Where are the heirs of Walter Lippman? Disconnected and incomplete thoughts... PARTIAL DRAFT ONLY...
George W. Bush on Tuesday said:
Some in Washington say we had to choose between cutting taxes and cutting the deficit. You might remember those debates. You endured that rhetoric hour after hour on the floor of the Senate and the House. Today's numbers show that that was a false choice. The economic growth fueled by tax relief has helped send our tax revenues soaring. That's what's happened...
And the media fell into line, writing "he said, she said" stories--Bush says revenue is up because of the tax cuts, Democrats say not so. Here are six examples:
Stephen Dinan: THE WASHINGTON TIMES: This week's lower deficit figure has been a shot in the arm for tax cutters in Congress and has reignited the debate over supply-side economics and whether President Bush's 2001 and 2003 tax cuts helped or hurt the federal budget. "Supply-side economics are alive and well," said Rep. Jeb Hensarling, Texas Republican and the budget point man for House conservatives, who added that tax cuts are the only explanation for the declining deficit. "Spending's not down; spending has increased every single budget. What happened is we're awash in tax revenue because supply-side economics is alive and well"...
Richard Wolf: USATODAY: Led by President Bush, Republicans touted the $296 billion deficit estimate for the fiscal year ending Sept. 30 as evidence that five years of tax cuts have worked. They said the tax cuts fueled economic growth, which raised corporate profits and individuals' wages. "Today is a good day for the American taxpayer," Bush said at a White House ceremony to tout the new forecast. "Tax relief is working, the economy is growing, revenues are up, the deficit is down." Democrats noted the new estimate isn't much below the 2005 deficit of $318 billion. They said the original estimate was too high, allowing Republicans to boast about the lower number four months before mid-term elections, when control of Congress is at stake...
Christopher Swann and Krishna Guha: FT: The improvement in government finances will strengthen the administration's efforts to secure a permanent extension of the tax cuts passed in President George W. Bush's first term in office. Mr Bush yesterday said the bumper receipts were proof "the tax cuts we passed work."... Chris Edwards, head of fiscal studies at the Cato Institute, a libertarian think-tank, said: "Soaring US economic growth and surging tax revenues have put sceptics of the Bush tax cuts on the defensive." However, critics argued that there was little evidence that the tax cuts had produced any supply side response, and said the deficit remained large for the fifth year of an economic expansion...
Paul Blustein: Washington Post: The Bush administration on Tuesday lowered its estimate of this year's federal budget deficit by 30 percent, to $296 billion.The new figure prompted the White House to claim vindication for its tax cuts, and Democrats to issue new denunciations of the nation's fiscal problems.... [T]ax revenue... is "much better than we had projected, and it's helping us cut the budget deficit," President Bush said in a White House ceremony to release the report, which is usually a low-key midsummer event. "Tax relief is working. The economy's growing. Revenues are up. The deficit is down"...
Jeremy Peters: New York Times: Surprisingly high tax revenues will help the federal government reduce its budget deficit faster than planned, President Bush said today, as his administration delivered its annual mid-year review to Congress.... The projected deficit decline helps Mr. Bush make a case that the tax cuts his administration pushed through Congress in 2001 and 2003 should be made permanent.... Mr. Bush said the latest budget figures were evidence that his administration's program of tax cuts was behind the country's prosperity. "Together, these tax cuts left nearly $1.1 trillion in the hands of American workers and families and small business owners," he said. "They used this money to help fuel an economic resurgence"...
Joel Haveman: Los Angeles Times: President Bush on Tuesday delivered what he called "some good news for the American taxpayer" -- a budget update that shows the deficit for this fiscal year, which ends Sept. 30, shrinking from the $423 billion forecast five months ago to $296 billion now.Bush's budget office said faster-than-expected increases in tax revenue accounted for $115 billion of the improvement. "The tax cuts we passed worked," Bush told a White House audience of aides and Republican members of Congress. The president said the tax cuts generated unexpected economic activity and consequent tax revenue. Most Democrats were unimpressed...
