Beer with Jason Furman of Brookings

At Jupiter, in Berkeley. Jason Furnan says that Greg Mankiw is:

1. More intellectually honest than anybody of either party who has been as close to a major campaign and thus as likely to attain high federal office.

2. Closer to a major campaign than anyone of either party who has been more intellectually honest.

Thus, he says, you can quarrel with his political commitments, but you cannot claim that he has been inefficient.

It is a point, a very good point...

Comments

[Brooks]

I hope that, despite now advising Romney, Greg Mankiw will demonstrate his "intellectual honesty" (and provide an important public service) by repeating explicitly that the Bush tax cuts have most likely had a negative impact on revenues, are continuing to do so today, and would continue to do so if extended, and that the same applies to other tax cuts that may be proposed (with the possible exception of the estate tax).

[edh]

Brooks,

Why do you stop at the "Bush tax cuts"?

Any tax policy that deviates from maximizing revenues has "a negative impact on revenues".

Leaving to one side whether a tax policy aimed at maximizing revenue is in the best interest of society, otherwise you seem to be arguing that the only good tax (rate?) cut is one that doesn't cost the government any revenue.

This is what I meant about tax cut opponents invoking the most extreme predictions of the Laffer Curve more often than tax cut proponents.

Earlier, on McArdle's site, in response to this you told me "I don't hear opponents to tax cuts -- liberal or otherwise -- typically claiming that a tax cut need be fully self-financing to be a good idea..."

In your comment above, I think you just did.

[Reality Hammer]

Investing in stocks and bonds and contributing to my retirement accounts has "a negative impact" on my checking account.

[randomobserver]

Mankiw intellectually honest? When he speaks, he may be better than the average partisan. But when one measures his speech with his silence together, there are glaring lies of omission. Intellectual honesty demands more than that.

[Rodg]

But when one measures his speech with his silence together, there are glaring lies of omission.

Of coarse you are right, his silence on abortion, chtulu and rock music completely destroy any statement he has made.

[Brooks]

edh,

Once again, you are strangely, persistently presumptuous and either unable or unwilling to distinguish between fundamentally different arguments. First, Mankiw himself has indicated that he believes the Bush tax cuts have a negative impact on revenues, and my comment presents a measure of his "intellectual honesty" now that he is advising a candidate, Romney, who is claiming otherwise. Second, I have asserted myself elsewhere in the blogosphere that the Bush tax cuts have had a negative impact on revenues, but NOWHERE have I suggested that revenue-neutrality (self-financing) is a requirement for a tax cut to be good policy, and in fact I have explicitly stated that such is not my belief. And yet you claim once again that I am making such an argument. It appears to be a persistent figment of your imagination.

Disagreement and debate is fine with me, but please stop putting words in my mouth. It's really silly and lame.

[edh]

Brooks,

There are myriad assumptions here, but the simple point I made was that every tax policy that deviates from the revenue maximizing regime is susceptible to your criticism.

Yet I observed that you impose the burden of “intellectual honesty” to “repeat” this axiom “explicitly” on Mankiw-Romney exclusively.

Presuming your “intellectual honesty”, rather than personal/partisan bias, I said “you seem to be arguing that the only good tax (rate?) cut is one that doesn't cost the government any revenue.”

If it was wrong for me to infer those alternatives, however, wouldn’t you have imposed a reciprocal burden on those who argue for a repeal of the Bush rate cuts to “repeatedly” explain “explicitly” the “negative impact on revenues” that the tax rate hike will cause because of the resulting loss of national income? If not, why not?

Now you say that “NOWHERE have I suggested that revenue-neutrality (self-financing) is a requirement for a tax cut to be good policy.”

Perhaps you haven’t. I can only go by what you say. But this denial by omission doesn’t refute my original observation, which was more about rhetoric than economics: Ironically, it is OPPONENTS of CERTAIN tax rate cuts who tend to SELCTIVELY invoke the most extreme portents of the Laffer Curve as a litmus test in order to argue AGAINST the policy than do the proponents use them to argue for the tax rate cuts.

[Brooks]

edh,

Please listen, because I really don't want to have to keep trying to get you to see your fabrications, straw men, non sequiturs and attempts at guilt-by-association for what they are.

You make a claim about the typical basis others have for opposing particular tax cuts (or tax cuts in general, within foreseeable ranges of rates), and about what their requirement would be to no longer opposed those tax cuts. I am skeptical of your claim, and I'm somewhat doubtful that you have substantial evidence for it. The fact that you have obviously erroneously claimed that MY statements are evidence that I have such a view hardly makes your assertion regarding others' views on this issue more credible, to say the least.

