Douglas Holtz-Eakin Burns His Credibility

Douglas Holtz-Eakin gained a lot of credibility working to stop the budget insanity first inside the Bush White House and then as Director of the Congressional Budget Office. He is now burning that credibility very rapidly:

McCain camp hits Obama on taxes - First Read - msnbc.com: The McCain campaign also sent out a memo.... "This year, Barack Obama returned to the United States Senate twice to vote in favor of a budget resolution which raises income tax rates by three percentage points for the 25, 28 and 33 percent tax brackets," Holtz-Eakin writes in the memo. "This would mean a tax increase for those earning as little as $32,000. While Barack Obama campaigns on a promise of no tax hikes for anyone but the rich, we once again find that his words are empty when it comes time to act.  In both March and June, Barack Obama could have put the force of his vote behind his words. Instead, he decided that 'rich' now means those making just $32,000 per year."

But NBC’s Ken Strickland spoke with a Democratic aide at the Senate Budget Committee who said there was never a budget vote that said: Let's raise taxes. What the budget vote did do was estimate how much additional revenue would be needed, and then it would go to the Finance Committee to determine how to raise that amount (raise taxes, close loopholes, etc).   The aide thinks what the McCain campaign has seized on is this revenue growth -- and has taken one of the possible ways to get there: by raising taxes among all income groups. But the budget vote never called for raising taxes, the aide said.

On the call, Holtz-Eakin said, “Sen. Obama can say what he wants this week… but this is about his record. It reveals what his true values are” -- that he voted for something that would raise taxes on low-income voters, Holtz-Eakin claimed...

This is, I think, a bad mistake for Doug Holtz-Eakin. If McCain wins in November, Holtz-Eakin will need credibility with Democratic as well as Republican senators. And if McCain doesn't win in November, Holtz-Eakin will need credibility with Democratic as well as Republican economists.

Comments

[pgl]

'This gets to Obama’s “credibility,” Forbes said on a conference call with reporters, and cited it as an example of the Illinois senator “saying one thing and doing another.”' - from the same story. Of course, Steve Forbes has never had an ounce of credibility on fiscal matters.

[Tyrone Slothrop]

This is truly amazing. The McCain campaign is accusing Obama of voting in favor of a specific budget resolution which -- it says -- would raise income taxes. The obvious two questions for NBC's Ken Strickland to ask are (1) did Obama vote in favor of the budget resolution, and (2) what did the budget resolution say? There's no dispute over (1), so the action is in (2).

Now, if someone asked me what the budget resolution said, I would find it and read it. If I were an Important Person, I might have a staff whom I could tell to find it and read it and tell me what it said. But this sort of simple investigation -- some naifs might think it something like what we used to call "journalism" -- is apparently beyond Strickland. Apparently he can't conceive that there might be simple empirical answers to some of the vital questions of the day. Instead, he finds a Democratic staffer to weigh in on the subject. Who investigate when you can dueling partisans?

"But the budget vote never called for raising taxes, the aide said."

The *aide* said? It's a budget resolution, and it either called for raising taxes or it didn't. The truth is out there.

[Tyrone Slothrop]

That should be

Why investigate when you can feature dueling partisans?

[tedb]

Good point, Tyrone. So has anyone actually done this homework? Please give us a citation if you know. Thanks.

[howard]

prof (at risk of repeating what i already posted at angry bear and reliving an old point here too), i think douglas holtz-eakin has looked at the example of greg mankiw and concluded, quite rationally, that there is no price to be paid for serving as a propagandist.

what price has greg mankiw paid? for example, you still treat him as a peer and colleague, worthy of collegial guild respect.

why criticize holtz-eakin for expecting the same outcome?

[Ken Houghton]

Howard got it in one. And Mankiw's sins--both during his time served and subsequently--have been significantly more venal.

[Barry]

Seconding Howard, Greg Mankiw is proof that (a) one doesn't need credibility with Democratic politicians, but also (b) a GOP economist doesn't need credibility with Democratic economists - they'll treat him like an honest colleague anyway.

