Post Practices Boo-Hoo Economics
Weisman opened his article by noting that the House tax-cut package would trim the federal revenue by $94.5 billion over five years nearly double the budget savings that Republicans muscled through the house last month. Missing was the history, to say nothing of recent news, behind tax cuts and the growth in federal revenue they produce.
Just last quarter, a growing economy bolstered by cuts in capital gains, dividend and income taxes saw a stellar job gains reach 30 consecutive months, red hot manufacturing numbers, 4.3% GDP growth and increased productivity. The federal deficit (for that period) dropped $80 billion, from $412 billion to $331 billion.
Weisman referred to tax cuts as a cost five times in
the story, but that is based on the premise that tax proceeds are
the governments money to begin with. This sort of creative
accounting implies that all money and property belong to the
government and can be confiscated on a whim.
Parroting Democratic talking points, Weisman also claimed that cutting the dividend tax would overwhelmingly benefit affluent investors, especially as Congress moves to cut programs for the poor in the name of deficit reduction. After getting a throwaway quote from a House Republican about the benefits of tax cuts, Weisman turned to study by a liberal group that claimed they would be harmful: The liberal watchdog group Citizens for Tax Justice says that the richest 1 percent of Americans would enjoy 53 percent of the value of the extension that year, while 78 percent would receive no benefit.
If Weisman was interested in balanced analysis, he would have considered a recent report from the Tax Foundation. In that study, foundation President Scott Hodge found as stock ownership becomes more universal in America, stock owners those claiming dividends or capital gains income are becoming increasingly middle class. In addition, the foundation discovered a rarely mentioned demographic most likely to benefit from the tax cuts: the elderly.
Source: Tax Foundation
Instead of using that study, Weisman hyped a flawed
report from the Federal Reserve Board to draw the conclusion that
the earlier dividend tax cut package had no real impact on the
stock market and prompted only muted gain in total corporate
Weismans faith in that study was misplaced. According to a December 6 Wall Street Journal article, the Fed study had such a small event window that it can hardly be taken as conclusive. According to the Journal: The economists tracked stock performance during a few days in early January, after the Bush Administration officially announced the tax cut proposal, and on a couple of other arbitrary dates. Apparently, the $4 trillion growth of the market since 2003 didnt factor into the conclusion. Much like Weismans story, the Fed cherry picked data for the study.
While Weisman did find comment from conservatives, he only offered them enough ink for vague talking points while hyping detailed numbers, studies, and analysis from liberal groups. Saying Our economic policies have done the trick, didnt carry near the authority of a Federal Reserve Board study, even if that study was fundamentally unsound.
Overall, Weisman painted a dour picture of the past, present, and future of dividend tax cuts. His portrait of policies that would save $50 billion over five years by imposing new fees on Medicaid recipients, trimming the food stamp rolls, squeezing student lenders and cutting child support enforcement doesnt do the economy or free market principles, justice.