Wouldn't it be great if politics was more about truth and less about spin? Not going to happen, I know.

By Richard K. Barry

A few days ago, I drew on a post by Steve Benen at The Washington Monthly to make a point about how disinterested many in the media can be about challenging demonstrably incorrect "facts" when offered up by a politician. As I wrote, it's almost as if the interviewers simply consider any statement of fact, no matter how erroneous, to be a matter of opinion with one opinion as good as any other. Apparently anyone really is entitled to their own facts.

Worse yet, it seems that real and important facts, not the "Michele Bachmann on Fox News type facts," but facts supported by research and good faith attempts to get at the truth, are too often ignored.

More recently, Benen wrote that Douglas Elmendorf, director of the non-partisan Congressional Budget Office (CBO), explored in detail the effects of a deficit reduction package. Elmendorf made the case that while, in the medium and long term, small deficits could improve economic output, in the short term a different strategy would be prudent.

From the report:

In the short term, while the economy is relatively weak and economic growth is restrained primarily by a shortfall in demand for goods and services, the policy (i.e., small deficits) would decrease the demand for goods and services even further and thus reduce economic output and income.

As Benen wrote, the CBO director's comments were made in the same afternoon that Federal Reserve Chairman Ben Bernanke reminded Congress that in the midst of our fragile recovery "sharp and excessive cuts in the very short term would be potentially damaging to the recovery."

I understand that economics has for long been called the dismal science for a reason and that it can be hard to grasp the arguments being made, but what is clear is that Republicans are demanding steep cuts that would take effect immediately while the Federal Reserve and the CBO are arguing that the GOP plan would throw sand into the gears of an economy already struggling.

Benen's point is that it is incomprehensible that such an important perspectives, from two very significant sources, is virtually ignored by the media.

Maybe it's true that neither of these guys would make scintillating television, but perhaps we should be given the option of paying attention to what they have to say, just in case it is essential information that could help us save the economy.

Just a thought.

(Cross-posted to Lippmann's Ghost.)

Bush tax cuts cost $329,220 for each job created

Guest post by Publius

The Bush tax cuts cost $329,220 for each job it created. That, according to the math recently employed by The Weekly Standard in its analysis of the cost per job from Obama’s stimulus package.

The Weekly Standard argued that because the overall cost of the stimulus to date is $666 billion, and the number of jobs created since the stimulus was passed (according to the low estimate by the Council of Economic Advisors) is 2.4 million jobs, the cost per job from the stimulus equals $278,000 per job. The Weekly Standard went on to note that we could have simply written a check for $100,000 to everyone whose employment was allegedly made possible by the stimulus and come out $427 billion ahead.

Sounds pretty bad, right?

Well, using the exact same formula, the Bush tax cuts passed in 2001 were estimated by the Joint Committee on Taxation to cost about $864.2 billion from 2001-2008 (the first year of the Bush tax cuts through the last year of his presidency). During that period, according to The Wall Street Journal, 2,625,000 jobs were created. That comes out to a total cost of $329,220 per job under the Bush tax cuts. And that’s if we assume that every single job which was created during Bush’s presidency was attributable to the Bush tax cuts (pretty unlikely) AND if we exclude the costs of the 2003 tax cut (estimated to cost another $350 billion over 10 years). We could have written a check for $100,000 to each person who “allegedly” had their job created by the Bush tax cuts and saved $600 billion, but they wouldn’t have received it because the check was instead delivered to really wealthy people.

My point isn’t that the Obama stimulus was good because the Bush tax cuts were bad. Instead, my point is that the math employed by The Weekly Standard is absurd. This example highlights the absurdity.

It’s wrong to suggest that the sole purpose of the stimulus was to “buy jobs.” If that was the sole purpose, then yes- the cost would arguably have been $278,000 per job. As White House spokesperson Liz Oxhorn noted the other day, however:

[The Weekly Standard] study is based on partial information and false analysis. The Recovery Act was more than a measure to create and save jobs; it was also an investment in American infrastructure, education and industries that are critical to America’s long-term success and an investment in the economic future of America’s working families. Thanks to the Recovery Act, 110 million working families received a tax cut through the Making Work Pay tax credit, over 110,000 small businesses received critical access to capital through $27 billion in small business loans and more than 75,000 projects were started nationwide to improve our infrastructure, jump-start emerging industries and spur local economic development.

