Democrats get Liberal Arts Degrees because there’s less Math Required

Posted by PITHOCRATES - May 25th, 2011

Mathematically Challenged when it comes to the Stimulus

You know it’s pretty bad when they can’t project a spending amount correctly when they themselves determine the amount (see Stimulus price tag once again lurches higher by Stephen Dinan posted 5/25/2011 on The Washington Times).

Congress’s chief scorekeeper said Wednesday that the price tag on President Obama’s stimulus law has risen once again, this time to $830 billion — or more than $40 billion more than first projected…

When it passed, the stimulus was expected to cost $787 billion over 10 years, with most of that being front-loaded. But the CBO has regularly adjusted that cost — usually upward — and now says the 10-year price tag will be $830 billion. That’s a $9 billion jump from the last estimate in February.

When you say you’re going to give everyone quality yet affordable health care you know there are a lot of guesstimates in the proposed price tag.  No one knows what the future holds.  So you know that actual costs are going to exceed whatever they project.  Because they can’t even guess the number right when they set the number themselves.

Imagine the stimulus bill as your grandparent coming over and giving you $20 so you can go out and buy something.  The grandparent gives you one of his or her $20 bills.  When your grandparent goes home that day, he or she has $20 less.  He or she spent $20.  A week later that spending was still $20.  A year later that spending was still $20.

You’d think that if the government put $787 billion into a fund for stimulus spending that they’d spend that money until that $787 billion was gone.  Simple, yes?  Instead, they accidentally spent more than they said they would.  It’s like they’re taking a test from a school textbook.  Only they have a teacher’s edition.  With the answers next to the questions.  And they still get the answers wrong.  Doesn’t give you much confidence in their number crunching abilities.

Republican Sponsored Tax Cuts Stimulated the Clinton Years

But those in Washington were always a little fuzzy with their math.  When they crunch the economic numbers for the Nineties, they show how higher taxes spurred economic activity (see The Graph That All Tax Hike Mystics Need to Grapple With by Romina Boccia and Curtis Dubay posted 5/25/2011 on The Foundry).

Economic growth was so impressive in the latter half of the ’90s, in fact, that some claim the Clinton-era tax hikes spurred the economy to prosper…

The data tell a different story. Growth in the first half of the decade following the Clinton tax hike was clearly subpar, and real wages actually fell. The economy didn’t take off until later in the decade, and not coincidentally after a 1997 Republican-sponsored tax cut.

Remember that Clinton‘s first term wasn’t a very good one.  Though he campaigned as a moderate, he governed as a liberal.  Remember Hillarycare?  The secret meetings to take over and nationalized U.S. health care?  That didn’t go over well with the voters.  The Democrats lost the House of Representatives at the midterm election.  And it was the republicans that yanked him back to the center.  And pushed for tax cuts.

As the Heritage chart shows, a closer examination of the economic growth data during the Clinton era reveals a very different story than the one Ezra Klein and the CBPP told. Despite the unusually favorable economic environment during the period, the Clinton tax hikes likely dampened real output and real wage growth. Economic growth, measured as real Gross Domestic Product (GDP), was a moderate 3.3 percent in the period from 1993 through 1996, and real wages actually fell for the entire period. In contrast, the 1997 tax cuts, which significantly lowered the capital gains tax rate, coincided with a period of strong business investment, strong real GDP growth at 4.4 percent, and strong real wage growth of 1.7 percent.

Before the Republican takeover of the House GDP did rise.  But real wages fell.  After the Republican takeover, both GDP and real wages rose.  Proving again tax cuts makes life better for the people.  Not tax increases.

The principles of economics still hold: If you make something more expensive, you get less of it. Taxes on capital and labor, ignoring all other factors, reduce economic and real wage growth. The real story of the Clinton-era tax changes is that the 1993 tax hikes resulted in slower economic growth than expected, while the 1997 tax relief unleashed economic and real wage growth—and a cottage industry of liberal history re-writes.

The numbers are all there.  Anyone can check them.  Just like the economic data from the Reagan years.  But the facts don’t help those who want to buy votes with continued spending.  So they rewrite history.  And belittle anyone who dares to disagree with them. 

Fuzzy, Pragmatic Math

When it comes to the economy, there are some like Raymond in Rain Man.  Brilliant people with their Ivy League degrees.  But put a dollar sign in front of something and they will inevitably get it wrong.  Like they did with the stimulus bill.  With Reaganomics.  With the Clinton years.  As they will get it wrong with Obamacare.  You see, their math has political ends. 

Their math is pragmatic.  It’s fuzzy.  So it can add up differently as needed.  In their world, the ends justify the means.  They want to raise taxes so they can spend and social engineer.  So the facts don’t mean what they appear to.  A low unemployment rate is too high under Reagan and Bush.  While a higher unemployment rate is not that bad under Obama.  A $200 billion deficit is too high under Reagan.  A $1.4 trillion deficit is not that bad under Obama.  And we can’t afford tax cuts for the ‘rich’ but we can afford to give everyone health care.  In short, anytime the flow of money increases from the people to Washington it’s a good thing.  Whenever that flow decreases it’s a bad thing.

That’s why getting the stimulus amount wrong doesn’t bother them.  Or that Obamacare will cost far more than they said it would.  Because both have or will increase the amount of money flowing from the people to Washington.  And that’s always a good thing in their pragmatic world.

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