The biggest thing I learned from the run-up to the Iraq war is that when one side presents arguments that are deceitful and nonsensical, it doesn’t just mean that those arguments are bunk, it means that that side probably has no *good* arguments for their position. To put it in Rumsfeldese, absence of evidence is, in this case, evidence of absence.
I think this lesson applies to today’s neo-Hooversits. Behold the most idiotic graph I have ever seen, from Arthur Laffer’s WSJ piece arguing against unemployment benefits (via Kevin Drum):
That’s right — as the number of unemployed people goes up, the total payments to unemployed people goes up! Imagine that! Laffer actually argues that this shows that unemployment benefits encourage people not to work.
And here’s Alan Simpson engaging in some creative accounting to argue in favor of gutting Social Security, Medicaid, and Medicare:
The commission leaders said that, at present, federal revenue is fully consumed by three programs: Social Security, Medicare and Medicaid. “The rest of the federal government, including fighting two wars, homeland security, education, art, culture, you name it, veterans — the whole rest of the discretionary budget is being financed by China and other countries,” Simpson said.
Reader DV explains the deception here:
But the bolded statement (the Medicaid/Medicare/SS) consume the entire federal budget is, plainly, untrue. I know this for other reasons but you can follow this link) from within the same fucking article and see that those three programs combined to cost 1.5T and actually revenue was/is 2.6T (these are projected 11 numbers but same difference)’. That statement by Simpson is a plain, unadulterated lie. How does Balz report on the budget without any idea of its details and how does he not fact check Simpson’s incredible claim?
FWIW, I think Simpson deducted the payroll taxes to get the numbers close except, of course payroll taxes are largely dedicated to SS and Medicare.
I recognize that there are legitimate discussions to be had about entitlement programs. But I have to think that if there were good reasons they have to be slashed, the neo-Hooverists wouldn’t have to resort to lies and deception to make their point.
Jude
Facts? Facts?
We don’t need no stinkin’ facts.
I mean, when you can claim, with a straight face, that the budget deficit is contributing to poor economic recovery, you’ve left the world of rationality behind.
Or, as my old grandmother used to say, when you argue with a goddamn fool, he’s doing the same thing.
comrade scott's agenda of rage
Um “idiotic graph” and “arthur laffer” in the same sentence is redundant. He invented the idiotic graph and the USofA has been paying the price ever since.
Now I can’t wait for the Laffer defenders to pop out of the woodwork and try to tell us why Laffer’s thoughts have merit.
Punchy
That graph is certainly a laffer.
Kryptik
DougJ, as has been pointed out by everyone around here, you, John, Tim, etc., what incentive do they have to base anything on facts when they can peddle bullshit and not only get away with it but be treated better than people trying to use reason and fact?
Ailuridae
The worst part is that Bowles’ lie in the same article (which has been covered here and elsewhere) is even more dishonest. The last two days on Morning Joe they have been talking breathlessly about this stuff and not a single guest or panelist was able to correct them on either point. And this is really, really basic budget stuff.
When they two heads of a commission on debt and the deficit can’t understand the very basics of a budget (and here unlike in the austerity argument it really isn’t any more complicated than a household budget with credit cards serving as an analogue to deficit spending) its time for them to be ridiculed and mocked until they resign in shame.
FWIW, I’m the reader in question but don’t really care if my initials are used.
Third Eye Open
The right has good reason to believe that if they get enough paid “academics” to muddy the water, it doesn’t really matter since it will be reported as one side of an argument made in good faith. Who is going to call them on it? Yglesias? Krugman? They are known partisans, and very unserious people.
If the Dems really wanted to counter this, they would have people like Grayson doing their PR. Demagogues? Absolutely. Effective? Darn-tootin’ it is. Modern America runs on catchy memes, sad, but true.
DH Walker
Not to mention that you have to be fucking blind not to see that the corresponding changes in the light blue line (payments) LAG BEHIND the dark blue line (unemployment rate).
I’ve seen some horrifically dishonest and/or idiotic arguments before, but Christ almighty.
