Wednesday, April 01, 2009
Democratic spokesperson Lori Montgomery reports...
Congressman Paul Ryan (R-Wisconsin) today issued an alternative to the budget plan offered by the President. Democratic response was swift as key party leaders claimed, among other things, that the plan would “cut taxes for business and the wealthy, freeze most government spending for five years, halt spending approved in the economic stimulus package and slash federal health programs for the poor and elderly.”
Ooops, my bad – that wasn’t the Democrats reacting – that was from Washington Post writer Lori Montgomery’s opening paragraph in her online news article on the plan. What really caught my attention was her calm description of how the GOP plan would “slash federal health programs for the poor and elderly.”
Now we’ve all learned that when a Washingtonian says a program has been slashed, it usually just means the increases aren’t as much as (a) requested, (b) previously budgeted or (c) what the punditry thought should be allocated. So I looked elsewhere for my news.
The AP (really!) gave it a different slant: U.S. Rep. Paul Ryan Presents Republican Budget To House
They describe the tax cuts for the wealthy thusly:
“The GOP plan would offer a dramatically simplified tax code in which couples would have the option of a 10 percent rate on the first $100,000 of income, with a 25 percent rate thereafter, with the first $25,000 of income exempt from taxation. Single could get a $12,500 exemption and a 10 percent rate on income up to $50,000…Taxpayers could also opt to remain in the current system.”
As a way of contrast, under current rules, Singles get a $5,450 exemption and a 10% tax rate through the first $8,025 of income. So if your single, don’t itemize and your gross income is, say, $21,000 – congratulations, Lori Montgomery thinks your wealthy.
As to the so-called cuts in Medicare, the AP reported that “Democrats warned that the GOP plan would force draconian cuts to the program.”
So perhaps if the AP wants to revise its story, it can report that “Democrats – including Washington Post reporter Lori Montgomery - warned that the GOP plan would force draconian cuts to the program.”
Here’s the link to the House Republican Budget Alternative. It explicitly notes that Medicare remains unchanged for those 55 and over. In fact, the biggest change would probably be felt only by “high-income seniors (those with household incomes exceeding the President’s benchmark level of $170,000)”.
This is all academic, of course, since this proposal will never see even a committee vote but I'm sure President Obama and other key Democrats are glad to see that Ms. Montgomery has their back.
Ooops, my bad – that wasn’t the Democrats reacting – that was from Washington Post writer Lori Montgomery’s opening paragraph in her online news article on the plan. What really caught my attention was her calm description of how the GOP plan would “slash federal health programs for the poor and elderly.”
Now we’ve all learned that when a Washingtonian says a program has been slashed, it usually just means the increases aren’t as much as (a) requested, (b) previously budgeted or (c) what the punditry thought should be allocated. So I looked elsewhere for my news.
The AP (really!) gave it a different slant: U.S. Rep. Paul Ryan Presents Republican Budget To House
They describe the tax cuts for the wealthy thusly:
“The GOP plan would offer a dramatically simplified tax code in which couples would have the option of a 10 percent rate on the first $100,000 of income, with a 25 percent rate thereafter, with the first $25,000 of income exempt from taxation. Single could get a $12,500 exemption and a 10 percent rate on income up to $50,000…Taxpayers could also opt to remain in the current system.”
As a way of contrast, under current rules, Singles get a $5,450 exemption and a 10% tax rate through the first $8,025 of income. So if your single, don’t itemize and your gross income is, say, $21,000 – congratulations, Lori Montgomery thinks your wealthy.
As to the so-called cuts in Medicare, the AP reported that “Democrats warned that the GOP plan would force draconian cuts to the program.”
So perhaps if the AP wants to revise its story, it can report that “Democrats – including Washington Post reporter Lori Montgomery - warned that the GOP plan would force draconian cuts to the program.”
Here’s the link to the House Republican Budget Alternative. It explicitly notes that Medicare remains unchanged for those 55 and over. In fact, the biggest change would probably be felt only by “high-income seniors (those with household incomes exceeding the President’s benchmark level of $170,000)”.
This is all academic, of course, since this proposal will never see even a committee vote but I'm sure President Obama and other key Democrats are glad to see that Ms. Montgomery has their back.
Friday, June 26, 2009
The Alternative Math of Lori Montgomery
Previously, I’ve taken note of some sloppy, biased reporting by Washington Post reporter, Lori Montgomery. So when I set out to read an article with her byline, I know additional research is probably in order
CBO Calls Long-Term Revenue, Spending Outlook Dire
According to Ms. Montgomery, here’s why it's so dire:
“The nation's long-term budget outlook has darkened considerably over the past six months, and President Obama's plan to extend an array of tax cuts and other policies adopted during the Bush administration has the potential to "create an explosive fiscal situation," congressional budget analysts reported yesterday.