Andrew Taylor: The Boston Globe: President Bush touted new deficit figures yesterday indicating considerable improvement upon earlier administration predictions, saying they show the wisdom of his tax cuts. Bush himself announced the figures -- a task that for the most part has been left to lower-ranking officials in the past.... Bush said the improvement is due to tax cuts he pushed in 2001 and 2003 and his clampdown on domestic agencies funded by Congress. "These tax cuts left nearly $1.1 trillion in the hands of American workers and families and small-business owners. And they used this money to help fuel an economic resurgence that's now in its 18th quarter," he said. "Economic growth fueled by tax relief has sent our tax revenues soaring"...
Only two news organizations got the real story--David Wessel of the Wall Street Journal NEWS PAGES:
David Wessel: WSJ NEWS PAGES Washington Wire: Do Tax Cuts Pay for Themselves?: Not if you read the fine print in the new White House midsession review of budget trends. "While difficult to estimate precisely," Treasury long-run analyses of the effects of President Bush's tax cut would "ultimately" raise total national output of goods and services by 0.7%.
So is that enough to pay for the tax cuts, even after allowing them to work their economic magic over the next 10 years? The Center for Budget Policies and Priorities, a Washington think tank and advocacy group that is distinctly unfriendly to Bush fiscal policies, says it isn't. "A 0.7 percent increase in the economic output that the Congressional Budget Office has projected for 2016 would represent an additional $146 billion [in gross domestic product]," it says. "If new revenues equaled as much as 20% of the additional output, the increase in revenues resulting from making the tax cuts permanent (assuming Treasury's best-case assumptions) would be $29 billion."
That's a lot of money. But how does it compare to the size of the president's tax cuts? The congressional Joint Committee on Taxation, using conventional analyses, says making the president's tax cuts permanent would reduce federal revenues in 2016 by $314 billion. That is more than 10 times what the Treasury analysis suggests tax cuts would generate by prompting more hours of work, more savings and investment and more efficient use of resources...
And the London Economist:
And the money comes pouring in | Economist.com : Mr Bush's tax policy may have played a modest role in boosting a temporary revenue surge. But that is very different from suggesting, as the White House does, that tax cuts were the main cause or that they permanently pay for themselves. Most serious economists have long laughed at the idea that Mr Bush's tax cuts raise revenue. Now, it seems, the president's own boffins agree. Deep in the Mid-Session Review is a claim that the Bush tax cuts could eventually raise the level of GDP by 0.7%, a relatively modest effect, and one that itself depends on the tax cuts being financed by lower spending...
New York University economist Jason Furman ventured out into the media storm and found:
It's been a surreal day. I was just on Fox News debating whether the deficit is higher or lower this year because of the tax cuts.
The official [administration] scoring shows the tax cuts added $200 billion to the deficit this year (not counting the higher debt service on the tax cuts in previous years). The academic "dynamic scoring" debate is whether the tax cuts raised this year's deficit by $180 billion (if they contributed to growth) or $210 billion (if they reduced growth).
And the Fox News debate is in outer space.
Jason went on to note:
Fortunately the [Bush] administration [Treasury staff] is on our side. They estimate that the tax cuts add AS MUCH AS 0.7 percent to national income over the long run. That's consistent with paying for AS MUCH AS 10 percent of themselves. And that's with their unrealistic financing assumptions...
Brendan Nyhan comments:
Brendan Nyhan: Bush vs. his economists III: [E]ven Bush's own economists don't believe this nonsense. Does that sound familiar? It should.... [T]he 2003 Economic Report of the President "directly contradicts a number of public statements by the President and other administration officials on two key economic issues: the effects of tax cuts on revenue and the relationship between budget deficits and interest rates." Then, in May 2003... "President Bush is again being contradicted by [his Council of Economic Advisers] and his nominee for chairman of the council, N. Gregory Mankiw, on the date a recession began in 2001, the revenue effects of tax cuts and the number of jobs that would be created by his tax cut package." We know the White House dislikes experts and shuns membership in the reality-based community. But to make a claim about a new report that your experts contradict in the report is chutzpah indeed...