SpotWeld
Check out the surplus / deficit tab in the charts here:
http://www.washingtonpost.com/wp-srv/special/politics/budget-2010/
Food for thought
licensed to kill time
From Laffable Curve to Laffable Graph in one EZ swoosh. It’s scientificky!
brandon
This is pretty much the canonical blog post on the subject of “liars, you can’t do anything with them”.
Waynski
Art Laffer should be put up against a wall and we should apply a second amendment solution to him.
jayjaybear
Has Laffer ever been right about anything?
cleek
i love that graph.
it proves that unemployment payouts track the unemployment rate, delayed by a few months.
give that man a Nobel!
Zifnab
You know, there are. Specifically, Social Security benefits are abysmally low, while the tax that support SS benefits is regressive – capping at around $100k – so that people in higher brackets don’t have to pay it. Meanwhile, the SS Trust Fund is littered with IOUs in the form of US Treasury Notes. Now, you don’t get much more secure than a Treasury Note, but it does go to demonstrate how a great deal of perceived debt and default is actually well in hand.
We have been investing the SS surplus in US Treasury Bonds, both cutting the amount we borrow from foreign countries (which, by the way, Japan owns almost as much of as China and domestic bond holders as much as the two combined – but THAT never gets mentioned) and boosting the SS fund with interest paid.
In a recession economy, one of the big progressive economics ideas is to INCREASE social security benefits. To cover the looming threat of SS no longer covering itself, one of the more practical political ideas is to remove the SS tax cap. Neither of these ideas are being discussed in public circles. Instead, we get this “raise the retirement age to 70 for people under 50” idea which A – doesn’t do a fucking thing to the deficit today, B – really screws over all those young people who are shouldering a 6.5% payroll tax right now for tomorrow, and C – should be completely unnecessary, because we already “fixed” SS according to the Reagen Administration back in 1983 when we passed the first “fuck the elderly” entitlement reforms.
So fuck Arthur Laffer. Fuck the elderly army of teabagging me-firsters. And fuck any politician – Democrat or Republican – that takes this shit seriously.
comrade scott's agenda of rage
@jayjaybear:
No.
Thus endeth today’s episode of One Word Answers.
MarkJ
Arthur Laffer should be laughed out of his profession. The guy is pretty much wrong about everything and demonstrates his lack of economic knowledge on a regular basis.
During the healthcare debate he actually repeated the “keep your government hands off my medicare” mantra as if there were actually some truth to the slogan. The implication being that medicare is not, in fact, a government program. He is either completely ignorant of the facts, or willfully lying to advance an ideological agenda that is bad for the country. Either way, calling him an economist is an insult to actual economists. Propagandist is the term that fits best.
Warren Terra
Looking at the graph, the main thing I see is a time lag: “unemployment benefits” (actually, according to the graph, total spending on unemployment benefits per person over time, which is quite a different thing) increase after the unemployment rate does, and also decrease after the unemployment rate does. So I guess Laffer’s point would be that we need better oracles, so we can better synchronize spending to help the unemployed with the unemployment rate.
But remember: his Y-axis is average benefit times average length claiming benefits. So the time lag that he apparently proves his case is a natural consequence of the long-term unemployed finding it harder to get a job than do those who have a resume untarnished by extended unemployment, or fresh graduates, or just younger people generally. And that’s even discounting regional factors: concentrated pockets of unemployment are likely to have the longest lag times of this sort.
What Laffer really wants is more deprivation for the serfs and villeins so that as their term of unemployment lengthens and their already reduced benefits threaten to expire (or indeed do expire) they will be forced to take any job they can find, no matter the pay or conditions. Bring back the Victorian poorhouses and the lag Laffer denounces in that graph would disappear, because those longest unemployed would become the first to find new employment, no longer the last to find new employment, because the pressure of circumstances would compel them to accept gratefully whatever demeaning and degrading position their betters deign to offer them.
