically a blame shift game that isn’t appropriate for adults. Imagine if a conservative think-tank created a chart in 2008 which we could see how much of the deficit was due to Medicare/Medicaid/Social Security/Other welfare programs. Or what if we assumed that, if Jimmy Carter had never been president, we would have avoided double digit inflation and the following recession and we extrapolated out those benefits to today?

First, those issues are counter-factual. We can’t know the present based on a theoretical past. (This is the first thing that Chait should have noticed. He’s an editor, not an economist, but he should have seen this very plain logical fallacy for what it is.) The President doesn’t get to pretend that he is dealing with part of the fiscal mess and ignore the rest of it because it’s “not his fault”. The President deals with the reality placed before him. Anything less is juvenile posturing.

Imagine that someone inherits a house. The house is seriously messed up due to the poor management of the previous owner. Cracked walls, rotting floorboards, leaky roof. The new owner comes in and promises to fix it up. It is probably unfair to complain a year later that everything isn’t perfect. But it is childish for the owner to ignore the problems by saying “That was there when I got here.”

Everyone knows there were problems. But by inheriting the house, the problems belong to the owner. The CBPP report is a way of posing a counter-factual scenario and saying “These problems don’t belong to President Obama.” I find the whole process absurd.

But the most egregious error (in my view) is the chart. It seems clear to me that the CBPP would rather build a chart to rest the blame as squarely as possible on Bush’s shoulders instead of building a chart that will increase understanding of the issue. They’ve sadly suckered Chait into this nonsense with a chart that tells him something that he might really like to be true, but that doesn’t very closely tack to fiscal reality.