To which Jay Rosen appends another comment:
Brendan: I certainly agree that to "make a claim about a new report that your experts contradict in the report is chutzpah indeed," but I think you have to see it as "strategy indeed." You're studying politics--study this! It's a new kind of political strategy based on the insight that if you do make a claim like that, and you don't have to back off because the forces do not exist to make you, then you have, in a way, demonstrated your Administration's power "over" reality, and you can roll over other realities, other people, that way. What if this method Bush has is a basic tool of governing? I think it is.... This is combined with another strange fact about the Bush White House. It is organized to make sure that a lot of "contrary" information never reaches Bush, which is the way he wants it...
And journalists wishing to be anonymous email in:
I haven't seen Wessel's column yet on dynamic scoring but it does look very well done (and characteristically so). I would point out, though, that he is performing a different function from those of us who have to churn out a decent news story... us ink-stained wretches...
The story has to have its principal slot reserved for what the president says. Wessel's chain of reasoning is much too opaque for my readers (or my editors) to understand. As much as you want me too, I cannot lead with: "Once again the president lied about the estimated effects of his economic policies"...
No argument with the [substantive] points.... I suggested to my editors yesterday that I ought to do a more analytical piece for today's paper, but they needed a hard-news story to lead the business front. It's tough...
The net result of the administration announcement as filtered through the mass media is yet another defeat for the country. It's a defeat for the country--and an especially big defeat for my reality-based Republican friends--each time a reader scans the front page and thinks "maybe tax relief is working: maybe the deficit is falling because of the Bush tax cuts." It's a defeat for the country each time an administration staffer thinks "experience shows that if we highball our estimates of the deficit in January, we can get a lot of favorable press in July." The chances of a sane, sensible fiscal policy go down, and the chances of some long-run fiscal crisis that will be terribly damaging to the American economy go up.
Let's back up. Democracy was born in classical Athens--a population of 200,000 of whom 30,000 were the adult male citizens who, when they had nothing better to do, assembled in the afternoon as the Assembly of Athens. They listened to speeches made by prominent orator-politicians (some of them bribed by the King of Macedon), and voted on the issues of the day. On Monday they would vote to put all adult male inhabitants of Mytilene to the death. On Tuesday, after a panicked round of borrowing, bribing, and begging by the ambassadors from Mytilene, they would be persuaded to revoke Monday's decree--even though the war-galley carrying Monday's orders to the fleet in the eastern Aegean had already left. On Wednesday, they would vote to put the advocates of Monday's law on trial for the crime of convincing the Assembly to pass a bad law. Politics by sound-bite. Rule by those who had nothing better to do with their time that afternoon than hang out at the Assembly eating shishkabab, gossiping with their friends, listening with one ear to the orator-politicians, and voting on critical issues.
It was with this historical memory of classical Athenian democracy as background that Alexander Hamilton could tell the American constitutional convention that the best-organized system of government the world had ever seen was that of... eighteenth century Britain. Britain had a popular government, for in the last resort the elected House of Commons had decisive power. But Britain had all these institutional mechanisms--restrictions on the franchise, principle of representation, independent judges, king, ministerial responsibility, control of ministers via impeachment and attainder, lords spiritual, lords temporal, et cetera--that were designed to filter and process popular wishes into good policies. And in Philadelphia in 1787 Hamilton, Madison, and company reworked the British system into a republican pattern that they thought of as a distinct improvement over the government they had just overthrown.