Furthermore, as I explained quite clearly, the reason I offered that test of Mankiw's "intellectual honesty" is because HE has previously (and repeatedly) expressed the view I have stated regarding tax cuts & revenues, and now that he is advising a candidate (Romney) who is making the opposite claim, he would show some intellectual honesty if he repeats his view now. Get it?

Re: "every tax policy that deviates from the revenue maximizing regime is susceptible to your criticism", if by "criticism" you mean opposition, again you are obviously putting words in my mouth and thereby either deliberately erecting a straw man or inadvertently committing a non sequitur. If by "criticism" you mean pointing out a fact regarding one drawback, then your statement is meaningless (just essentially saying that "every tax policy that has this drawback is susceptible to your pointing out that it has this drawback" -- um, so?).

As for my consistency, while I've already explained why my point legitimately pertained only to Mankiw (i.e., just a matter of his repeating a view he has previously expressed many times), I have stated quite clearly elsewhere that there are indeed usually revenue feedback effect from a tax cut -- just not nearly the 100% needed for them to be self-financing at rates anywhere near our current rates. The converse of that, of course, is that a static calculation of a revenue GAIN from a tax INCREASE generally overstates the gain, since a tax increase will generally have the opposite effect on the tax base (reducing it rather than increasing it, as a tax cut generally does). That follows almost self-evidently from my acknowledgement of revenue feedback effects from tax cuts. Anyone who, while advocating a tax increase, ignores the potential (and generally likely) negative impact on the economy and the tax base (at least over some time horizons) of a tax increase and who therefore pretends the best estimate of the revenue gain is that produced by static analysis, likely overstating the revenue gain, is showing just as much ignorance, stupidity or insincerity as someone who makes unrealistic claims in the other direction in support of tax cuts or opposition to tax increases.

I'm a fiscal conservative, a TRUE fiscal conservative, which means that I believe first and foremost in fiscal responsibility, and part of fiscal responsibility means setting policy based on the best information and best possible assumptions, rather than feel-good myths such as that the Bush tax cuts causing higher revenues and that letting them expire will cause lower revenues. If you think that trying to dispel that myth makes one less of a fiscal conservative, then you have no idea what a fiscal conservative is.

[edh]

Brooks,

You’ve personalized the argument, and maybe that’s partially my fault. I take your word for it that you don’t oppose all tax cuts per se.

But it’s not “meaningless” to point-out that every tax policy has a revenue drawback that is susceptible to your criticism when you’ve selectively chosen the advocate of only one for chastisement.

Compared to other advisors, Mankiw has been extremely out front in qualifying the limitations of his clients' positions than any other economic advisor I can think of. Nevertheless, why has Mankiw been so called to task on this issue?

My larger point is that I think many opponents of tax rate cuts (Jon Chait and Ezra Klein most recently, and many others before them) have themselves oversold the degree to which tax cuts have been “sold” to an unsuspecting American public based on them being truly self financing in the purest sense.

In so doing, they’ve erected a rhetorical straw man and tried to switch the debate to make self-financing the litmus test of every tax rate cut. Hey, it’s fair political judo on their part, but I just wanted to point that out who is really touting that standard in policy circles: opponents way more than proponents.

Of course, some of the political rhetoric on the proponents’ side is left vague, intentionally perhaps, but from what I’ve seen of Bush and Romney they have mostly kept themselves to saying tax rate cuts are compatible with better economic growth, competitiveness and government revenues increasing on an annual basis -- not on the basis of some more extreme supply-side dynamic scoring.

Indeed, I think the reason rate cuts remain popular is that so far they have proven themselves historically compatible with increasing government revenues on a year to year ledger basis. People think about how much the government would rake-in and spend without the rate cut if the economy did remain as strong, and how much less they’d have if the economy wasn’t as strong because there had been no rate cut.

Meanwhile, I think people view the deficit as somewhat independent of revenue. In other words, they fear there’s a certain amount of deficit spending the politicians think they can get away – and simply giving them more money won’t change that for the better.

[M1EK]

Mankiw's lies of omission are more along the lines of posting articles asserting a highly progressive federal tax system while leaving out the payroll tax and implying farther that the graph represents total tax burden (also, obviously, would include state/local).

Or talking about the power of HSA's without noting that the tax benefit is accrued to the individual proportional to his/her maginal tax rate.

When called on stuff like this, his response was to close comments on his blog.

I was not impressed.