Michael's Big Day o' Misinformation - Taxes and Economy

You began the second hour of the show with a McClatchy/Marist poll.    It sharply conflicts with other recent polls on the subject, and when you look at the survey question, you can see why.  
"Which statement comes closer to your view?  Congress should extend the tax cuts only for the middle class, but not for the top 2%, that is, households earning $250,000 or more or Congress should extend the tax cuts for everyone, including the top 2%, that is, households earning $250,000 or more."
This question is a little difficult to grapple with, but based on the construction of the first alternative, a respondent could believe they are choosing between tax cuts for households making $250,000 or more, or tax cuts for everyone.  43% chose the first option, while 52% chose the second. Compare that to these other polls: 

Wall Street Journal - 68% of respondents saw phasing out the Bush Tax cuts for those making more than $250,000 was mostly or totally acceptable.

Pew Forum - 44% of respondents saw raising taxes on those making $250,000 would be beneficial to the economy, vs. 22% who thought it would harm the economy.

Both the WSJ and Pew polls show a 2-1 support for phasing out the Bush tax cuts on the wealthy.  The McClatchy/Marist poll is an outlier, and probably because of the poll question.

Michael Medved:  Where is the support for what it is that Senator Patty Murray and other leading Democrats want to do?  What they want to do is literally raise taxes on everyone and then, after January, when they hope the President will come back re-elected, then go ahead and lower taxes again for people earning below a certain level.  But isn't that outrageous? They want the United States to take the fiscal hit.  She's saying it openly. In January, where everyone would, at least for a couple of weeks, have to pay more in taxes.  You think that's a good idea?

On its face, it doesn't sound like a good idea.  However, she explained the logic, which is something that eluded you.  In the speech, she told the story of the Grover Norquist tax pledge, and the story of the super committee.  Since her colleagues were bound by the pledge, any vote to preserve middle class tax rates while letting upper class tax rates expire would be considered a tax increase, and they could never vote for it.  If, however, the taxes sunset as they are scheduled to, any votes would be for tax cuts, even though they have exactly the same effect.  She explained it here:
I also think many Republicans are starting to realize something very important.  On January 1st if we have not gotten a deal, Grover Norquist and his pledge are no longer relevant to this conversation.  A name, by the way, that I heard repeatedly by Republicans over and over in the Super Committee will no longer be a part of this debate.  We will have a new fiscal and political reality.   
If the Bush tax cuts expire, every proposal will be a tax cut proposal, and the pledge will no longer keep Republicans boxed in and unable to compromise.  If middle class families start seeing some money  coming out of their paychecks next year, are Republicans really going to stand up and fight for new tax cuts for the rich?  Are they going to continue opposing the Democrat’s middle class tax cut once the slate is wiped clean?  I think they know that that would be an untenable position and I hope this pushes them to come to the table with real revenue now before being forced to the table if we don’t get to a deal by the new year because, you know what, we really shouldn’t wait.  It’s not good for the economy, it’s not good for the markets, and most importantly, not good for our taxpayers.
They don't want the United States to take the fiscal hit.  They want to let the Bush tax cuts expire for the wealthy, and they want to do it as soon as possible.  Stop misrepresenting their position.  It's dishonest and disgusting.

Caller:  Hi, Michael.  I'm one of those people who does not believe that you should run politics and government based on what the people actually want.  Maybe you should run it on what's right, and we have this huge deficit, so maybe tax cuts aren't the best idea.

Michael Medved: Okay, no one is talking about cutting revenue.  Do you get that?  

Caller:  Yes, but if you take in more money, you are basically going ahead, and you are able to pay your bills more easily.  You can get a better job.

Michael Medved: Wait, I think it's good if the government takes in more money.  But, one of the things that history shows, and I just, I spent a great deal of time actually looking at these figures.  You know what it means when they talk about government revenue, right?  It's how much money actually comes in to the federal government.  Do you know there's no relevance, no connection at all, really between the top marginal tax rate and the revenue stream?  Revenue goes up every year.  It doesn't matter.  It goes up more when we have growth.  You want more revenue for government?  You want more money to pay the bills?  We need a growing economy.

Revenue does not go up every year.  It kills me that you tell these people you "spent a great deal of time looking at these figures", so they trust you.  But that trust is misplaced.  Via the Tax Policy Center

Years revenue changed +/- 1% of GDP since 1970:

1971 -1.7%  (-$4.9 billion) 
1983 -1.7%  (-$17.2 billion)
2002 -1.9%  (-$138 billion)
2009 -1.5%  (-$439 billion)

They don't always go up.  What can we say about tax rates during those times?  1970 was a tax cut year.  1981 was a tax cut year.  2002 was a tax cut year.  2009 was a financial crisis.  That prove enough?

Caller:  Well, what about in Clinton's times, he was in office we had a growing economy.  We had growth.

Michael Medved: We did during Bush, too.  Did you know that revenue went up every year under President Bush?  

No, it didn't.  See above.  I'm pretty sure Bush was President in 2002.  But let's break down the entire term, shall we?