In a new report, the Congressional Budget Office found that extending the Bush administration tax cuts, reining in the alternative minimum tax and canceling a scheduled reduction in payments to Medicare doctors would dramatically slash tax collections at a time when federal spending would be "sharply rising."
(Ed. Note. Not sure why Ms. Montgomery believes not-reducing payments to doctors will contribute to reduced tax revenue. If anything, it will increase the revenue side by adding more taxable income.)
Ms. Montgomery doesn’t actually tell us which CBO report she is describing but I believe it is this one: The Long-Term Budget Outlook.
I’m also guessing Ms. Montgomery never got around to reading it. For instance, whereas Ms. Montgomery says the proposed plan “would dramatically slash tax collections”, the CBO notes:
“Federal revenues totaled 17.7 percent of GDP in fiscal year 2008. Because of the recession and the tax reductions provided in stimulus legislation, CBO expects revenues to decline sharply in fiscal year 2009, to 15.5 percent of GDP… Under the alternative fiscal scenario, the [Bush tax cuts] would be extended, and the parameters of the AMT would be indexed to inflation after 2009. Consequently, revenues would grow more slowly over the long term than in the other scenario, but they would still increase gradually relative to GDP because of the effects of real income growth. The effective marginal tax rate on labor income would rise to about 30 percent in 2035 and to 33 percent in 2080. Tax receipts would reach only 18 percent of GDP in 2012 and then gradually rise to 22 percent of GDP by 2080, 4 percentage points lower than in the extended-baseline scenario.” (Pg.11 of the report, Pg. 25 of the pdf.)
In what math universe does 18-22% of a larger number represent a drop in tax collections over 15-17.7% of a smaller number?
Is Ms. Montgomery so obtuse she doesn't understand her own reporting?
“The news is not particularly good even if the government were to collect the extra money, primarily because of the rapidly rising cost of Social Security and federal health programs for the elderly and the poor.”
...which should tell her something. She notes the effects of Social Security and federal health programs spending without noting that a large chunk of these programs (Social Security and Medicare) are financed by FICA taxes – not income taxes. So the Bush tax cuts aren’t completely on point here. And her reference to the AMT is completely without context. As the report also spells out, left unchanged, “…the cumulative effects of inflation would make almost half of all households subject to the AMT by 2035 and nearly three-quarters subject to it by 2080. Currently, only 3 percent of households are subject to the AMT.”
But hey – she managed to get in some negative Bush references so maybe she got a going away fist bump from Dan Froomkin.
CBO Calls Long-Term Revenue, Spending Outlook Dire
According to Ms. Montgomery, here’s why it's so dire:
“The nation's long-term budget outlook has darkened considerably over the past six months, and President Obama's plan to extend an array of tax cuts and other policies adopted during the Bush administration has the potential to "create an explosive fiscal situation," congressional budget analysts reported yesterday.
In a new report, the Congressional Budget Office found that extending the Bush administration tax cuts, reining in the alternative minimum tax and canceling a scheduled reduction in payments to Medicare doctors would dramatically slash tax collections at a time when federal spending would be "sharply rising."
(Ed. Note. Not sure why Ms. Montgomery believes not-reducing payments to doctors will contribute to reduced tax revenue. If anything, it will increase the revenue side by adding more taxable income.)
Ms. Montgomery doesn’t actually tell us which CBO report she is describing but I believe it is this one: The Long-Term Budget Outlook.
I’m also guessing Ms. Montgomery never got around to reading it. For instance, whereas Ms. Montgomery says the proposed plan “would dramatically slash tax collections”, the CBO notes:
“Federal revenues totaled 17.7 percent of GDP in fiscal year 2008. Because of the recession and the tax reductions provided in stimulus legislation, CBO expects revenues to decline sharply in fiscal year 2009, to 15.5 percent of GDP… Under the alternative fiscal scenario, the [Bush tax cuts] would be extended, and the parameters of the AMT would be indexed to inflation after 2009. Consequently, revenues would grow more slowly over the long term than in the other scenario, but they would still increase gradually relative to GDP because of the effects of real income growth. The effective marginal tax rate on labor income would rise to about 30 percent in 2035 and to 33 percent in 2080. Tax receipts would reach only 18 percent of GDP in 2012 and then gradually rise to 22 percent of GDP by 2080, 4 percentage points lower than in the extended-baseline scenario.” (Pg.11 of the report, Pg. 25 of the pdf.)
In what math universe does 18-22% of a larger number represent a drop in tax collections over 15-17.7% of a smaller number?
Is Ms. Montgomery so obtuse she doesn't understand her own reporting?