[Pquincy]

PGL: evidently, NBC is listening to you. The MSNBC story now has the following addenda (below), in which Strickland actually decided to look for some facts, rather than sitting back happily reporting he-said-he-said. I actually take this as a positive sign: the reporters and media producers (if not owners) can be shamed into making "updates", and this might even have a bit of a 'disciplining' effect in that they probably don't like having to make "updates" (which others would correctly see as corrections), and would thus do their job slightly better.

To wit (http://www.msnbc.msn.com/id/18970417/):

NBC's Ken Strickland fact checks Holtz-Eakin's memo:
The questionable line from the Holtz-Eakin memo is that Obama "returned to the United States Senate twice to vote in favor of a budget resolution which raises income tax rates by three percentage points for the 25, 28 and 33 percent tax brackets. This would mean a tax increase for those earning as little as $32,000."

Is it true? As with many things political, the answer is yes and no. Secondly, it's a recycled argument Republicans make often about Democrats and raising taxes. In other words, what at first blush appeared to be newsworthy is 'not so much' in my humble opinion. [NOTE HERE: Strickland evidently realizes that the Republican claim is bunkum, but doesn't want to say so too loudly]

THE FACTS:
- There was no vote during the budget resolution process to actually raise taxes. Simply put, there was not a vote which in effect said, "let's raise taxes by 3% on certain tax brackets." So Obama did not vote to raise taxes per se. BUT...

- The overall budget resolution does assume the BUSH 2001/2003 tax cuts will expire (or have to be offset by new spending.) And if they expire, taxes in the 25, 28, and 33 percent tax brackets would increase 3% as Holtz-Eakin suggests. (Democrats are happy to remind folks that McCain was against those tax cuts, before he was for them.)

- Also noteworthy: The budget resolution is NOT/NOT a law, NOT binding. (The President of the United States doesn't even sign it.) Instead, it's a blueprint of sorts that gives guidance to how congressional tax writers write tax laws in the Finance Committee. That panel is not bound to what the budget says, and often votes to "waive" budget rules.

Bottom line: While it may be a bit of a stretch to say Obama voted to raise taxes, it is accurate to suggest that Obama's support for the budget resolution indicates a willingness to let the tax cuts expire--thus potentially causing a tax increase.

*** UPDATE 3 *** The Obama campaign, per NBC's Andrea Mitchell, maintains the budget resolution encompassed middle class tax cuts, more than offsetting the lost benefit of the Bush tax cut extensions for lower-income taxpayers.

[dan p]

Holtz-Eakin, who certainly knows better, also makes a disingenuous if common error with the $32,000 figure, which is the bottom of the 25% tax bracket for *taxable income* for a single person. No one reports their earnings that way except on that one line of the IRS form. The exemption and standard deduction means a single person begins to pay that rate on gross income after a minimum of about $40,000, and of course most people have some extra deductions.

[Movie Guy]

I have to wonder if many economists and other bloggers bothered to read the House/Senate budget proposal. As importantly, I wonder if those who did read it actually understood it.

[lboyd]

I have read budget reolutions and even better I have actually waded through parts of the budget and the enabling legislation. First, there are often more than one of them rather than one. And not having seen the press release you know something about the person if he includes the number of the resolution or not. Hence the confusion. Second, there has been no legislation that proposed raising taxes at all. It would not be contained in a budget resolution but a specific bill modifying the Tax Code. What is voted on is spending, not revenue. Although resolutions can direct someone to study the effects of a certain action like increasing taxes. Republican legisltors actually used to score points by asking the CBO what the effect would be of a 100 percent income tax rate. In other words all of people's income would be taxed. They did this to illustrate the "supply side" effects of tax rates, and further illustrate that the CBO had no assumptions about what effect higher tax rates would have. No one ever said they were in favor of 100% tax rates. But the world was young then and idealistic.