P.S. This all of a piece with the rest of the Republican social agenda. Earlier this week the Republicans announced that they were upset that the Affordable Care Act might make contraception affordable; people on the left rightly denounced this Republican attack as reflecting their theocratic base’s desire to keep women barefoot and pregnant – but the point is, the Republicans’ rhetoric may be about the “pregnant”, but their policy and their actual goals are focused more on the “barefoot”, as we can see in an even more revealing form with their war on unemployment benefits.
russell
Behold the most idiotic graph I have ever seen, from Arthur Laffer’s WSJ piece
But was it on a napkin?
Comrade Dread
Well, if they came right out and said, “We fucking ripped off your pensions and spent it on tax cuts and shit, and now instead of asking the beneficiaries of our economic stupidity to pay more and make it right or cut defense spending to a reasonable level, we’re going to screw you out of your promised benefits.” they wouldn’t get elected, now would they?
maus
Speaking of which-
http://hughhewitt.com/transcripts.aspx?id=33f20ad0-458a-44ff-812a-2c464060d131
Christopher Hitchens remains a piece of human excrement.
RSR
I’d like to see a graph of the temperature rate vs the total real sweat sweated per sweater.
flukebucket
@Jude:
Made me think of Facts really are stubborn things but what is a fact?
beltane
They do have a real argument, but it is one that they would not dare to state in public. It has to do with the creation of a society where virtually all the wealth is held by the few, while the majority languishes in inescapable poverty and want.
If you read Megan McArdle, you can positively taste the relish she feels for casting elderly workers into utter destitution. The sight of starving old people would apparently provide some form of of validation to her and her ilk.
While this is their real argument, it is not one that could be easily sold to the public, hence the bullshit, made-up argument.
beltane
@Waynski: Mr. Guillotine would be a more suitable partner for a man of Mr. Laffer’s views.
Mark S.
Ugh, I know I chastised everyone on the last thread because it turned into Obot vs. Firebagger Part MDCXVIII, but can someone explain to me the 11th dimensional chess going on in appointing a bunch of right wing assholes to this deficit commission? They are going to recommend slashing SS and Medicare and cutting capital gains taxes and eliminating the estate tax, and the Dems in the House will kill it and Republicans and Brooks and Broder will blame them for not taking the deficit seriously. What am I missing here?
Zifnab
@beltane:
Which is a terrible idea anyway. We’ve got countries like that. In the third freak’n world. It continues to boggle my mind that anyone would actually WANT to drain the money out of the US Economy to the point that it descends into some kind of feudal state.
Maybe a couple hundred years ago, this might have seemed like a good idea. But the US became a technological superpower in large part because it knew how to share the wealth. There’s just no stock in building an iPhone for a dozen ultra-rich plutarchs. We wouldn’t have commuter air travel if only 1000 people a year could afford to fly. Hell, even the hookers and blow industry has benefited from business volume.
Why anyone who isn’t completely insane would want to fuck that up is beyond me.
DougJ
@brandon:
That’s what inspired my thinking about Iraq, but I couldn’t remember how to find the original post.
sven
No one here wants to consider the obvious, that the disincentive to work is so strong, it may actually reverse causality. If you stop and think for a second, this effect makes it obvious how FDR caused the Great Depression and Obama caused this recession.
Sure, a bunch of smug physicists in their ivory tower at Harvard will say time only flows in one direction, you liberals think you have the answer to everything!
Agoraphobic Kleptomaniac
That graph doesn’t even make sense for the point he thinks he’s making.
According to that graph, Unemployment falls after Payouts from unemployment reach a certain level. If you slid the light blue line over so that it was BEFORE the dark blue line, he might have a point.
To me, it looks like we need to spend approximately $5000 of unemployment to each unemployed person to get the economy moving again.
If we want to get unemployment for this particular spike to match the history he’s pointing to (for when the economy turns around), we need to increase unemployment costs about another $2000 per person.
Zifnab
@Mark S.:
They aren’t all right wing assholes.
http://www.theatlantic.com/politics/archive/2010/02/obama-creates-deficit-commission-mandates-bipartisanship/36179/
And it’s both a financial and political necessity. The deficit commission isn’t going to be completely lopsided, and I have no doubt that many of the ideas will be completely tossed aside because they are political poison.