The concept of the stimulus was grounded in Keynesian economic theory- government countercyclical spending is critical to countermand the effects of a recession. Increased government spending increases GDP, frees up capital and, consequently, creates jobs. Jobs are part of the benefits of stimulus. They aren’t the direct purchase.

By most metrics, the stimulus was a success. According to the CBO, the stimulus increased GDP by 3.1%. It added as many as 3.6 million jobs to boot. It gave us new factories, roads, bridges, and other infrastructure which we benefit from each day. Boiling all of this down to a cost per job is just silly.

The Weekly Standard would also be wise to note that about $288 billion of the projected $747 billion stimulus came in the form of tax cuts (about 38.5% of total spending), despite the fact that according to many prominent economists (such as Mark Zandi), tax cuts are far less stimulative than other types of spending, such as food stamps, unemployment benefits and infrastructure spending (all of which Republicans opposed).

If The Weekly Standard wants to argue the stimulus could have been more effective, it won’t find many on the left who disagree. If it wants good ideas on how to make it more effective, step one is to stop believing tax cuts are the best solution to all economic ills.

(Cross-posted at The Fourth Branch.)

CBO says GOP's negotiating skills MIA on budget deal

By Nicholas Wilbur

The Republicans' hard-fought battle to curb the "ballooning deficit" and "reign in excessive government spending" backfired in the worst kind of way this week.

The non-partisan Congressional Budget Office delivered the knockout blow to the party of fiscal conservatism on Monday morning, when it published an updated estimate of the actual savings agreed to in the bi-partisan budget deal that avoided a government shutdown in early April.

Republicans were already sour over the deal, which both parties claimed would cut $38.5 billion in spending from this fiscal year's budget (or approximately $78 billion compared to the president's budget request, which was never enacted). A quarter of the most conservative Republicans in the House voted against the measure on the basis that the cuts didn't come close to the $61 billion (or approximately $100 billion) they promised their constituency during the midterm election campaigns. Since the agreement was reached, the news has only grown more disappointing.

On the eve of Congress' vote to enact the "budget compromise," the CBO issued a report estimating that the actual savings from the alleged $38.5 billion in cuts would come out to more like $352 million (not billion). The discrepancy was due to lawmakers increasing spending for certain defense programs and including both unspent budget allocations and rescissions (programs whose funds were already cancelled by Congress) in their budget savings calculations.

Most recently, the CBO issued a revised report projecting that spending reductions actually would result in a net increase in government spending – to the tune of $3.2 billion. According to the report, the estimated cuts to non-military spending totaled only $4.4 billion, or approximately 90 percent below the $38.5 billion Republicans believed they were agreeing to, as a compromise, in order to avoid a government shutdown.

Rather than decreasing the deficit and cutting wasteful government spending, Republicans passed a bill that actually increased spending and added to the deficit.

So much for fiscal conservatism.

So much for campaign promises.

And so much for the ol' reliable campaign tactic of labeling Democrats as spend-thrift socialists bent on turning American into a broken and bankrupted welfare state. It will be painfully amusing to watch the GOP try to justify how they managed to fight for three months over a budget they claimed didn't do enough to address the country's apocalyptically high deficit, only to settle on a deal that actually increased the deficit.

On the other hand, if it's true that nothing in politics happens accidentally, then it's entirely possible that Republicans are gearing up for another massive swipe of Democratic seats in Congress, this time by appealing to the left-wingers who believe, with good reason, that government spending during a time of nominal growth is the best remedy for an ailing economy.

I wouldn't count on it, but that's a better justification for achieving the opposite of the party's stated intentions than walking up to the podium at a press conference and explaining in congratulatory prose how President Obama's negotiating skills are so monumentally superior to those of the GOP.

"We were as shocked as you were" isn't exactly a campaign motto that will rile the base in 2012.

(Cross-posted at Muddy Politics.)