Time passed. The world changed. Mass political parties, mass communications, nationwide presidential campaigns, popular election of senators--a whole bunch of things happened that moved American politics away from the eighteenth-century Westminister model and back toward the Athenian model. And in response Walter Lippman and his peers decided that the proper balance could be maintained by the construction of a sacred and holy profession that would make the public opinion piper to whom politicians danced in this age of mass communications into an informed, sober, rational judgment about important issues rather than into gossiping-and-shishkabob-eating offhand judgments. This sacred and holy profession? Objective journalism, as we have known it for the twentieth century. Walter Lippman himself. Edward R. Murrow broadcasting from London about Churchill and the Nazi bombing. William L. Shirer broadcasting from Berlin about Hitler. Walter Cronkhite. William Greider on the Reagan economic policy team and its tax cuts. Woodward and Bernstein on Richard Nixon and Watergate.
Now it seems that the press corps cannot fulfill this function. Americans do not need to have their government covered not as an arena for celebrity gossip (the stars of Hollywood photograph much better and have much more interesting personal lives). Americans do not need to have their government covered Teddy White "Making of the President"-style as a sporting contest with winners and losers, great shots an flubs (the World Cup is a much better sporting spectacle). Americans need to have their government covered as if the government were their common agent doing important thing that affect their lives. Suppose your mother owned a Florida condo that she rented out during the spring and summer. And suppose your siblings asked you how the agent she hired to rent out the condo was doing. How you would report to them--that's how the press should report on government. In the case of Judd Gregg, the proper report is analogous to, "Well, he's worked really hard and he's said he's saved a lot on maintenance, but actually the savings are really small." In the case of George Bush, the proper report is, "Well, he said that cutting the rent would mean that we'd get more money because we'd be able to rent the condo more weeks, but it turns out he's completely disconnected from reality."
But that's not a task that it seems that our daily newspaper press can carry out. Reporters describe themselves as under pressure to do "hard news" rather than "analytical" pieces, and "hard news" seems to mean a "he said, she said" story which opens "the President said X" and goes on to say "experts differ" leaving readers with absolutely no clue and no way to judge whether the guys whom we hired last election to do the public-finance equivalent of the family-finance job of managing our mother's Florida rental property are in fact doing a good job.
Note that my examples are budget examples. I'm one of the budget people. But I have peers in other issue areas. They see the same deficiencies. Whether they are bombs-and-bullets people, striped-pants-diplomacy people, welfare-and-social-policy people, science-and-technology-policy people--they all see the same patterns.
And it is not clear to me whether things were ever any better--they seemed better to me in the 1970s and 1980s (but not the 1990s), but maybe I was just young and naive. After all, even Walter Lippman had his anti-particle: Walter Winchell. And for every I.F. Stone trying to tell truth about power (and occasionally falling victim to crazed conspiracy theorists) and every Jack Anderson, there were fifty reporters willing to do the bidding of a certain junior senator from Wisconsin.
So where are the true heirs of Walter Lippman? And how do we build and organize institutions to give them the prominence and influence they deserve in order to make our Public Opinion much better than that of the Ekklesia of Athens?
Here are a couple of modest steps. Should the Democrats retake congress in November--should a Democrat be elected president in November 2008--no reporter should be allowed to write anything about Democratic economic policy proposals without checking and digesting (a) the Financial Times, (b) the news pages of the Wall Street Journal, (c) the Economist, and (d) the comments of a trusted list of Republican weblogs. If I artificially restrict myself to four (sorry guys), they would be:
- http://marginalrevolution.com/
- http://voxbaby.blogspot.com/
- http://gregmankiw.blogspot.com/
- http://www.janegalt.net
In any event, reporters (and economists) also need to read, memorize, and religiously follow Susan Rasky's and my Dutch-uncle advice:
- Nieman Watchdog > Commentary > Twelve things economists need to remember to be helpful journalistic sources
- Nieman Watchdog > Commentary > Twelve things journalists need to remember to be good economic reporters
MORE TO COME SOMEDAY...