Given the glacial pace of the Senate, and the political toxicity of every House vote, it’s much easier to take a couple dozen non-politicians and have them argue out a plan than to let some poor Congressman from Ohio get called a baby killer or a cat food commissioner for some mediocre idea that’s going to get cut anyway.
It’s a think tank that keeps the deficit hounds from screaming “Why isn’t Obama doing anything!” And it’s a tool to campaign on in 2012, when Democrats and Republicans tout every footnote of the report as the true panacea for all budget woes.
beltane
@Zifnab: They don’t think their position through to its logical conclusion. While they may find the idea of an aristocracy to be appealing, they do not consider the fact that a poor society is a poor society. The average middle class American enjoys a level of material comfort that someone like Henry VIII could never even have imagined. Shrinking the pie so that one can grab a larger piece is the idiotic idea that lies at the heart of conservative economics.
Waynski
@beltane: This.
patroclus
Another thing Simpson could use is a more sophisticated understanding of the non-U.S. purchasers of U.S. government securities. “China” is not some monolithic boogeyman; its banking sector actually includes not only the “Big Four” (Bank of China, China Construction Bank, the Agricultural Bank of China and the Industrial and Commericial Bank of China) but also a wide variety of regionals and smaller local financial institutions in addition to the purely state-owned developmental funds. Worldwide investors know who BOC, ICBC, ABC and CCB are beacuse, in recent years, they have capitalized themselves in record-setting public offerings – which has effectively converted them from their State-owned-enterprise (SOE) past into hybrid institutions that are also publically owned and subject to contracts governed by the rule of law; with fiduciary responsibilities to shareholders and investors.
The relatively new regulatory structure is also more generally known than is explained by Senator Simpson; the People’s Bank of China (“PBOC”) is no longer the all-powerful entity of the communist past. While it remains the principal supervisor and regulator, its powers have been diffused into various somewhat competitive arms, with multiple regulatory missions. The regulatory power has been vastly amended and reshaped due to the enactment of multiple banking and commercial laws in the past decade.
So, are we really going to slash Medicare and Social Security because Simpson thinks that the burgeoning emulative capitalism that China is implementing hasn’t really happened and that it instead remains some sort of monolithic Maoist bugaboo?? Really??!! A new “Red Scare” to sell entitlement reform?
I call bullshit. Simpson and Bowles better come up with a better argument than this.
kommrade reproductive vigor
It’s all win for these coddled arseholes. If they don’t get what they want they can keep whining about how much better life would be if people would only listen to them. If they do win they can whine about the horrors of the constant food riots.
David in NY
But have the House (and Senate?) bought into having to act on the Commission’s proposals??? I thought I saw something about that. That could be nasty.
Brachiator
@comrade scott’s agenda of rage:
Laffer has defenders? I wonder if he would even have been allowed to contribute to the WSJ at all pre-Murdoch.
The Democrats should be able to eat the GOP alive on this issue.
@Warren Terra:
Great point. This just underscores the stupidity of his graph. There’s also something interesting happening after 2000, but you’d need much more than Laffer provides here to get into it.
Third Eye Open
@sven: You’re not seeing this correctly. Decisions made today, according to certain theories, can effect not only our future, but our past. Dastardly, I know!
shep
That’s another lie.
http://en.wikipedia.org/wiki/File:Estimated_ownership_of_US_Treasury_securities_by_category_0608.jpg
MarkJ
@ beltane – yes, this is exactly why I think most CEOs know nothing about business. A prosperous middle and working class would expand the market for whatever they are selling and lead to greater profits. But their lobbyists actively work to promote policies that hurt the working and middle classes.
jayjaybear
@Brachiator: Laffer is the father of supply-side economics (he of the Laffer Curve). The entire GOP and a goodly portion of libertarians (both capital and small “l”) are his defenders.
David in NY
I don’t know if anyone else observed this, but the chart proves just the opposite of what Laffer says: it shows that increasing unemployment insurance payments reduces unemployment. If you look at the chart, look at every peak in unemployment payments and ask, “What happens next?” The answer is, “Unemployment drops dramatically. Every time.
So ramp up that spending on unemployment insurance, I say. It will make unemployment go way down.