2002  -1.9%  (-$138 billion)
2003  -0.6%  (-$71 billion)
2004  -0.1%  (+$98 billion)
2005  +0.8% (+$273 billion)
2006  +0.9% (+$253 billion)
2007  +0.3% (+$162 billion)
2008  -0.9%  (-$45 billion)
2009  -2.5%  (-$419 billion)

Since almost half the years comport with your statement, shall we say you are almost half-right?  No, we will say you are all wet. In fact, how can you make that claim when the data is widely available? Are you just making this stuff up at this point?  

Caller:  Yeah, but the deficit... What happened to the deficit?

Michael Medved: The deficit started going down.  The deficit went up early in the Bush administration because of a recession which he inherited and because of 9/11.  And then the deficit started going down and it went way down.  When Bush got re-elected in 2004, the deficit was about a third, and I just wrote about this.  It was about a third of what it is today.  

Let's look at what actually happened, and I'll let you judge if your characterization is correct.

2002  $157 billion
2003  $377 billion
2004  $412 billion
2005  $318 billion
2006  $248 billion
2007  $160 billion
2008  $458 billion
2009  $1,412 billion

I'm sorry, Michael, but you are completely misinformed about Bush's fiscal legacy.  It was peaking when he was re-elected.

Caller:  Does that count the wars?

Michael Medved: Yeah.  It counts everything.  The deficit was just not that bad under Bush.  It was bad, it should have been lower.  But you're talking about under President Bush, it was 3.4%  Today, even according to Obama's optimistic projections, it's 8.5%. It'll be more.

In Bush's last year, it was 10.1%.  It was 3.4% in 2004.  But note, there was a conspicuous lack of a financial crisis in 2004.  In Obama's last year, it was 8.7%.

Caller: But in terms of the actual deficit, it grew tremendously under Bush, correct?  The deficit?

Michael Medved: Correct, we had a surplus under Clinton, the last couple of years of Clinton.  But it really, if you take a look at Bush's deficits and his deficit record, and the growth record, every single year revenue went up.  That's the point.  This idea that somehow you raise the top tax rates on the rich, and then you raise revenue.  You raise revenue by lowering the top tax rates on the rich, too, because there's more growth.  That's what we should be talking about is how do you grow the economy, not how you punish people who are successful and already growing the economy.

See refutations above.  Please, I'm begging you, just look at the numbers.  Your statement about how lowering the top tax rates on the rich raises revenue is unsupported by the data.  Read Christina Romer's article on this topic for more info.  Or Bruce Bartlett. Or any reputable analyst.

Michael Medved:  By the way, in Congress, Boehner had agreed to a deal that was about 2-1 [spending cuts to revenue increases] revenue enhancements, 2-1 spending cuts over revenue enhancements.  Between 2-1 and 3-1... The Democrats are refusing to negotiate.  

Actually, this isn't true.  It was 5-1, with $300 billion in revenue, and $1.5 trillion in cuts, but there's a little more to it than that.  The Republican offer of $300 billion in revenue increases was not real.  It was essentially mathematically impossible.  I won't go into fine detail here, it is explained here.  

Michael Medved:  Why, by the way, would this particular economic downturn, which by many measures was not as severe as for instance, the economic downturn at the end of the Carter and the beginning of the Reagan administration... If you take a look at inflation, unemployment, by all those measures, we were worse off in the late 70s.  

If you consider inflation and unemployment "many measures", you are right, it's not as bad as the 70s. If you consider the number that really matters, GDP, then the 70s are nowhere near the financial crisis of 2008-2009.  

In 2008 and 2009, GDP shrunk by 3.8%.  The last time the GDP shrunk that much was 1946, when it contracted by 10.9%.  

Michael Medved:  Did he have a do-nothing Congress for his first full two years or did he have overwhelming Democratic majorities?  

This is an oft-repeated falsehood on your show.  In the Senate of 2009, 60 votes were required to pass any legislation.  Obama had 60 votes, didn't he?  Not quite.  
  • He started with 57 elected Democratic Senators, and 2 Independents.  
  • Senator Kennedy had a seizure on Inauguration Day, and Senator Al Franken had not yet been seated, as there was an epic recount struggle between him and Norm Coleman.  Therefore, Obama was down to 55 Democrats and 2 Independents.
  • Arlen Specter later switched parties and now Obama had 58 Senators, although Ted Kennedy was still home sick.
  • Then Robert Byrd got sick, reducing Obama's count to 57 again.
  • Next, Al Franken was seated, but Robert Byrd and Ted Kennedy were still sick.  Kennedy did manage a vote in June, though.  Mostly, Obama had 58.
  • By July, Robert Byrd had returned, but still no Senator Kennedy.  Obama now had 59.
  • Ted Kennedy died in August 2009, and in September, Paul Kirk was appointed to fill his seat until the special election.  Finally, President Obama had 60 seats in the Senate.  Until February 4th, when Scott Brown was elected.
All told, President Obama had 60 votes in the Senate for 4 months.  Not two years.

Michael Medved: If you look back at the history of past recoveries, we've had very, very bad economic hard times in the past, it's just never taken us this long.  And, the fact that our fiscal situation is so much worse, and fiscal situation meaning our deficit has just gone up 300%. 

1945 called.  He begs to differ with you.  He's on the line with 1930.  They'll hold.

Michael, please stop with the nonsense.  You are continuing to hurt America with what you're doing.  Please stop.


Roland Lindsey
Bellevue, WA

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