“The news is not particularly good even if the government were to collect the extra money, primarily because of the rapidly rising cost of Social Security and federal health programs for the elderly and the poor.”
...which should tell her something. She notes the effects of Social Security and federal health programs spending without noting that a large chunk of these programs (Social Security and Medicare) are financed by FICA taxes – not income taxes. So the Bush tax cuts aren’t completely on point here. And her reference to the AMT is completely without context. As the report also spells out, left unchanged, “…the cumulative effects of inflation would make almost half of all households subject to the AMT by 2035 and nearly three-quarters subject to it by 2080. Currently, only 3 percent of households are subject to the AMT.”
But hey – she managed to get in some negative Bush references so maybe she got a going away fist bump from Dan Froomkin.
Saturday, June 13, 2009
Dog Bites Man: It's Still Bush's Fault
I know that Washington Post reporters are pretty much duty-bound to shill for this President but still…
In an article written by Lori Montgomery and Scott Wilson, they casually throw out this little factoid:
“Obama's offer of new spending cuts comes against a backdrop of public concern over the nation's fiscal health and long-term spending plans that even he has acknowledged would lead to "unsustainable" deficits. His 10-year budget would shrink the $1.3 trillion annual deficit left by the Bush administration before allowing it to widen again in its final years.”
While President Bush wins no plaudits from me for his budgetary record, let’s remember that Congress initiates spending bills and the last two years of the Bush Administration were accompanied by a strongly Democratic Congress…which included one Senator Obama.
The spending resolution leading to the current budget was passed last June:
“The Senate by a 48-45 vote approved a compromise fiscal 2009 budget resolution Wednesday that would cap discretionary spending at $1.013 trillion, $21 billion more than President Bush requested.” Senate passes fiscal 2009 budget resolution along party lines (6/4/08) -- www.GovernmentExecutive.com
Included among those 48 votes: Barack Obama.
In September 2008, the Congressional Budget Office estimated the FY 2009 deficit to be $438 billion – an at-the-time outlandish number that now, just a few months later, looks to be a model of frugality. The ensuing increase to beyond a trillion dollars came from the governmental responses of TARP and more stimulus packages. What part of those did Mr. Obama oppose? (If you’ll recall, he spent the days leading up to his inauguration cajoling his fellow Democrats to allow the second half of the TARP funds to be released to his administration).
Besides, that $1.3 trillion number is so pre-Obama
“The director of the Congressional Budget Office today updated his projections for the budget and economic outlook and is now anticipating a $1.8 trillion deficit this year, and $1.4 trillion in 2010.” Deficit Now Projected at $1.8 Trillion for 2009 - Political Punch
Fearless prediction: We will never see an Obama budget that even sniffs “only” a $438 billion deficit.
For some more helpful talking points: Bush Deficit vs. Obama Deficit in Pictures » The Foundry
In an article written by Lori Montgomery and Scott Wilson, they casually throw out this little factoid:
“Obama's offer of new spending cuts comes against a backdrop of public concern over the nation's fiscal health and long-term spending plans that even he has acknowledged would lead to "unsustainable" deficits. His 10-year budget would shrink the $1.3 trillion annual deficit left by the Bush administration before allowing it to widen again in its final years.”
While President Bush wins no plaudits from me for his budgetary record, let’s remember that Congress initiates spending bills and the last two years of the Bush Administration were accompanied by a strongly Democratic Congress…which included one Senator Obama.
The spending resolution leading to the current budget was passed last June:
“The Senate by a 48-45 vote approved a compromise fiscal 2009 budget resolution Wednesday that would cap discretionary spending at $1.013 trillion, $21 billion more than President Bush requested.” Senate passes fiscal 2009 budget resolution along party lines (6/4/08) -- www.GovernmentExecutive.com
Included among those 48 votes: Barack Obama.
In September 2008, the Congressional Budget Office estimated the FY 2009 deficit to be $438 billion – an at-the-time outlandish number that now, just a few months later, looks to be a model of frugality. The ensuing increase to beyond a trillion dollars came from the governmental responses of TARP and more stimulus packages. What part of those did Mr. Obama oppose? (If you’ll recall, he spent the days leading up to his inauguration cajoling his fellow Democrats to allow the second half of the TARP funds to be released to his administration).
Besides, that $1.3 trillion number is so pre-Obama
“The director of the Congressional Budget Office today updated his projections for the budget and economic outlook and is now anticipating a $1.8 trillion deficit this year, and $1.4 trillion in 2010.” Deficit Now Projected at $1.8 Trillion for 2009 - Political Punch
Fearless prediction: We will never see an Obama budget that even sniffs “only” a $438 billion deficit.
For some more helpful talking points: Bush Deficit vs. Obama Deficit in Pictures » The Foundry