EDIT: @Agoraphobic Kleptomaniac: OK, you sorta kinda said the same thing, but not with my panache.
Corner Stone
@Comrade Dread:
But isn’t this exactly what they are saying? When they talk about “sacrifice” and “hard choices”?
Corner Stone
@David in NY:
Both Reid and Pelosi have committed to getting an up or down vote on anything that comes out of the commission.
It’s not entirely likely that anything will actually come out of the commission at all.
But that’s been beside my point on this damn thing the whole time. Now the door is cracked. And you’ve got a “bi-partisan” leadership team in every media outlet across the country spewing, and repeating, bald faced fucking zombie lies. Just flat out lying.
But those lies will etch themselves into the consciousness surrounding this “debate” and we’re going to be looking right down the poop chute of seeing SocSec as we know it out and out die.
The most likely outcome is raising the retirement age. The other, IMO, is shoving some percentage of SS funds into the mutual fund industry ~ a kind of ersatz privatization.
Once they get SocSec on the table, which has been done, the argument is no longer about SocSec but what must be done about SocSec.
And it’s turtles all the way down from there.
Hugin & Munin
Corner Stone: Broder endorsed the comission today. We’re screwed.
Hugin & Munin
Errr, I’ll pay someone a buck for another ‘m,’ but only if you can deliver it to my previous post.
Brachiator
@jayjaybear:
I know who Laffer is. It’s just that I thought his 15 minutes were up years ago. I can’t imagine anyone today taking him seriously. It says much that conservatives can’t find economists with more gravitas to defend their policies. Hell, they might as well have Sarah Palin try to explain the economy.
@David in NY:
Nah. Pretty much the only thing the graphs shows is that there is a time lag between worker unemployment and the payment of benefits. This is entirely trivial.
By contrast, here is a graph from an NY Times blog post showing how long term unemployment (greater than 27 weeks) is making up a larger portion of the unemployed, and a snapshot of various industries and disappearing jobs.
Here’s a key point:
Sly
RE: Social Security and the Public Debt.
Galbraith addressed this nonsense in its entirety in his testimony to the commission. Required reading. That he begins with an attack on Simpson, Pete Peterson, and the commission in general is a mere prelude to the asskicking he gives to the entire notion that SS is in anyway related to the debt.
cmorenc
More affluent conservatives (and hard-core glibertarian ideologues who have secure gigs thanks to the former) began to believe again during the administration of Bush, Jr that they might just have a realistic chance of progressively strangling social security and other government entitlement programs to death over the next one or two decades. They realized even in the headiest, strongest days of the Bush Administraion and narrow GOP control of Congress that they could not anytime soon repeal them directly. Their strategy was based instead on creating an increasing array of options for people to voluntarily divert their earnings and assets to private-investment based alternatives bringing them personally significantly better return on their contributions/investments than they would likely get back from the federal government entitlement programs. A key collateral effect-by-design of these diversions was to progressively alter and shrink the demographic base of those still relying on government programs more and more toward poorer segments of the population, causing social security to be increasingly seen as a welfare program for poorer, less successful (or unworthy) folk, rather than something ordinary hard-working people earned over a lifetime. At some point, it would then become politically feasible to “reform” social security into an increasingly stingy welfare program with incentives and limits pushing all but the most severely disabled among the elderly out of the program to the maximum extent possible. At least that was the dream just after the 2004 elections – and when the idea flew poorly when Bush pushed the idea in 2005, conservatives believed that they merely needed to lay the groundwork more softly and incrementally, biding their time, but that with patience they’d ultimately succeed – even though the 2006 elections meant these ideas had to be put on the back burner for longer than they’d prefer.
All that changed when Obama won in 2008 – it suddenly seemed to them that if they permitted Obama to “succeed”, it spelled the end of their vision for a dramatically more glibertarian society for at least several decades (remembering what happened when FDR got elected in in 1932). That’s one of the most key reasons why the GOP dug its heels in so hard so soon rather than show any hint of cooperation, especially when Health Care reform came up and represented (if they allowed it to come to pass in any form other than in drastically minimalistic form that really changed nothing about the current system) – the creation of an immense amount of intertia that would be as difficult to turn around within anyone’s lifetime as FDR’s social security (or LBJ’s medicare) has proven to be. For true-believers of hard-core glibertarian conservatism, the fight to discredit and defeat Obama and the Dems IS truly a fight-to-the-death cage match, because if Obama succeeds, they believe that prospects for the conservative vision of society are effectively dead, perhaps forever, but at least for many decades to come.
