Sometimes when you read the New York Times you just have to laugh. Tomorrow’s edition includes an article on soaring federal revenues that manages to achieve a lugubrious tone even as it reports good news. The article is titled “Surprising Jump in Tax Revenues Curbs U.S. Deficit.” Of course, the jump in tax revenues was especially surprising to those, like the Times, who deprecate supply side economics and stubbornly refuse to learn from experience.
The Times begins:
An unexpectedly steep rise in tax revenues from corporations and the wealthy is driving down the projected budget deficit this year, even though spending has climbed sharply because of the war in Iraq and the cost of hurricane relief.
On Tuesday, White House officials are expected to announce that the tax receipts will be about $250 billion above last year’s levels and that the deficit will be about $100 billion less than what they projected six months ago.
You’d think the Times would be rejoicing, right? The deficit is coming down and the money is coming from the “wealthy” (a group consisting mostly of hard-working two- and three-income families) and corporations. Yet somehow, champagne corks aren’t popping at the Times:
Republicans are already arguing that the revenue jump proves that their tax cuts, especially the 2003 tax cut on stock dividends, would spur the economy and ultimately increase revenues.
Democrats and many independent budget analysts note that overall revenues have barely climbed back to the levels reached in 2000, and that the government has spent trillions of dollars from Social Security surpluses just as the first of the nation’s baby boomers are nearing retirement.
Note, first, that the partisan divide is acknowledged, but resolved on the side of the Democrats: “many independent budget analysts” agree with the Democrats, none, apparently, with the Republicans. Who are they? Who knows? But note the claim that the Times attributes to the Democrats and their “independent analysts”: overall revenues have “barely climbed back to the levels reached in 2000.” This assertion is ridiculous. The chart below was presented by John Snow at the end of 2005; click to enlarge:
As you can plainly see, total receipts soared far past the 2000 total last year, and, if 2006 revenues are up by $250 billion, as the article itself reports, they will exceed 2000 by around 20%.
But that’s not the Times’ only blooper. Consider this claim, as quoted above:
[T]he government has spent trillions of dollars from Social Security surpluses just as the first of the nation’s baby boomers are nearing retirement.
What is that supposed to mean? First of all, Social Security revenues are simply a part of the general budget. Their surpluses or deficits are an accounting construct. And, for the entire six years of the Bush administration, Social Security surpluses total around a trillion dollars. So for the government to have spent “trillions of dollars,” you would have to go back quite a ways before the baby boomers were getting set to retire.
We’ll return to Social Security in a moment. But first, the Times places the good budget news in context:
Revenues are up, but they have lagged well behind economic growth.
Whoa! The cat is out of the bag! Revenues are soaring, but they still lag behind economic growth. So those poor folks who rely on the Times for their news are now in on the secret. And once the Times starts spilling secrets, it’s hard to stop. Another fact that may be news to the Times’ readers comes tumbling out:
One reason for the increased volatility [in federal tax revenues] may be that a large share of income taxes is now paid by the nation’s wealthiest families, and their incomes are based much more on the swings of the stock market than on wages and salaries. About one-third of all income taxes are paid by households in the top 1 percent of income earners, who make more than about $300,000 a year.
I’m puzzled. How does the Times reconcile those facts with the “tax cuts for the rich” mantra that it has repeated hundreds of times in opposing the administration’s tax policies? A regular reader of the paper may be feeling a little disoriented by now.
But bad news will bring him back to earth. The good news about the budget is, the Times assures us, only temporary:
Far more ominously, the nation’s oldest baby boomers will be eligible for Social Security benefits in just two years. Conservatives and liberals alike predict a huge escalation in costs of Social Security and Medicare over the next several decades.
“The long-term outlook is such a deep well of sorrow that I can’t get much happiness out of this year,” said Douglas Holtz-Eakin, a former director of the Congressional Budget Office and a former White House economist under President Bush.
Well, yes. That’s why President Bush wanted to reform Social Security. Remember? The Times seems to have forgotten. Not only that, I’ll bet that if someone with time on his hands and a subscription to Times Select does a little research, he’ll find an ediorial or two in which the Times endorsed the Democratic Party’s position that only a few minor tweaks will be necessary to keep Social Security solvent. Of course, the Times acknowledges that Medicare is a big part of the budgetary problem, too:
Outlays for Medicare have climbed 15 percent this year and are expected to hit $300 billion. About half of that increase results from the new prescription drug program, which is expected to cost nearly $1 trillion over the next 10 years.
The first person who finds the Times editorial that argued that President Bush’s prescription drug program was too stingy gets a free subscription to Power Line. I have to agree, though, with the Times’ conclusion:
Tax receipts amounted to about 17.5 percent of the nation’s gross domestic product in 2005, far below the level five years ago and still slightly below the average of 18 percent since World War II. Spending, by contrast, is running at about 20 percent of gross domestic product .
“Spending has not been restrained,” Mr. Riedl said. “One hundred percent of the reduced deficit is because taxpayers are sending more money to Washington.”
Exactly. So let’s roll up our sleeves and cut spending. Times editorialists, let’s see your list of domestic programs that need to be cut.