The Washington Post has denounced the inclusion of bonus depreciation in the just-passed tax extenders bill for 2014. The correct term is “partial expensing.” There is nothing “bonus” about it. The...
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- O'Reilly vs. Obama on Economics and Tax Policy
O'Reilly vs. Obama on Economics and Tax Policy
Economic ignorance was on display last night on the O'Reilly Factor as O'Reilly took on Barack Obama on the issue of the economy and tax policy. O'Reilly, the same man who claimed he would find that one guy who set the price of gasoline, said last night that the Bush tax cuts have actually increased revenue, and that THE reason real wages have fallen for most Americans in the past few years is illegal immigration. Here are some highlights and commentary from various topics on last night's interview.
The Bush Economy
O'Reilly: Under President Bush, the federal government derived 20 percent more revenue than under President Clinton. Did you know that?
Obama: Well, the economy grew, Bill.
O'Reilly: It grew. That's right. Under Pres. Bush, the economy grew 19 percent more than Clinton.
Obama then disagreed with O'Reilly's claim. Who is correct? Obama.
The economy (as measured by percent change in real or nominal GDP) did not grow faster under Pres. Bush than under Pres. Clinton. That 19 percent figure O'Reilly is citing is merely the real GDP growth rate from when Bush entered office until now. But the economy didn't grow 19 percent more under Bush than Clinton.
Let's look at both nominal and real GDP during the first 7.5 years of Pres. Clinton and Pres. Bush.
Nominal GDP in 4th quarter of 1992 (seasonally adjusted): $6,484.3; Nominal GDP in 2nd quarter of 2000: $9,822.8
Nominal GDP in 4th quarter of 2000: $9,953.6; Nominal GDP in 2nd quarter of 2008: $14,312.5
So nominal GDP grew by $3,338.5 billion under Clinton, or 51.49 percent.
Nominal GDP grew by $4,358.9 billion under Bush, or 43.79 percent.
Real GDP in 4th quarter of 1992 (seasonally adjusted in chained 2000 dollars): $7,450.7; Real GDP in 2nd quarter of 2000: $9,847.9
Real GDP in 4th quarter of 2000: $9,887.7; Real GDP in 2nd quarter of 2008: $11,740.3
So real GDP grew by $2,397.2 billion under Clinton, or 32.17 percent.
Real GDP grew by $1,852.6 billion under Bush, or 18.73 percent.
Then Obama brought up the distribution of these economic gains under Bush, saying that the wages and incomes of "the people who watch O'Reilly's show" did not go up. It's true that real wages didn't go up, but regarding income, it depends on your income measure: the income measure that Obama has been citing (median household income from Census) doesn't include benefits received. It's only a "cash income" measure.
Obama blames slow wage growth for most of the population on higher corporate profits (not entirely true). O'Reilly blames illegal immigrants. Here's his priceless quote:
O'Reilly: "We've been studying this issue because we want to be fair and balanced and give people both sides. The reason that wages have been depressed...is because there are 10 million new immigrants in the workforce. Most of them are illegal aliens."
Smith, Keynes, Friedman, O'Reilly. "THE reason." Not just "A" reason. But "THE" reason.
Tax Cuts and Revenue
Next they got back to tax policy, and Obama tried to defend his redistribution plan against O'Reilly's label of "class warfare." It was mostly semantics, but Obama is taking from some to give to others. There's no doubt about that.
But then O'Reilly brought up the Laffer Curve issue at two moments in the conversation. Here's the latter time:
Obama: "(The deficit) has to do, in part, with the Bush tax cuts and no cuts in spending."
O'Reilly: "No it can't because the Bush tax cuts created more income. (while Obama says "no, no, no.") The spending is out of control."
Obama needs to learn how to effectively respond to this false claim that the Bush tax cuts have increased revenue. His response in the debate with Charlie Gibson on capital gains was inadequate, and his response in this one was as well, although in a conversation with Bill O'Reilly, it may be hard to get in a complete sentence.
Obama, although more informed than O'Reilly on most of the facts, had a few moments that made you ask, "What is he talking about?"
Here's one such statement:
"Our infrastructure. Look at what happened in Beijing. You go to the Olympics, and these folks are building. And we've got sewer lines that are crumbling."
Comparing the infrastructure of the United States to China's building of a handful of stadiums to put on a two-week show for the world is just stupid. It may be that we need to solve some infrastructure problems, but just because China is building public infrastructure doesn't mean the U.S. has to. Most of China is still basically a third-world country, therefore needing infrastructure. The U.S. is developed already. That's like Bill Gates saying that since Joe Blow is fixing up his trailer park house, he needs to fix up his mansion too. I guess this shouldn't surprise us given that Barack Obama also believes that public financing of sports stadiums is good economic policy, which no economist (left, right or center) supports. (Apparently, Sarah Palin has the same twisted views on regional economic development.)
And another Obama comment that sounds good, yet makes little sense if you think about it for more than 10 seconds (on the topic of redistribution):
"If I am sitting pretty and you've got a waitress who is making minimum wage plus tips, and I can afford it (the tax hikes) but she can't, what's the big deal for me to say I'm going to pay a little bit more. That is neighborliness."
Neighborliness? It's definitely neighborly for you, Mr. Obama, to give to that waitress out of your own pocket. But is it neighborly for you as president via government force to take from somebody else to give to that waitress? It is true that there is some degree of public good to redistribution that would not be accomplished in the private sector if left to it, thereby requiring government force rather than private charity alone. But that's not the argument Obama is making. He is equating government taking from you to give to a waitress to your giving to the waitress out of your own pocket.
After this segment, O'Reilly had on two "experts" to assess the interview and the topic. Both were political analysts who spouted incorrect statements and economic ignorance. Why doesn't he put on a true tax policy expert (from either side of the issue)?
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