Corner Stone
@Hugin & Munin: There’s an omission in your commission.
Corner Stone
@cmorenc:
How does this jibe against Obama’s setting up the commission?
IOW, what is your opinion about why Obama pushed to get this commission up and running, and with the people he picked leading it?
Batocchio
Your first paragraph is spot on. And Laffer, who’s a hardcore wingnut, gives some other tells. He calls it “Paying People Not to Work,” which is ridiculously prejudicial, versus “Unemployment Benefits,” or the more touchy-feely “Helping Out Fellow Americans in a Rough Patch.” He theorizes about unemployment benefits paying $150,000 a year. And he postulates a two person economy. Pretty much all movement conservatism “arguments” about policy are just rigged demos. (Just as with that sociopath high priestess of selfishness, Ayn Rand.)
Nylund
its obvious that unemployment LEADS benefits. When unemployment goes down, then benefits go down. Duh. Pretty obvious stuff. Guess what? When I break my arm, my medical bills go up too.
IIf an increase in benefits caused unemployment to go up, then his argument might have merit. But, the data does not do that. Unemployment is not lagging benefits at all.
Give me the data series and a whopping 23 seconds and I can run a Granger Causality test and prove this statistically.
Nylund
I’m going to take a stab at presenting the Wingnut counter:
People know that the benefits will rise, so they quit their job so that when the rise in benefits happen, they’ll be first in line.
This really isn’t that different from Ed Prescott’s claims that the recession happened because everyone knew Obama was going to become president and raise taxes so they all preemptively quit their jobs to avoid those taxes. And Ed Prescott won a Nobel Prize!
mclaren
Incidentally, while SS/Medicare/Medicaid cost 1.5 trillion dollars all together, America’s military expenditures currently run to 1.3 trillion dollars per year, broadly defined. (Including VA payments, DHS, Pentagon “black projects” which now total 50 billion per year just for the black projects alone, NSA, CIA, NRO, Blackwater which has admitted it’s a front for the CIA, and so on.)
At the current rate of growth of our military budget, very soon the annual military expenditures will overtake the combined SS/Medicare/Medicaid outlays.
Logic would suggest that if we really want to cut the deficits we should start cutting our military budget, especially since we can’t win wars anymore. But that’s an argument based on facts…and, as Ronald Reagan so wisely remarked, “Facts are stupid things.”
Parrotlover77
Yes! I agree. There are very legimiate discussions to be had. Such as, to what starting age do we LOWER Medicare and Social Security, and by how much should we INCREASE the benefits? Those are excellent questions that we should be discussing.
Bender
And that’s how you know global warming is a hoax, right?
Matt M.
Daniel Davies covered this some years ago.
SFAW
You’re forgetting the canonization of St. Ronnie. His “coattails” from his elevation to sainthood meant that imbecile “advisors” like Laffer will retain their credibility [sic] well beyond the point where their ideas are shown to be fucking stupid/nuts/evil.
In a rational world, you’d be 100% right. (Of course, in a rational world, we’d never have heard of Laffer, because he’d be doing the only job he’s smart enough to handle – watching grass grow.) Unfortunately, rationality has been in short supply in the US for awhile.
Alan
A chart stretching from 1972 through 2010, and it’s not adjusted for inflation? Wow. As you can see from the extremely low payments during the Carter administration, and the extremely high payments during the Bush administration, inflation dominates all other factors in the nominal-dollar-denominated payout series.
What’s funny is that by using nominal dollars instead of real dollars, Laffer works against his own argument. Over the course of the entire series, unemployment appears to have a slightly negative slope, while payouts have a slight positive slope. By Laffer’s reasoning, this is proof that paying people not to work decreases unemployment. Awesome!